East African countries turn to neighbours for more trade

PUBLISHED ON November 20th, 2019

East African countries turn to neighbours for more trade

The value of intra-trade among East African Community partner states increased to $5.98 billion in 2018 from $5.46 billion in 2017, accounting for a 9.4 per cent growth.

This comes as member countries opted to trade with each other in the wake of falling demand for the region’s agricultural products in the US and the rest of the world.

The East African Community Trade and Investment Report (2018) shows that all EAC member states save for Burundi recorded growth in trade with their regional counterparts.

The report prepared by the EAC Secretariat shows that Uganda, Tanzania, Rwanda, South Sudan and Kenya’s combined exports to the EAC and Southern African Development Community regions amounted to $3.1 billion and $1.9 billion in 2018 respectively.

This shows, however, the growth in intra-EAC trade slowed down to 9.4 per cent last year compared with 24.8 per cent in 2017.

The positive trend signals the importance of intra-EAC trade that has been stifled by persistent trade disputes on rules of origin, non-tariff barriers, inadequate value addition to the agricultural sector and competition from other producers and regional blocs that benefit from export subsidies.

In 2015 and 2016, intra-EAC trade was in the negative territory.

Burundi’s total trade with other EAC partner states fell by 11 per cent to $150.9 million in 2018, from $162.6 million in 2017.

Kenya’s total trade with EAC partner states increased by 4.7 per cent to $1.95 billion in 2018 from $1.86 billion in 2017, mainly on account of increased total trade to Uganda, Tanzania and Rwanda.

According to the report, Rwanda’s total trade with EAC increased by 13.4 per cent to $638.8 million from $563.2 million in the same period.

Tanzania’s total trade with other EAC partner states increased by 14.6 per cent to $811.3 million, from $707.7 million while that of Uganda improved by 21.2 per cent to $2.05 billion from $ 1.69 billion.

However, South Sudan’s trade deficit with the EAC region declined by 15.7 per cent to $375 million, from $444.6 million in the same period.

According to the report, EAC’s increased exports to SADC excluding Tanzania was as a result of the increased benefits arising from the membership to the EAC-COMESA-SADC Tripartite.

EAC’s exports included agricultural products such as maize, sugar, rice, coffee and tea as well as manufactured goods.

The report notes that EAC’s exports to the European Union increased by only 6.5 per cent to $2.5 billion last year from $2.3 billion in 201,7 constituting about 17.5 per cent of the total EAC exports.

However, EAC’s exports to the US and the rest of the world fell by 20.6 per cent and 12.7 per cent respectively during the year mainly due to falling demand.

On the other hand, total EAC imports grew by 19.2 per cent to $38.3 billion from $32.2 billion, with imports from the EU amounting to $4.3 billion while intra-EAC imports grew by 13.9 per cent to $2.8 billion, accounting for 7.4 per cent of total EAC imports.

“This increased growth of intra-EAC trade signified the growing importance of intra-EAC merchandise trade,” reads the report.

Total imports from China, India and EU amounted to $7 billion, $3.9 billion and $3.7 billion respectively, constituting 18.1 per cent, 10.2 per cent and 9.8 percent of total imports respectively.

Imports from Asia and the middle East declined but still constituted 44.3 per cent of total imports.

The report notes that China, India and United Arab Emirates are still important trading partners.

“Overall, the region continued to register a trade deficit with the rest of the world in 2018 partly due to an increase in imports into the region, “the report reads.

EAC’s trade deficit grew by 39.4 per cent to $ 24.3 billion in 2018 from $17.4 billion in 2017.

East Africa is dependent on imports, especially from China, the Far East and Europe.

Its key imports include petroleum products, machinery, electronics, motors, iron and steel and food stuff especially rice and wheat.

Source: The East African

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