(DTIS) Update, Volume 1 – Main report - Enhanced Integrated ...

Dar es Salaam (Tanzania) and Mombasa (Kenya), through which Burundi trades. Some estimates put thetransport and logistics costs at approximately 40% of export prices of agricultural products in Burundi.A logistics strategy that is designed around the following broad areas – infrastructure development,logistics quality, customs modernization and corridor management - and includes measures to improvethe connectivity of lagging regions needs to be developed and implemented. Moreover, storage facilities(especially cold chains for perishable products) must be put in place.Small traders (mostly women) face significant barriers when crossing borders. In addition to numerousnon-transparent and unpredictable administrative barriers, they need to pay bribes and are exposed toharassment. A “Charter for Cross-Border Traders” could remove the constraints faced by small tradersand facilitate regional trade in agricultural products, including horticulture.I.2. Non-tariff barriers and regulations affecting goods and servicesGoods: more efforts are needed to reduce barriers to trade in goods. Although the elimination ofburdensome non-tariff measures (NTMs) and the removal of non-tariff barriers (NTBs) were consideredhigh priority issues in the 2004 DTIS, numerous barriers, such as lengthy customs formalities anddiscriminating administrative procedures, that have a negative impact on trade continue to hinderregional integration, including Burundi’s imports and exports. Burundi stands out as a heavy user ofNTMs - about 70% of products imported into Burundi are covered by five or more NTM types,suggesting that economic operators face multiple regulations that can be cumbersome. Regulatoryproliferation, combined with weak capabilities and a legacy of discretionary and opaque enforcement,stifle entry and diversification of the Burundian economy. In addition, rising NTBs in at least someneighboring countries highlights weak EAC disciplines and a lack of appropriate diplomatic reaction bypartners, including Burundi.Policy action needs to focus on preventing domestic regulatory proliferation and encouraging theremoval of non-tariff barriers (NTBs) faced by Burundian exporters. Regulatory proliferation canbe prevented by following “good practices” for new regulations, including consultations and a coolingoffperiod before measures are put in place, and limiting new regulations to cases where they addressclearly-identified societal demands. The current NTB review committee could evolve toward a model inwhich it plays the role of an independent regulatory-review agency. It is also important to providesupport to domestic exporters, by collecting reliable information on NTBs encountered by Burundi’soperators on other EAC markets, by encouraging private-sector use of the online Tripartite NTBreporting/monitoring mechanism, by taking up the issues raised in the monitoring mechanism anddealing with them effectively. Finally, Burundi needs to raise the issues in EAC forums and push fortheir inclusion in the EAC time-bound program for the elimination of identified NTBs, adopted by theEAC Council in 2009.Services: The gap between Burundi’s services performance and that of its EAC neighbors is huge.For example, Burundi is characterized by a significantly lower number of individuals and firms withlines of credit or loans from financial institutions, a lower number of fixed and mobile phone subscribersand limited availability of professionals with market relevant skills. This is the case despite a relativelyopen services trade regime and regulatory measures that do not seem more burdensome than thoseapplied in the EAC. What seem to be important constraints – at least in financial and professionalservices, the two services sectors analyzed in more detail in this report – are Burundi’s limited capacityto effectively implement its liberalization and regulatory engagements, as well as theinsufficiency/absence of regulation in some sectors, which can constrain business growth and allowmany opportunities for unfair competition and corruption. Additional constraints are related to theabsence of relevant skills and immigration rules that restrict the mobility of services providers.7 / 153