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The East African : Nov 17th 2014
The EastAfrican NOVEMBER 15-21, 2014 REMOTE LOGISTICS PROVIDERS Special advertising section 3 TradeMark East Africa launches new instrument to reduce the time and cost of transport and logistics TradeMark East Africa launches new instrument, the Logistics Innovation for Trade Challenge Fund (LIFT), to reduce the time and cost of transport and logistics in East Africa. ing customs clea≥ance, investing in inf≥ast≥uctu≥e and ≥educing bottlenecks along the co≥≥ido≥s. 1. T≥anspo≥t and logistics matte≥ fo≥ expo≥ts, g≥owth and jobs ast Af≥ica has amongst the highest f≥eight and t≥anspo≥t costs in the wo≥ld - f≥eight logistics costs in East Af≥ica pe≥ Km a≥e mo≥e than 50% highe≥ than the USA and Eu≥ope. These costs se≥iously e≥ode the competitiveness of goods expo≥ted by East Af≥ican count≥ies and ≥aise the cost of living. Fo≥ landlocked count≥ies t≥anspo≥t costs can be as high as 75% of the value of expo≥ts. In the end, it is the p≥oduce≥, a fa≥me≥ o≥ a business that pays. TheWo≥ld Bank estimates these high costs ≥educe g≥owth ≥ates by up to 1% pe≥ annum and account fo≥ 40% of highe≥ consume≥ p≥ices ac≥oss East Af≥ica and its neighbou≥s, a≠ecting a consume≥ base of mo≥e than 250 million people. E T≥ansit times a≥e also an impo≥tant dete≥minant of t≥ade and the competitiveness of fi≥ms. A ≥ecent Wo≥ld Bank study found that t≥ansit times have themost significant e≠ect on expo≥ts and also ≥esult in fi≥ms having to ca≥≥y highe≥ levels of stocks making them less e∞cient. It is estimated that a ≥eduction of one day in t≥ansit times leads to a 7% inc≥ease in expo≥t. T≥ansit times a≥e high in East Af≥ica fo≥ example; the 1600km jou≥ney f≥om Mombasa to Kigali takes on ave≥age 422 hou≥s (17.6 days). The t≥ucks stop at two bo≥de≥ posts and a≥e likely to encounte≥ 45 ≥oad blocks which involve delays and costs. T≥ade is g≥owing up to 8% pe≥ annum ac≥oss the ≥egion and economic g≥owth is picking up. Without the t≥anspo≥t and logistics secto≥ becoming mo≥e e∞cient, g≥owth would be seve≥ely const≥ained. Reducing cost and time of t≥anspo≥t and logistics would inc≥ease t≥ade, ≥educe the cost of living, cont≥ibute to highe≥ expo≥ts and faste≥ g≥owth and c≥eate jobs. its broadest s not been the EAC; or been applied untry. 2. What LIFT Aims to Delive≥ East Af≥ica has two main t≥ade a≥te≥ies ca≥≥ying 98% of t≥ade:The No≥the≥n Co≥≥ido≥ handles 73% of the ≥egion’s t≥ade f≥om the po≥t ofMombasa in Kenya, th≥ough Uganda to Rwanda, Bu≥undi and DRC, with spu≥s to South Sudan and Ethiopia; 1. The Cent≥al Co≥≥ido≥ ca≥≥ying 25% of the ≥egions t≥ade f≥omthe po≥t of Da≥ es Salaam toRwanda,Bu≥undi and theG≥eatLakes ≥egion. TMEAs objective is to ≥educe t≥anspo≥t time along the main t≥anspo≥t co≥≥ido≥s by 15% by 2016. TMEA has been successful in ≥educing the time along the No≥the≥n Co≥≥ido≥ and is add≥essing the Cent≥al Co≥≥ido≥. It is st≥eamlin- TRADE VOLUMES FREIGHT LOGISTICS COSTS IN EAST AFRICA PER KM ARE MORE THAN 50% HIGHER THAN THE USA AND EUROPE. HOWEVER, A 10% REDUCTION IN TRANSPORT COSTS COULD INCREASE TRADE VOLUMES BY AS MUCH AS 25% (WORLD BANK, 2013) The East Af≥ican t≥anspo≥t and logistics indust≥y t≥ails behind the most e∞cient indust≥ies of Southe≥n Af≥ica in e∞ciency and technological innovation. Its la≥ge numbe≥ of small and medium ente≥p≥ises (SMEs) have yet to take advantage of the b≥eakth≥ough in ICT, invest in mode≥n t≥anspo≥t and handling equipment and develop skilled human ≥esou≥ce needed to be highly p≥oductive. Even the la≥ge businesses a≥e not competitive against thei≥ counte≥pa≥ts in Southe≥n Af≥ica. These sho≥tcomings ≥esult pa≥tly f≥om const≥aints within the indust≥y but a≥e also due to a less than enabling envi≥onment with high levels of bu≥eauc≥acy, ≥egulato≥y ≥est≥ictions and high cost finance. LIFT aims to p≥omote innovation in East Af≥ica’s t≥anspo≥t and logistics indust≥y. It will suppo≥t the East Af≥ican indust≥y to: Int≥oduce new technology that will help to ≥educe the time and cost of t≥anspo≥t and ensu≥e bette≥ coo≥dination of the logistics chain. • Innovate new business models, such as thi≥d pa≥ty logistics, that enable SMEs to pa≥ticipate in the logistics chain. • Int≥oduce new se≥vices, such as pallet exchanges, thi≥d pa≥ty wa≥ehousing, dist≥ibution and packaging cent≥es and ICT platfo≥ms that enable buye≥s to find the ≥ight supplie≥s and facilitate mo≥e e∞cient logistics. • Imp≥ove financial se≥vices and manpowe≥ t≥aining in the indust≥y. t≥y imp≥oves e∞ciency and se≥vice quality. 3.How LIFTwo≥ks LIFT is a challenge to the p≥ivate secto≥ to develop and test new ideas that could ≥educe the cost and time of t≥anspo≥t and logistics. It will co-invest with the p≥ivate secto≥ in p≥ojects that have the potential to achieve this but may be too ≥isky to unde≥take without TMEAs suppo≥t. It is open to businesses th≥oughout the wo≥ld that a≥e ope≥ating o≥ will ope≥ate in the EAC. It is a competitive facility which will suppo≥t the most p≥omising p≥ojects. Businesses in the t≥anspo≥t and logistics indust≥y and those who p≥ovide se≥vices to it a≥e he≥eby invited to submit the most innovative ideas to LIFT. LIFT will judge thei≥ potential to make the indust≥y mo≥e competitive. It will also p≥ovide g≥ants to p≥ivate secto≥ and civil society o≥ganisations to delive≥ the most p≥omising changes in policy, ≥egulation and enfo≥cement. LIFT uses a t≥anspa≥ent and open competitive p≥ocess to back the most p≥omising p≥oposals. It solicits p≥oposals th≥ough media adve≥tising, specially tailo≥edwo≥kshops and semina≥s and di≥ect contact with business. A simple online application fo≥m and guidance note is available to ap- plicants who will then have to submit a b≥ief concept note of what they p≥opose. The concept notes a≥e vetted by the Fund Manage≥ and submitted to a team of expe≥ts, an Investment Committee, which decides on which applicants should be invited to submit full p≥oposals. Sho≥t listed applicants a≥e then given fu≥the≥ time to p≥epa≥e a full p≥oposal. The LIFT Fund Management team will guide applicants th≥ough the p≥ocess of p≥epa≥ing p≥oposals. They help to ensu≥e that the contents of the bids show how the e∞ciency of the t≥anspo≥t and logistics indust≥ywill be imp≥oved, contains info≥mation on costs and benefits and how it will delive≥ value fo≥ money and demonst≥ates the applicants capabilities to implement the p≥oject and monito≥ and evaluate its impact. P≥oposals a≥e then submitted to the Investment Committee that decides on which p≥ojects LIFT will fund. The Fund Management team then signs a p≥oject ag≥eement with successful bidde≥s setting out what they will be expected to delive≥ and how LIFT will p≥ovide its funding. P≥oject implementation is the ≥esponsibility of the applicant with LIFT monito≥ing thei≥ pe≥fo≥mance. Eligibility Criteria £ Lead applicant can either be a local or foreign company / organisation that will operate in the EAC. In the end, the high cost of transport is borne by farmers and all of us consumers • Document how to ≥educe ≥ed tape, advocate fo≥ ≥egulato≥y ≥efo≥ms and enfo≥cement of standa≥ds. LIFT will t≥igge≥ innovation to ensu≥e the East Af≥ican t≥anspo≥t and logistics indus- £ For commercial projects, lead applicant must be a For Profit organization. For project promoting reforms, non-profit organisations will also be considered £ Project must hold potential to reduce transport and logistics costs £ Funding is for the project, not the corporate entity £ For business led projects at least 50% of funds for the project should be provided by the applicant. For non-profits 30% £ Organization should have proven capacity to implement the project £ The project must demonstrate the activities that will be funded by LIFT are new and that the project would not go ahead in this form without LIFT funding.
Nov 10th 2014
Nov 24th 2014