SOKOOMPIA

East African Roads

The UK has announced a £10.5m fund to help improve transport in east Africa. Photograph: Dan Chung for the Guardian
The UK has announced initiatives aimed at reducing transport costs in east Africa, a region with the second-highest transport and logistics costs in the world.

Justine Greening, the UK’s international development secretary, launched a $16m (£10.5m) fund that will award innovative ideas to cut transport costs, Logistics Innovation for Trade (Lift). The fund will provide matching grants to encourage private sector investment in freight and other logistics technologies in east Africa.

The fund, managed by Trade Mark East Africa, a not-for-profit organisation, aims to reduce transport time along the main transport corridors in east Africa. The pledge comes on top of the £57.4m the UK has invested in the organisation to help boost Ugandan exports by £200m and Kenyan exports by £530m by 2016.

The announcements followed Greening’s visit to Tanzania’s main port during which she said the UK was leading development partners’ efforts in investing in infrastructure projects in the region.

“The government has development initiatives … on roads and railways but the huge challenges Tanzania is facing represent really big opportunities for public private partnerships between the government and the best British industries to get the infrastructure Tanzania needs to kickstart the economy,” she said.

Greening said she had travelled with UK leading businesses such as Pall-Ex UK to share their experiences on how they have managed to minimise the costs of transportation of goods in the UK.

Frank Matsaert, chief executive of TradeMark East Africa, said high costs of doing business in the region had hampered trade growth but he hoped the new project would reduce transport times in the region by 15% over the next three years.

“A 10% reduction in transport costs is likely to increase trade by 25% worldwide, more in Africa where transport costs are higher. Without logistics efficiency problems being addressed, east Africa’s growth potential will be seriously constrained,” he said.

British investors in Tanzania complain of non-trade barriers, cargo delays at ports and red tape. However, senior government officials who attended the launch promised visiting investors from the UK and companies operating in the country that they would address their concerns under new efforts to attract more foreign investments.

Greening said in an interview that the UK was determined to help Tanzania raise its ranking in the World Bank doing business index, and Tanzania government tackling corruption was key to the drive. “The UK has passed the bribery act that sets the bar very high for the behaviours that we expect of the UK companies operating anywhere in the world, including anywhere in Tanzania,” she said.

The World Bank estimates that high costs of doing business reduce growth rates by up to 1% per annum and account for 40% of higher consumer prices across the region and its neighbours.