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A Roadmap to Progress: The Critical role of regulations in East Africa’s logistics industry

Charles Thuo, Chief Executive Officer and Founder of Apexloads Inc. PHOTO | Courtesy

As the crossroads of trade and economy, logistics is the pulsating heart of modern commerce.

In East Africa, a region known for its dynamic markets, the logistics sector faces a labyrinth of challenges.

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Among them, the pressing need for comprehensive regulations stands tall.

The vitality of regulations

Logistics is not just about the movement of goods; it is an intricate web that must ensure the safety of consumers and the welfare of various stakeholders, including road users.

As an industry closely tied to third-party logistics (3PLs), it’s essential that these entities are properly registered, and their vehicles are duly inspected, maintained, and insured.

The safety net widens when we consider the drivers, who should be adeptly trained, licensed, and devoid of any substances that can impair their abilities.

However, regulations don’t operate in a vacuum; they need an apparatus for enforcement. This necessitates personnel and the financial muscle to sustain them. The common approach is through taxes and fees.

East Africa’s prospects

In East Africa, tourism reigns supreme as one of the top three sources of government revenue. The symbiotic relationship between the government and the tourism sector has seen barriers being removed, security being reinforced, and attractions meticulously maintained. The question then arises, why can’t we replicate this model for logistics?

The crux of the problem

An Achilles’ heel in the logistics sector in East Africa is the shadowy nature of operations. It is estimated that up to 80% of freight brokers in East Africa are unregistered, thereby bypassing the tax net.

This evasion isn’t limited to freight brokers; it’s a ubiquitous issue, extending to makeshift repair shops and more. While it’s easy to castigate the players for not paying taxes, we must also acknowledge the public’s general distrust in governmental appropriations of funds.

Government-driven initiatives, while welcome, often have a revenue-centric perspective. Take, for example, the Single Customs Territory (SCT) being executed in East Africa, designed in part to plug tax leakages.

Carrot or stick?

The predicament requires nuanced handling. It’s vital for 3PLs to adopt self-regulation to curtail issues like theft and fraud. This is where Apexloads steps in with its database of verified 3PLs.

This verification system, providing 3PLs with a unique numeric identifier, creates a transparency layer that is desperately needed.
However, the conundrum lies in incentivizing the 3PLs to participate in the verification process. Experience shows that voluntary participation is sluggish at best.

The “stick” approach seems more effective, but is it sustainable?

A collective way forward

A collaborative approach is essential. The onus is on the 3PLs to realize that self-regulation paves the way for long-term sustainability.

By working with verified partners, we can cultivate trust among cargo owners and foster a reliable network.

However, choices are integral. When brokers and transporters have an array of options, they are more likely to choose verified partners. In an ideal scenario, East African governments could mandate verification and the issuance of an EAC for all 3PLs.

While it is evident that the logistics industry requires regulation, there needs to be a balance. A blend of government mandate and self-regulation could be the golden mean we seek.

Let’s not wait for the stick. Let’s be the change, and let’s steer the logistics industry in East Africa towards a horizon of progress and prosperity.

Charles Thuo is the Chief Executive Officer and Founder of Apexloads Inc.

DISCALIMER: Opinions expressed in this article do not necessarily represent those of the Corporation.

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