Northern Corridor Case StudyMalaba OSBP

Business and Systems Aligned. Business Empowered.TM

Silas Kanamugire, Transport AdvisorMarch 12, 2007

The Northern Corridor

The Northern Corridor

Trade Transaction CostsTime is a Significant NTB

• Rough time estimates for a container– Mombasa – Kampala: 21 days– Mombasa – Kigali: 30 days– Mombasa – Eastern DRC: 45 days

• The extra cost of moving goods in the region by road due to inefficiencies and corruption canreach $1,000 per container per trip

Issues: Delays and High Costs at Border Posts

• Poor border design • Inadequate border infrastructure, • Excessive Bureaucracy, delays and

/transparency integrity issues at borders • Inefficient and repetitive border control

operations• Multiple border organizations some times

with overlapping mandates• Poor border traffic management

Cutting Transaction Costs at Borders What it Takes

• Modernizing border infrastructure and operations

• Streamlining border procedures, • IT solutions for documentation/information

processing• Establishment of juxtaposed/one-stop

border posts

Cutting Transaction Costs at Borders: Why OSBP?

• Shared Infrastructure/facilities/resources• Reduced cargo clearance time/one-stop

–Joint actions/better customs coordination/lower risk of duplication

–Fewer cargo inspections• Improved Traffic management• Faster customs bond release

OSBP Operating Model

Uganda Kenya

1. Customs Offices2. Joint Control Bldg3. Truck Parking4. Joint Inspection Area5. Bridge6. Entry/Exit Gate

2

2

3

1

1

3

4

4

Border Control Zone

6

6 6

6

5

Uganda Kenya

1. Customs Offices2. Joint Control Bldg3. Truck Parking4. Joint Inspection Area5. Bridge6. Entry/Exit Gate

2

2

3

1

1

3

4

4

Border Control Zone

6

6 6

6

5

Operating Model

Operating Model

Malaba OSBP Implementation Process

• KRA/URA bilateral discussions• Establishment of national committees and

joint bilateral steering committee• Broader/more structured joint activities since

2004 • Proof-of-Concept: concept paper,

demonstration campaign, architectural model, virtual-reality model

• Development of Business Plan and technical designs

• Rehabilitation of Mlba Railway Office

Implementation Process• Launch of 1st phase:

• Clearance of rail cargo Nov.06: Juxtaposed

• Trial for selected Uganda bound road cargo: one-stop

• Survey of BP infrastructure/facilities: telecoms, power, offices, roads/rail

• Development of IT/connectivity component: CBS, IT Corridor

• Resource mobilisation for next phases

Implementation Process: Legal/Cooperation

Frameworks

• Northern Corridor TTCA rules on juxtaposed border posts, 1996

• National/Bilateral Steering Committee's TORs and rules of procedure, 2003/4

• East African Community’s Customs Management Act (Customs Union), 2005

• Uganda/Kenya MOU signed, April 4. 2006

Implementation Process: Operating Agencies

Results

• Road cargo clearance time at Malaba:– Two-stop clearance: 2 days/truck– Trial OSBP: 3 hours/truck

• Rail cargo clearance time at Malaba:– Two-stop clearance: 2 days/train– OSBP: 4 hours/train

Results• Buy-in by Governments/Businesses,

Resources mobilised, Donor coordination/cooperation improved: – Funding for studies: USAID, WB,

DFID;– Infrastructure upgrading: more than

$50 million mobilised by World Bank and JICA for Malaba and nine other border posts

– AfDB considering funding other border posts between Burundi, Rwanda and DRC

Implementation of Border IT Interface

IT Corridor Objectives: Save Time&Cost

•Establish standardized cross border communication between customs systems•Avoiding duplicate declaration data capture in each country of transit• Advance notification of cargo• Most efficient method to communicate release of transit bond•Fighting Corruption at Borders

THANK YOU