EAC Trade Report

Trade Report: What next for President Kikwete as coalition of the willing emerge in EAC?

Three Tanzanian nationals have gone to the East African Court of Justice to stop three EAC countries from sidelining Tanzania in the integration process.

Messrs Ally Hatibu Msanga, David Geofrey Makatha and John Adam Bwenda from Arusha, Tanzania want presidents Uhuru Kenyatta (Kenya), Yoweri Museveni (Uganda) and Paul Kagame (Rwanda) stopped from holding meetings that exclude Tanzania and Burundi.

They also want the court to stop the three leaders from implementing resolutions agreed during three meetings held between June and October this year in Entebbe, Mombasa and Kigali..

Should the court grant their wish, the three leaders will stop the construction of the multi-billion dollar standard gauge railway line connecting Mombasa through Nairobi to Kampala and Kigali, Rwanda. It is expected to be extended to South Sudan at a later date.

During their meeting in Mombasa in August, the three leaders commissioned berth 19 at the Port of Mombasa. Through their joint efforts, movement of goods from Mombasa to Kigali has improved greatly. It now takes only eight days to transport a container from Mombasa to Kigali down from 15 days.

 

President Jakaya Kikwete: The man to determine the future of EAC?

By EA Trade Reporter

President Jakaya Kikwete must be a disturbed man. He played a crucial role in the re-birth of the East African Community (EAC) over a decade ago.

A few years to his retirement, President Kikwete must decide whether Tanzania will remain in the community or not. For now, he has stated that his country would not quit despite what appears as a well calculated move to sideline the second largest economy in the bloc.

Even as bickering continue, many an East African would hope that President Kikwete has not lost the vision he had for the community.

In one of his speeches in 2005, ‘The Community must have substance’ President Kikwete made a revealing statement.

He said: “The Community must have substance. The programmes of the Community should be concretized and the benefits of coming together made real to the people.

The operations of the Customs Union should stimulate production, trade and investments in the region. Free movement of the factors of production, which is the centrepiece of the envisaged Common Market, should further enhance regional development.

 

The day Tanzania withdrew from Comesa

Shortly after the re-birth of the East African Community (EAC), Tanzania decided to withdraw from the Common Market for Eastern and Southern Africa (Comesa) in favour of the Southern African Development Community (SADC).

Tanzania was the third country to withdraw from the 21 member body in 2000, after Mozambique and Lesotho.

The then Tanzania President Benjamin Mkapa attributed the withdrawal on economic reasons though sources say other considerations could have contributed to the move.

"Our reason for withdrawal is simple. We are party to too many regional trading organisations. The sum effect of this means that our membership is extremely costly to sustain and we must rationalize our participation in such ventures." The membership fees, among other things, are too high to maintain,” said straight-talking Mkapa

"The idea of African brotherhood is often just a cover-up for laziness. We must see what is achievable in our circumstances and evaluate all decisions. In terms of regional economic integration, sentimentality is not enough. We really have to be frank and honest." In other words, there is no need for economic integration for the sake of being seen to work together while the integration does not make economic sense.”

 

Tanzania torn between two lovers

 

Posted by: The People in Development Agenda November 13, 2013

As the clock ticks towards the set date for the full integration of the East African Community, Tanzania seems to be weighing its option on whether its development interests will be best served in the EAC or the Southern African Development Community (SADC).

Metaphorically, in the EAC, Tanzania is like a small sister who has to scramble for the pie against her big sister Kenya. Two weeks ago, Tanzania skipped the EAC heads of states summit on infrastructure held in Kigali, Rwanda.

The three day meeting was attended by President Uhuru Kenyatta, Uganda’s President Yoweri Museveni and the host-Paul Kagame.

President Jakaya Kikwete of Tanzania and Pierre Nkurunziza of Burundi skipped the meeting that saw the present states jointly launch a Single Custom Territory aimed at eliminating the remaining Non-Tariff Barriers and boost business among the partner states.

Kikwete, however, says that he was not invited. Looking at the situation from an economical sense, the Southern African Development Community (SADC) continues to be the main trading partner of Tanzania among other African blocs for the two consecutive years.

 

EAC must tackle infrastructure deficit to unlock economic potential

By Benson Kathuri

Africa has played host to leaders of the world’s economic superpowers in the recent past. They in include Chinese President Xi Jinping and U.S President Barack Obama who concluded a tour of Senegal, South African and Tanzania Tuesday.

Unlike before, the talk between these leaders and their African counterparts revolved around increasing trade and not donor aid. African leaders were particularly keen on infrastructure development ranging from roads, electricity to railways.

President Obama was categorical that it was only Africans who can develop Africa. His administration supports a partnership that would ensure increased trade between the two regions and beyond.

In March, leaders of the BRICs block, Brazil, Russia, India and China met in South Africa exploring ways to strengthen trade ties with the continent. The continent, for long dismissed as hopeless is developing into a destination for investment.

However, many challenges still remain. Despite the high return on investment, the region is still the most expensive to do business. Inadequate infrastructure, weak policies and institutions, corruption and lack of human skill are some of the challenges investors have to contend with.

 

New found mineral wealth calls for faster integration in EAC

The East African integration process enters its second decade with renewed hope after huge deposits of gas in Tanzania and oil in Uganda and Kenya were discovered.

Application by South Sudan to join the East African Community (EAC) also provides another big opportunity considering that the country is already a major oil exporter.

The country that is in constant conflict with Sudan has suffered huge losses in recent times after a dispute over the costs of exporting the commodity with the northern neighbor forced Juba to shut its oil fields.

Sources now say exportation has resumed after a peaceful deal brokered by the African Union but this is likely to recur and hence the urgency for the country to get an alternative route to export the commodity that is the sole foreign exchange earner for the young democracy.

South Sudan government led by President Silva Kiir has expressed its desire to have an oil pipeline through Kenya to the Port of Mombasa. A major highway to the landlocked country would also boost its economy.

Though Kenya’s retired President Mwai Kibaki had initiated a major infrastructural project comprising of a modern railway to Sudan and a new port at Lamu to serve the landlocked countries that include Ethiopia, regional leaders must fast track it.

Uganda’s President Yoweri Museveni has raised the red flag saying the resource now calls for the leaders to fast track the EAC integration process that is now at the common market stage.

A common market should allow free movement of all factors of production, including workers but his has not happened yet as most partner states have not realigned their relevant laws to conform to the common market protocol.

 

Build roads, ports and generate electricity but do not forget policies and regulations that drive trade

 

One of the greatest achievements of the East African integration process is the rehabilitation and building of new roads across borders and within the countries.

EAC leadership has not only showed keen interest to push infrastructure development a notch higher but they have so far walked the talk.  It is now easier and faster to move goods across all the major corridors.

During the last meeting in Nairobi in November last year, EAC Heads of State renewed their commitment to continue the agenda and focus also on other key infrastructure projects like ports and energy.

The leaders under the then chairman of the EAC Heads of States Summit Kenya’s President Mwai Kibaki resolved to modernize and expand the EAC railway network and ports as well as review the performance of the concessioned railways.

The Kenya-Uganda railway was concessioned for 25 years almost a decade ago but its performance has not been impressive as it accounts for less than 10 per cent of goods cleared from Mombasa port.

On energy, the leaders want the EAC Power Master Plan implemented incorporating projects from Burundi and Rwanda, in an effort to share and pool the power resources in the region.

With the region that has committed itself to revamp industrialization, cheap and reliable power becomes critical to its success.  Less than 10 per cent of the entire population in the region is also connected to electricity.

The region is also on the verge of becoming a major oil and gas exporter with oil deposits now discovered in Kenya and gas in Tanzania. This calls for new oil refineries and associated facilities like pipeline.

 

Make forthcoming general elections in Kenya a major priority in EAC

 

Kenyans have a case to show the world that they are firmly back on the democratic path by holding peaceful, credible and transparent general elections on March 4 this year.

The electorate will not only be picking a new president to succeed President Mwai Kibaki who retires after the mandatory two five years term but will also be creating new governance structure under the proposed county governments in the new constitutional order.

A repeat of post election violence witnessed after the 2007 disputed presidential elections would create uncertainty of the country as a destination for both domestic and foreign investment.

Many investors are holding to their positions awaiting the outcome of the poll. A successful election would trigger enhanced investment in the country seen as a regional hub.

Kenya’s election is a regional issue as well. Land locked countries like Uganda, Rwanda Burundi and some parts of the Democratic Republic of Congo rely on Kenya to export and import goods.

During the 2007 mayhem Ugandan economy suffered massively after rioters uprooted sections of the Kenya-Uganda Railway within Nairobi. With the Northern Corridor running from Mombasa Port to Kampala closed by the riotous mob, it was impossible for the country to get its regular supplies of goods.

 

Can EAC rise to the occasion and remove all barriers that hinder trade in this decade?

By Benson Kathuri

Two months after a delegation from the East African Community (EAC) defended their trade policies at the World Trade Organisation (WTO) in Geneva, Switzerland; it is not yet clear what the team aimed to achieve.

Other than the usual chest thumping saying the region has enormous investment potential, not much in terms of policy and specifics came from the team led by Dr William Mgimwa, Tanzania Finance Minister.

WTO members who included Australia, Brazil, Canada, China, European Union, Japan, India, Korea, Pakistan, United States, and Turkey, had asked specific questions about the going on in the region and for good reasons.

The world is now looking at the EAC region with a population over 120 million people as a viable market that serious investors from these countries can look at. But the region remains a high cost destination to do business.

The region remains underdeveloped with contribution of manufacturing to GDP remaining relatively low, at less than 10 per cent in general.

Low productivity, underpinned by lack of innovation, the high costs of inputs, including unreliable and expensive power supply, and the unskilled labour force are, inter alia, the main reasons behind the sector’s poor performance.

The potential of the services sector constitutes that remain the main economic activity remains untapped while improvements in transport services and in regulating banking services remain a challenge

 

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