What you need to know:
After 16 years with Trade Mark East Africa (TMEA), Mr Frank Matsaert, has thrown in the towel. In an Interview with Prosper Magazine’s Ismail Musa Ladu, the outgoing TMEA chief executive officer spoke about the impact of non-tariff barriers, the implication of conflict on regional trade and his role in trade facilitation and development of trade infrastructure in the country as well as the region.
What are some of the key highlights of your time at the helm of TMEA?
I have had the sincere pleasure of working with a diverse team of talented individuals from across the world and together we grew the institution from an initial budget of $42 million to approximately $1.2 billion by April this year. It all started here in Uganda with a small grant of $10,000 to pilot work with PS Edith Mwanje at the Ministry of East African Community Affairs to support Uganda in the EAC integration process, almost 16 years ago.
Since then, we have managed to generate large scale impact that has helped millions of East Africans, reducing trade costs that help businesses expand, creates opportunities, and jobs. Our work has contributed to trade costs falling by more than a third, making trade being easier for businesses and small traders alike. The confidence bestowed on us by our donors and partner Governments has propelled us to expand to the rest of Africa as a Pan-African institution positioned to support the implementation of African Continental Free Trade Agreement (AfCFTA), helping build prosperity through trade for more than a billion people in Africa.
I have truly appreciated the partnerships and friendships we have forged across a wide range of stakeholders including Regional Economic Communities (primarily the EAC), Government Ministries, Departments and Agencies; the private sector, civil society and the more than 100,000 small traders we have worked with. Taking these, predominantly women, traders to the World Trade Organization in Geneva was for me a highlight I will never forget as their stories of positive change amazed all the hundreds of people present across the World. It was a speaking truth to power moment that is rare in life.
Critically, we set up an organisation that has nurtured East African talent to support East Africa’s development, and we have strived to look after our team, developing approaches on Equity, Diversity and Inclusion, with staff wellbeing being central. A combination of HR processes and systems ensure that we achieve this, such as flexi work hours, equity in pay and benefits across the job groups and gender, and an open-door policy where every voice counts. I gladly note that we have had low staff turnover, and sincerely thank my dedicated team of professionals that make the TMEA family what it is today, a high performing, innovative and ethical force for change.
During your time as CEO, how much has been injected in trade facilitation projects in general and how much came to the Uganda program?
We are now operating in 13 countries in the East, Horn, South and now setting up in West Africa. TradeMark East Africa has been operational in Uganda for the last 12 years and we have invested over $142 million to date. The impact has helped Uganda expand its trade and exports, creating jobs and lifting many out of poverty. Our largest investments have been in developing Uganda’s land borders with its many neighbours.
We have worked on seven borders in partnership with the Uganda Revenue Authority and many other Government Agencies and Ministries reducing the time it takes to move goods by 70 per cent on average. At these borders we have helped thousands of women traders form associations, gain access to finance, training, and markets. They now operate at borders without harassment or bias and contribute to the country’s revenues.
We have combined trade infrastructure investments with digitisation of many of Uganda’s key trade agencies, creating on-line approaches that reduce costs, increase predictability, and improve transparency. Initiatives like the Uganda Electronic Single Window, Uganda trade portal, the Regional Electronic Cargo Tracking System have helped propel Uganda into the role of a digital trade leader that is helping to change the shape of trade across Africa. We have also developed a strong program to support products to meet export standards with the Uganda National Bureau of Standards. We have worked closely with businesses in improving the trade environment and in professionalising the logistics industry in Uganda, and we have made major investments in improving the flow of good such as the Gulu Logistics Hub, which will soon be operational. It promises to stimulate the economic potential of Northern Uganda by cutting down the time and cost of transporting and distribution of goods improving trade across value chains and catalysing development of Northern Uganda.
Challenges faced during your tenure?
There are many, but overall, the key one has been differing levels of political will to foster change. Here in Uganda the commitment from the top has been strong, but in other countries this has not always been the case. This makes improving the trade environment very difficult and has slowed down the pace of collective impact across the region. After all trade is about exchange, and if one side improves things whilst another does not, the net effect is muted. We have also seen budget deficits in some Government institutions delay projects, especially where counterpart funding is insufficient for big infrastructure projects in addition to systems and processes.
Conflict and civil unrest have also remained a big challenge, especially in places like South Sudan, where during my tenure we evacuated staff three times due to unrest and extreme insecurity. We had to scale down our programming there as a result. In Burundi in the past, DRC, and recently in Ethiopia we also faced similar challenges. In addition, elections have also periodically presented challenges that can disrupt Government decision making and trade.
Managing fiduciary risk with issues like corruption, weak legal systems, and tender irregularities continues being a challenge, as does balancing different interests from marginalised groups, big businesses, and Government. External needs like access to trade finance are also a challenge beyond the traditional areas that we have worked in, though we will be looking at this challenge with our new commercial arm that is being established.
Finally, the impact of Covid-19 has been a big challenge, both as an institution and in our programming. The impact of the pandemic reduced our funding for a period and rolled back some of the gains we have collectively made.
The latest challenge has been the impact of the ongoing conflict in Ukraine that has further fragmented global supply chains, raised food, commodity, and agricultural input prices spurring up inflation and driving interest rates higher. We are working on how we might be able to help the region adapt as our Government budgets come under severe strain.
Do you think you could have done better than you have performed so far?
We made progress in delivering our promise to the region which was reduction in time and costs of trade. In 10 years, we completed and operationalised fifteen One Stop Border Posts across East Africa. In Uganda these are Mutukula, Busia, Malaba, Elegu, Mirama Hills; these are completed and have on average reduced time to enter and exit the borders by an average of 70 per cent. We are currently supporting 10 new One Stop Border Posts across the region, with two in Uganda, Ntoroko Lake Port Border and Goli-Mahagi. Notably in the Eastern Africa region, conditions for external trade and investment have tremendously improved due to enhanced focus on trade as a key ingredient for economic resilience; I am proud that TMEA was a key contributor to this improvement with our partners.
On areas of improvement, TMEA is adaptive to the external environment and over time we noted areas that were not in our realm. Not focusing on them hindered promotion of sustainable trade; case in point, TMEA’s objective is to increase trade but this has the risk of also increasing carbon emissions. To mitigate this, we recently initiated a $210 million Green Corridor program that will facilitate a host of interventions with partner Governments to reduce Green House Gas (GHG) emissions across trade and transport corridors. We are also becoming more strategic in our partnerships working systematically with a range of relevant partners such as AfCFTA Secretariat in Ghana (Africa Union) to scale up the impact of trade facilitation. We are deliberate in supporting both software combined with hardware, which is key in driving impact and catalyzing investment. Volume increases at key borders like Malaba and Busia are growing well beyond projects due to the faster processing and transit times; this is also something that will require a second phase of development with Government. We also want our programs to be closer to the private sector, and we have formed a number of industry reference groups to guide our work.
In terms of regional trade, what did you particularly observe as a main challenge and how can it be sorted?
There are multiple challenges, for example, trade costs are still high. Average transport costs on the Northern Corridor have fallen by an average of 48 per cent from $4.06/Km in 2010 to $2.1/Km in 2017. This is a strong reduction but there is much more to do - middle income countries average $1/Km.
Also, more resources and political will are needed to push forward with development of both soft and hard infrastructure to reduce trade costs. Governments and partners can embrace a more systematic approach across the whole transport network, not just ports and borders, but integrate rail, road, and logistics; a lot of political will is needed for this to happen.
The second challenge is that of trade barriers. With our partners, many non-tariff barriers to trade have been eliminated, but they are dynamic, often arising in another form. These barriers take the form of technical barriers, such as standards disputes, or retaliatory blocking of goods. The last twelve years has shown that restricting trade – often for the few - is not a way to drive prosperity for the many. A good case in point is food trade.
The wider region has generally always produced enough food to cover deficits due to crop failure or drought, but trade restrictions have often stopped it being made available to feed the hungry. There is urgency of reducing excessive costs of humanitarian assistance on corridors to mitigate effects of famine and conflict such as in South Sudan but also Somalia. This is something we are working on as it is critically important as the negative effects of climate change affect agricultural production.
A large-scale boost in exports and jobs is needed to move the region into middle income status. We still have high budget deficits, therefore the region must be more competitive in trade, to export more because this is one of the ways revenues will rise for Governments.
For all your efforts to improve or facilitate trade, did you ever get a feeling that government support is not as forthcoming?
Most infrastructure has been co-funded by Government and TMEA, and generally, partnerships with Governments have been very strong and there have not been major issues, though resources are stretched across the region. In terms of trade facilitation reforms, we will only engage based on co-creating solutions with Governments, so we have not found Government support to be a major problem. Governments have also done well in assuring the sustainability of these reforms.
What are your thoughts regarding sustainability of the projects you have undertaken?
This is an important issue and as I said we only undertake projects that are co-designed with partners, and sustainability is part of the design process. We are a facilitator and convenor. Our key operating principles such as aligning our programming with country priorities, collaborating with both public and private sectors, and designing interventions with the end in mind has ensured a high level of ownership by partner Governments.
This means sustainability mechanisms are put in place within the institutions we support. Further, building stable and coherent processes while providing technical assistance and capacity building of institutions has remained central to sustainability agenda. In terms of infrastructure, it is important though that once construction is completed that Governments commit to maintaining the infrastructure built in line with our agreements with them.
TMEA has made good progress on defining the feasibility planning for its new commercial arm – Trade Catalyst Africa (TCA) - that will aim to catalyse commercial capital into trade infrastructure, digital workstreams, and trade finance. We anticipate this being established over the next year. The commercial arm will further enhance sustainability of not only our programmes but other aid for trade initiatives.
In all the countries that TMEA operates in, where do you think the most success has been registered?
Every country has registered success given its unique prevailing conditions. In Kenya for example, interventions at the Port of Mombasa reduced time to import through the port from around 7.2 days in 2012 to an average of 4 days this year. Similar reforms have been undertaken at Dar es Salaam port.
At the same time, transport times have more than halved to Kampala, with costs falling by more than a third. This achievement is as a result of efforts by all the countries along the key trade corridors. We would have wished to deliver more impacts in countries like South Sudan and Burundi, and we are working on this. Our region’s interconnectedness is critical to its success and growth.
How did COVID-19 impacted on TMEA operations?
The pandemic disrupted the lives of billions of people in every corner of the world. We were not left unscathed. We experienced firsthand how Covid-19 not only strained health systems but also impacted on global trade, and specifically in the region where we witnessed mass layoffs and SME’s closing.
As supply chains across the globe were disrupted, so were livelihoods. Our experience in supply chains and our local presence across the region informed our quick adaptation to programming as we quickly rolled out the award winning Safe Trade Emergency program that helped to keep trade moving in 12 countries in larger Eastern, Southern and Horn of Africa regions.
The $32 million Safe Trade program was anchored on innovation and digital transition which enabled markets and borders to safely remain open for continued trade, thus speeding up recovery and promoting traders’ resilience. The programme, albeit with disruption, helped keep trade moving, whilst other parts of the Continent completely closed their borders. In this time, we learnt much from engaging with Ministries of Health that will support future responses to these types of shocks.
Safe Trade delivered innovations such as EAC Regional Electronic Cargo and Driver Tracking System (RECDTS) App, facilitated issuance of EAC-COVID-19 test certificates (to truck drivers) that are recognised in Kenya, Uganda, Rwanda, and Burundi, thus eliminating the need for multiple testing of drivers at borders, and complementing efforts to decongest borders. To date more than 100,000 drivers are using the technology to move across the region. We also worked with partners to ensure food security, access to critically required medicines; and supporting measures that reduced job losses and support exports.
As an institution, we also were not spared by the pandemic. Cuts to donor funding caused by COVID-19 inflicted economic recession in donor countries, necessitated a human resource restructuring process and scaling down of programming. Personally, as the head of the institution this was one of the most draining and painful processes I had to undertake in my time as CEO; having no choice but to let go of people amidst a pandemic and tough economic context. Even then, we put in measures to help the affected staff transition. I am confident that our current efforts to diversify funding will help support TMEA’s greater resilience to funding shocks like this.
What’s next after TMEA? Are you taking a break from Trade Facilitation? When do we hear from you again?
Taking the decision to call it a day as TMEA’s CEO was not easy as I am passionate about what we are doing, and everyone including our Board wanted me to stay on. After the long journey of 16 years in first designing the program with the EAC and across five countries, then getting the agreement to establish the institution, then raising the initial funds, and then leading the organization for 12 years, has been incredibly fulfilling but I feel it is time to hand over to a new leader. I am coming back to Uganda in September to hand over to my successor, so I will tell you then as I introduce him, but I plan to stay in the region and continue contributing to building trade and prosperity across Africa.