The 16th ordinary meeting of the heads of states of the East African Community (EAC) was held on the 20th February 2015 in Nairobi Kenya. These Presidents of Tanzania, Kenya, Uganda, Rwanda and Burundi made a number of resolutions. Among them is the resolution to speed industrial development in the regional block through banning importation of second hand clothes and vehicles popularly known as mitumba in Kiswahili. The need for industrial development in this part of the world is very clear if development goals are to be attained. Whereas the need for industrial development in EAC is uncontested territory, the routes through which industrialization of the sub-region is to be attained is surely contested and subject to debate. There are various perspectives through which this seemingly political decision to industrialize the EAC through banning of second hand clothes and vehicles can be looked at. In this article, the author gives selected economic perspectives on the matter. Why mitumba consumption? Before any move to ban second hand clothes and vehicles in this part of the world one has to answer the why mitumba question. There may be various schools of thoughts on the matter. In the final analysis however it is likely to boil down to cost and at times quality factor. If one was to take representative social-economic profiles of consumers of second hand clothes in Tanzania and arguably the rest of the EAC, one is likely to see the majority belonging to lower social-economic strata. For vehicles, they will...

Kampala. Intra-regional trade between the East African Community (EAC), Common Market for Eastern and Southern Africa (Comesa) and the Southern African Development Community (SADC) has grown threefold in a period of 10 years. Latest statistics show the combined intra-trade of the three regional economic communities (RECs) for the period 2004 to 2014 grew from $30 billion (about Shs87 trillion) to $102.6 billion (about Shs289.7 trillion). In this period, Comesa alone recorded growth from $8 billion (about Shs23.2 trillion) to $22 billion (about Shs63.8 trillion). Comesa is made up of Uganda, Kenya, Rwanda, Burundi, the Democratic Republic of Congo, Eritrea, Ethiopia, Egypt, Sudan, Comoros, Djibouti, Libya, Madagascar, Malawi, Mauritius, Seychelles, Swaziland, Zambia and Zimbabwe. SADC, on the other hand, registered growth from $20 billion (about Shs58 trillion) to $72 billion (about Shs208.8 trillion). SADC is made of South Africa, Botswana, Lesotho, Namibia, Swaziland Mauritius, Zimbabwe, Madagascar, Malawi, Mozambique, Tanzania, and Zambia. EAC saw its growth in trade grow from $2.6 billion (about Shs7.5 trillion) in 2004 up to $8.6 billion (about Shs24.9 trillion) realised in 2014. Uganda, Kenya, Tanzania, Rwanda and Burundi make up the EAC. Giving an update on the Tripartite Free Trade Area negotiations, the Secretary General of the Common Market for Eastern and Southern Africa (Comesa), Mr Sindiso Ngwenya, said: “This growth has taken place on the basis of the individual free trade areas (FTAs) of the three RECs”. Mr Ngwenya said the establishment of the Comesa-EAC-SADC free trade area will follow the same growth path, however at...

The East Africa Community (EAC), comprised of Burundi, Kenya, Rwanda, Tanzania, and Uganda, is one of the leading regional economic organizations in sub-Saharan Africa and has made great strides in recent years toward integrating the economies of its partner states. It has established a free trade area and a customs union, and is working toward a common market. THE U.S.-EAC COOPERATION AGREEMENT The U.S.-EAC Cooperation Agreement on Trade Facilitation, SPS, and TBT commits both the EAC and the United States to three objectives: IMPLEMENT THE WTO's TRADE FACILITATION AGREEMENT - The Agreement commits the parties to cooperate on customs issues, including the implementation of the World Trade Organization (WTO) Trade Facilitation Agreement, reducing red tape and unnecessary formalities at borders decreasing border release times, and implementing other positive reforms laid out in the WTO Trade Facilitation Agreement to help streamline and facilitate trade. This will build on the EAC's own work on customs reforms, which have resulted in substantial reductions in the time and costs of moving goods across borders within the EAC. For instance, container transit times from Mombasa, Kenya, to Kigali, Rwanda have declined from 21 days several years ago to six days, while associated transport costs are down by over $1,700 per container. ENHANCING FOOD SAFETY, PLANT AND ANIMAL HEALTH - The Agreement provides for U.S.-EAC cooperation and capacity building related to food safety and animal and plant health standards. While a majority of the region's people are involved in agricultural production or processing, the export potential...

On Thursday, the U.S. signed a trade agreement with the East African Community (EAC), comprising Burundi, Kenya, Rwanda, Tanzania and Uganda, to ease trade flows and provide American technical assistance. East Africa has some of the fastest-growing economies in the world, and the recent discovery of oil in Kenya and Rwanda make the region even more attractive in terms of future development. Trade between the U.S. and the EAC already increased 52% in 2014 to $2.8 billion, and this agreement will help it to continue expanding. The African countries’ main exports to the U.S. are agricultural goods and textiles, while U.S. exports have so far consisted in large part of heavy machinery and aircraft. But the rapidly expanding middle class throughout East Africa is a tempting and largely untapped market for American firms which sell consumer goods. The U.S. has had bilateral partnerships with the individual EAC states since 2013 but this agreement marks the first of its kind with the regional trading bloc. The mutual benefits of the EAC are becoming increasingly evident for its members, and the organization is taking regional integration seriously. Intra-EAC formal trade rose from $3.7 billion in 2010 to $5.8 billion in 2013, and it is further reducing internal non-tariff barriers. “Container transit times from Mombasa, Kenya, to Kigali, Rwanda have declined from 21 days several years ago to six days, while associated transport costs are down by over $1,700 per container,” according to the Office of the U.S. Trade Representative. Furthermore, “One-Stop-Border-Posts” soon...

The vision of free cross-border movement within the 19-member Comesa bloc has drawn closer to reality after three more states scrapped the visa requirement for travellers. Mauritius, Rwanda and Seychelles have scrapped visas on nationals of Comesa member states while Zambia has issued a circular waiving visas for the region’s citizens who travel for official business only. The decisions are part of efforts to implement the bloc’s Protocol on Free Movement of Persons, Services, Labour and Rights of Establishment and Residence in the region. “Although, we have not recorded new signatures and ratifications, a number of member states have showed strong commitment and promised to speed-up the process of signing and ratifying the protocol. The government of the Republic of Zambia has sent an official letter which states that the Protocol will soon be signed,” Mr Houssein Guedi Absieh, the Immigration Officer at Comesa, said. So far four countries; Burundi, Kenya, Rwanda and Zimbabwe have signed the protocol on free movement of persons. Only Burundi has fully ratified it. Kenya and Rwanda are, however, already fully complying with most of the provisions of the protocol before it is fully implemented by the bloc. The two countries have promised to ratify the protocol soon. The ease of movement within the 19-member Comesa bloc is set to be received positively in Kenya which has made the bloc its single-most important destination for export. Official data indicates that the region accounted for 33 per cent of the Sh502 billion worth of exports that...

The recent oil price volatility provides us with a strong warning not to over-rely on oil revenues for national budgets and development. We have recently witnessed a number of oil-dependent countries which are facing socio-economic disorientation as revenues plummet. One such country is Nigeria. When we studied African geography in the 1960s, both Nigeria and Kenya were successful agricultural economies that sufficiently fed their populations and exported enough produce to finance their imports. While Kenya remained an agricultural economy, Nigeria at some point discovered oil and unwittingly prioritised it at the expense of agriculture and other economic sectors. For nearly 60 years, Nigeria has remained heavily dependent on oil for their foreign currency requirements and for funding national budgets. The country’s economic fortunes or failures therefore follow the plot of global oil prices. Kenya’s is a fairly balanced economy with low exposure to global commodity dynamics. In addition to agriculture, it has developed other key economic sectors like services (financial and communication), tourism, manufacturing, mining and energy. Although Kenya is yet to be labelled an oil producer, it has discovered about 0.6 billion barrels of oil in Turkana basins but these are not likely to be monetised until about 2017/18. Kenya has, however, benefited from foreign direct investment (FDI) from oil and gas investors. Without oil Kenya has performed fairly well, and can still continue to succeed without oil. The newly discovered oil should therefore be treated as incremental to the existing GDP and should not be permitted in any...

NAIROBI: Kenya is rated as the worst mining destination in Africa and only slightly better than Hungary and Malaysia in terms of global rankings, according to the 2014 Fraser Institute Annual Survey of Mining Companies. The survey, which canvasses the views of mining executives from around the world, has placed Kenya at 120 out of 122 jurisdictions worldwide. Kenya's performance was dismal in terms of its policy perception index and best practice mining potential. The finding by the Canadian firm that Kenya's attractiveness as a mining investment destination is worsening comes at a time when the Senate is about to debate amendments to the Mining Bill, before it is enacted into law. There are also numerous cases still pending that involve cancellation of mining licences of various firms by authorities. According to the report, when considering both policy and mineral potential in the Investment Attractiveness Index, Malaysia ranks as the least attractive jurisdiction in the world for mining investment. This is a significant drop for Malaysia which ranked 70 out of 112 in 2013. In the bottom 10 (beginning with the worst) are Hungary, Kenya, Honduras, Solomon Islands, Egypt, Guatemala, Bulgaria, Nigeria and Sudan. Kenya and Bulgaria experienced large drops from position 79 and 57 (of 112 overall) in 2013, respectively. The Investment Attractiveness Index is a composite index that combines both the Policy Perception Index and results from the Best Practices Mineral Potential Index. The report, however, notes that while it is useful to measure the attractiveness of a...

Aviation experts from the Northern Corridor countries have converged in Kigali to discuss a concrete legal framework as the region prepares to fully liberalise the airspace among partner states. The two-day meeting has attracted civil aviation experts from Rwanda, Uganda, Kenya and South Sudan to prepare a workplan and budget for the implementation and management of the Northern Corridor airspace, accordning to Tony Barigye, the Rwanda Civil Aviation Authority (RCAA) communication manager. “They are also expected to prepare a memorandum of understanding on search and rescue, as well as aircraft accident investigation,” Barigye told Business Times in a telephone interview yesterday. “This meeting is yet another step to the liberalisation of the airspace among the Northern Corridor states. It will also help deepen the EAC integration process.” It comes on the backdrop of agreements that have been signed between states to relinquish ‘Fifth freedom rights’ as one of the ways of liberalising the regional airspace,” he added. Last year, Rwanda, Uganda and South Sudan signed an agreement establishing a legal framework paving way for negotiations that will see local airlines attain ‘Fifth freedom rights” on the Juba-Nairobi, Nairobi-Juba routes. Under the agreement, local airlines, including RwandAir, have the right to carry passengers from one country to another and from that country to a third country. Monique Mukaruliza, Rwanda’s co-ordinator for the Northern Corridor integration projects, said the initiatives will enhance competition in the aviation industry and, ultimately, make air transport in the region affordable. Alex Buterere, the RwandAir senior manager...

KAMPALA, Uganda – Southern and Eastern African Trade, Information and Negotiations Institute (SEATINI-Uganda) is asking the Uganda government to go slow on revising the work permit system in light of dispensing the requirement for Kenyans and Rwandans. Recent news reports have been awash with reports about Uganda’s scrapping work permit fees for Kenyans and Rwandans. This move is in line with the commitments made by the East African Community(EAC) partner states; Uganda, Kenya, Rwanda, Burundi and Tanzania in the signing and launch of the EAC Common Market Protocol on July 1, 2010 to promote the free movement of labour across the region. It is expected that this process will enable movement of labour from areas of surplus to areas of scarcity where it is better paid. Since the launch of the Protocol high work permit fees have been fronted as a major challenge to realization of the free movement of workers, and activists have been agitating for their removal. The move by Uganda is therefore timely and an achievement in promoting regional integration especially since both Rwanda and Kenya scrapped these fees five years ago. However in order for Ugandans to benefit from the free movement of workers, there is need to tread carefully especially given the skills gaps in the market and focus on addressing internal productivity challenges. The recent launch of the labour information system is a strong achievement for Uganda in this regard and should be expedited. There is need to expedite curriculum reforms on skilling. Presently...

WASHINGTON, USA - The United States Trade Representative (USTR) Michael Froman, last week announced new moves to ease trade between the US and the East African Community. “This agreement will help us lift the burdens that trade barriers impose, unlocking opportunity on both our continents,” he said in Washington. According to the USTR, trade of goods between the US and the five countries totaled $2.8 billion in 2014. The agreement also establishes a new five-year, $64 million trade and investment hub in East Africa focused on broadly increasing exports under the African Growth and Opportunity Act (AGOA), while expanding and diversifying regional agricultural trade and food security. Froman said , “Today’s agreement is an important milestone for deepening what has already proven itself to be a promising and impactful partnership." Thursday’s deal will help the African nations further streamline the customs process, meet global standards on food protections and reduce other technical barriers to trade. According to a release from the Office of the Trade Representative, during a summer 2013 trip to Africa, President Obama announced the Trade Africa initiative to promote US.-Africa trade and investment, with the starting point in East Africa. With strides made there, the Obama administration wants to deepen that relationship by knocking down additional trade barriers in the region while expanding the U.S. reach to other African nations. “We see this agreement and all our work with the EAC to date as an important steppingstone, not the final destination,” Froman said. The EAC has been...