We should formalise cross border trade with Somalia

The picture above shows a farmer harvesting miraa in Shigharo location within Wundanyi constituency. The region is the highest producer of miraa in the coast region.

On a hot afternoon, a drive through Wajir town’s CBD is not appealing especially when the cruel tropical sun bakes everything in its way. The newly laid tarmac road has eased movement within the CBD.

A number of stalls have sprung up by the roadside. A young man stands next to his movable stall. I rummage through the products on display, an array of assorted items from designer perfumes to beauty products, electrical equipment all neatly laid to attract the attention of passers-by like myself.

Many of the items had labels ‘Made in china’ made in Dubai’ product of Egypt’. I engaged the trader on a raft of issues. Our discussion mainly centered on ease of doing business with Somalia and brought to the fore a number of issues on cross border trade.

Trade between Kenya and Somalia from recent times has been mainly one sided. Kenya shares more than 800km-long border with the war-torn Somalia; this stretches from Kiunga in Lamu to Mandera.

The notable formal trade engagement between the two neighbors is the export of the narcotic stimulant leafy plant locally known as ‘Khat or Miraa’. On average an estimated 30 flights ferrying miraa to Somalia depart the Jomo Kenyatta international Airport. The volume of Miraa to Somalia has markedly increased since the UK and other western Markets banned its imports.

The surplus has been diverted to Somalia which offers ready markets. There are no reciprocated trade imports from Somalia to Kenya evidenced by the fact that cargo planes that delivered Miraa to Somalia mainly revert back empty.
The Border counties have mainly been considered as a conduit for contraband goods from the Neighboring countries of Somalia and Ethiopia. As noted by the trader I met in Wajir, their products are mainly from China, the Far East and the North African economies of Egypt and Tunisia.

The volume of trade along the Border is estimated to be USD 30 million mainly propelled by the absence of government investment in the region since independence. The Border communities have always maintained strong kinship relationship with their relatives across the Border even before independence. Trading between these communities especially in livestock and basic household necessities have always thrived. So how should Cross border trade be formalized?

One of the major promises of the Jubilee government was to expand and enhance regional trade especially with neighboring countries. Even though the crafters of the manifesto had the EAC countries in mind, there is no reason cross border trade with Somalia cannot be enhanced and formalized.

The National government should enhance the Border custom offices in Garissa, Wajir and Mandera and improve systems in these offices. This will reduce the dependence on illegal border crossings generating the much needed revenue inform of import duties and levies.

The government should lift the ban on imports from Somalia and encourage local traders to formally comply with trade regulations along the Border.

Although reliable data is hard to come by, available records show Somalia mainly imports from Djibouti, India, Kenya, Pakistan, China, Egypt, Oman, United Arab Emirates and Yemen. A number of these products find their way into the local markets.

The county governments have made considerable gains in enhancing infrastructures in the region and are out to entice investors into the region. The National government should engage the local county administration and device a way to streamline Border customs department to enhance revenue generation.

The departments of revenue at the county level have much more efficient revenue systems cascaded even to the sub counties. This will come in handy once a formal collaboration between the two levels of government is established. A formula to commit part of the revenue generated to the local county coffers will enhance revenue generation and encourage compliance to the trade regulations.

Kenya has been struggling to reduce imports of sugar so as to prop up the local sugar sector which was already reeling under the effect of much cheaper sugar imports from COMESA member states.

By formalizing trade channels with Somalia through engagement with local actors and multi- agency collaboration, the nature and volume of imports into the Country can be heavily regulated. For instance allowing cargo planes delivering Khat to take back fish and other commodities and earn the rebuilding nation some revenues.

The volatile security situation in Somalia has now been on the international screens for some time now. This has made the regional neighbors to consider Somalia as a pariah and failed state and would handle its issues with strong gloves.

The AU bolstered peace keeping forces has covered considerable grounds and a shaky peace has been restored. Kenya should formalize trade with Somalia and establish necessary border institutions to enhance trade and improve on the security situation along the Border.

The writer is an economist and comments on regional issues

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