The East African Community (EAC) may have to blame itself for slow trade between its partner States, even though the bloc has some of the most ambitious business protocols on the continent.
In spite of these, trade between members has reduced from 16 percent to 14 percent in recent years, signaling persistent protectionism and defiance of the bloc’s policies.
The EAC passed the Customs Union, and Common Market Protocol but private sector members drawn from the eight partner States under their umbrella body, the East African Business Council, argue that a new approach to the EAC integration is urgently required to reverse the trend.
They presented their views to the Ms Veronica Nduva, the EAC Secretary General, at an event this week. They spoke at the EABC- CEOs- EAC Secretary General Round Table held in Arusha on August 21, 2024.
EABC vice chairperson Dennis Karera said trade in services has suffered most.
“Lack of harmonisation of mutual recognition of professionals, failure to abolish work permits and implement the EAC trade dispute remedies, liberalisation of air transport services, harmonisation of domestic taxes and elimination of long-standing non-tariff barriers are hampering the EAC,” said Mr Karera.
Mr Karera said the last seven years have not been good for the business community between the EAC and the EABC, terming growth pace as slow. It is the period member States were supposed to completely accommodate the protocols, however.
“In the recent past, we have been trading at 16 percent but today, we have dropped to 14 percent. Where are the problems?” he said.
“The EAC economy is projected to grow by 5.1 percent in 2024 and 5.7 percent in 2025. Yet we are only four months left in 2024 and we are not sure we shall meet that projection.”
The council, however, sees engagements with officials of the EAC and governments as crucial to help reverse the trend.
The EAC set itself four main pillars: The Customs Union, Common Market, Monetary Union and Political Federation. The the first two (CU & CM) are yet to be fully adopted by partner States and it has got complicated after the EAC admitted new member nations; Democratic Republic of Congo and Somalia, to the fold, long after the protocols were passed. The two countries, as well as South Sudan which joined in 2016, must play catch-up.
“The Customs Union is not respected. There is so much to be followed but people do not respect it. When we go back to our respective countries, we pick and choose what we should follow and what we shouldn’t. It kills the spirit and kills the practice,” said Karera.
“We don’t follow the Customs Union as we should and we need to solve those problems at the source, which is with the ministers of trade and EAC ministries, customs union officials, and the revenue bodies in all partner States.”
The main objective of the Customs Union is formation of a single customs territory, which would mean that partners offer a common taxation regime for imports into the bloc and provide privileges to goods originating from one member and sold to the other.
Key achievements of the Customs Union, which came into operation in 2005, include the reduction of non-tariff barriers and enriching the business environment in the region.
The Single Customs Territory has helped transit goods to be cleared at the first point of entry in EAC, weighbridges removed, police and customs checkpoints reduced, computerised clearance introduced and electronic cargo tracking systems in place.
Sometimes, however, countries bicker on where goods have actually been manufactured, especially when pointing to ingredients used, and when those raw materials have been mostly imported from elsewhere.
At other times, sanitation and other non-tariff barriers become a source of dispute, slowing clearances. However, it is the Common Market with its six freedoms that have been most troubling to implement. It provided for free movement of goods, persons, labour/workers, services and capital, right of establishment and right of residence.
“Free movement of labour across the region has not happened. Mutual recognition agreements have not been signed. Today, lawyers from Arusha (Tanzania) here cannot go and start practice in Kigali,” said Karera.
“Engineers from Kigali cannot build houses in Arusha. Teachers don’t move freely. Pharmacies in Nairobi cannot open up in Arusha. I had to use my passport to come to Tanzania despite the agreement seven years back that lets you cross these borders with an ID. Services don’t move.”
“We need to initiate the commencement of negotiations for liberalisation of the remaining non liberalised five sectors which are energy, environment, health, construction, recreational and social services.”
Ms Nduva pledged to follow up on EAC Council directives and decisions, particularly those relevant to the private sector. But one problem with those movements is that they found some countries unprepared and have had to learn along the way.
Uganda didn’t have national IDs when the protocols were passed and had to massively register its people to ensure they enjoy the reciprocal service offered by those already with national IDS such as Rwanda and Kenya. But while Uganda, Kenya and Rwanda allow IDS between them, Tanzania which doesn’t have national IDs insists on passports to allow in nationals from these countries.
Nduva committed to ensuring that the Sectoral Council on Legal and Judicial Affairs meets to facilitate the adoption of any pending EAC Trade instruments.
“We have had a challenge that the EAC sectoral council on legal and judicial affairs has not had the chance to meet,” said Nduva.
Quick finalisation
“I’m committed to engage with the various policy organs to ensure quick finalisation of these instruments to ensure that includes the EAC NTB Elimination Act, revised schedules of commitment on the progressive liberalisation of services, mutual recognition agreements, EAC standardisation, Accreditation and Conformity Assessment (SACA) Act and Metrology are on track.”
Ms Nduva further emphasised the EAC’s progress in border efficiency through the implementation of One-Stop Border Posts (OSBPs), which have led to a 70 percent reduction in border crossing times and generated annual savings of over $63 million.
“Additionally, 274 Non-Tariff Barriers (NTBs) have been resolved since 2007. The EAC has also developed and operationalized the NTB App to simplify NTBs reporting,” she explained.
In his contribution at the panel discussion, Mr Vimal Shah, the EABC Chairman emeritus, recommended that EAC Partner States eliminate Stays of Applications on the EAC Common External Tariff and refrain from Country Specific Duty Remissions.
“We are saying to the whole team here that everyone coming to the EAC should be a decision maker,” said Shah.
Shah also emphasised the need to adopt digitisation and reduce transport and logistics costs to enhance the competitiveness of the EAC bloc.
The acting Executive Director of EABC, Mr Adrian Njau, said that as the Voice of the Private Sector in East Africa, the EABC has continuously advocated for policies that unlock barriers and catalyze trade and investment within the region.
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Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.
