Importers urged to use local insurance and shipping firms

Local importers have been urged to use local firms to insure and ship consignments in and out of the country to reduce currency outflows. “You are paying billions of dollars to foreign insurance and shipping companies to have your consignments shipped to Mombasa at the expense of local firms, when shall they grow?” Silas Kanamugire, the director of trade facilitation and transport at TradeMark East African, asked regional shippers during a training workshop in Kigali recently.Kanamugire noted that the practice was not only suffocating local business but also the economy. “We are giving away a big chunk of trade due to ignorance and lack of capacity. This has given foreign firms an opportunity to control our trade,” Kanamugire pointed out.However, shippers told the Business Times that local companies lack financial capacity and confidentiality in their operations. “Most local firms are expensive and also lack the competence to be trusted with billions of dollars,” said one importer who asked not to named. Charles Kareeba, the chairman of the Uganda Shipper’s Council, however disagreed saying that the only way local companies can be boosted is by doing business with them. “All the big shipping and insurance firms in Europe and Asia expanded not because they had the domestic business support. How do you expect local companies to get financial capacity when you are giving all the business to foreign groups, which you don’t even know?” Kareeba argued. He noted that local importers are overcharged by foreign companies because they have limited knowledge on the tax and legal regimes in these countries. Kenneth Mwige of Intergovernmental Standing Committee on Shipping said that it was very important for Rwandan shippers to get organised as per the international trade requirements. “The whole chain of international trade is organised but owners of cargo are not. Its therefore very important that cargo owners get organised so that when problems persist they know who to contact.” Andrew Othieno, head of research and analysis at Private Sector Federation (PSF), said that because Rwanda remains the only country without a shipping council within the region they were pushing traders to learn from other members in the region while also pushing to form one.According to Jairus Esibwe, a senior lecturer at Maritime Management Institute of Mombasa, insuring with local firms helps save foreign currency and builds savings for investment. He noted that the best way to help cargo owners who are bound by the contracts of foreign companies was to improve efficiency and pricing of cargo handling as well as promoting competition.According to the Kigali Marine Insurance in Risk Mitigation Report, Rwanda’s balance of payments on freight and insurance inflows increased from 3.3 per cent in 2011 to 3.7 per cent in 2012, leading to a reduction in outflows from negative $352.2m to negative $396.7m.The intergovernmental standing committee on shipping was formed in 1967 to serve the region and international community as a one-stop centre of excellence for regional maritime and total logistics on coastal shipping services as well as inland waterways. It is comprised of Kenya, Tanzania, Uganda, Zambia and Rwanda, which joined recently.