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25 May 2012
 

The Institute for Security Studies is a regional human security policy think tank with an exclusive focus on Africa. As a leading African human security research institution, the institute is guided by a broad approach to security reflective of the changing nature and origin of threats to human development.

 
 
   
 
 
Article by: Institute for Security Studies

By July this year, the Customs Union and the Common Market Protocols which promise free movement of people, goods, services and capital in the five countries that make up the East African Community (EAC), will be effected. Signed at the end of last year at the EAC headquarters in Arusha, the enlarged trading bloc will offer investors a larger market, and in the long term will aim to have a monetary union and eventually a political federation.


Such a move is applauded since it will aim to boost intra-regional trade and will enhance the accessibility to a larger trading bloc currently hindered by fragmented markets in Burundi, Kenya Rwanda, Tanzania and Uganda. While the regional bloc has a relatively small combined GDP of $73.3 billion, with a total population of 127 million, trade among the EAC states has jumped to 49% since 2005, according to the EAC Secretariat.


It is no doubt that the benefits of such a move will mainly benefit Kenya, with the region's strongest manufacturers, retailers and banking industry, the smaller economies will also benefit. Rwanda and Burundi will get a boost from cheaper and quicker transport of goods to and from the ports of Mombasa and Dar es Salaam.


However, for such a herculean policy to be implemented with far reaching benefits for the citizens in the eastern African region, a more harmonised approach towards the implementation of the long awaited Common Market is required. Despite not being subjected to duty, Kenyan exports to the other member states still reportedly spend days at border posts undergoing unnecessary scrutiny, especially at Namanga on the Tanzania border and to a certain extent at Busia-Malaba on the Uganda border. Such delays during inspection at the borders remains unfriendly to business and if not addressed, only deters the realisation of a Common Market and is damaging to trade within the region. A recent study by Rwanda's Private Sector Federation found that bribery at roadblocks can add more than $1, 000 to the cost of trucking a container through Uganda and Kenya.


As if this is not enough, according to a report in The East African, the Tanzanian Customs officials say they have not received any directive from the government to waive import duty. It has also been reported that while the Kenyan side is ready to open 24 hours, the Tanzanian side have actually cut working hours from 6am to 5pm - previously they worked until 6pm - and unconfirmed reports say that there are moves to stop working on weekends.


Thus, from the very onset, the benefits of the region's borderless trade seem very distant, as challenges such as a low purchasing power may inhibit demand for goods. As well, the EAC member countries produce the same products and raw materials, negating the scope for increased intra-regional trade. One long term benefit of greater cooperation would help the EAC to better negotiate their position in global trade talks such as the stalled Economic Partnerships Agreements being negotiated with the European Union.


It is time that the EAC considers fast tracking the borderless trade to ensure that its citizens benefit from an enlarged trading bloc. One such move is to create a single Customs clearance desk at the point of entry so that good can move without having to be stopped for further inspection. As well, the inherent weaknesses at the EAC secretariat and the ministries in charge of community affairs across the region will have to be addressed. Application of different benchmarks, bureaucracy, understaffing in government departments and lack of awareness of the borderless trade by citizens may delay anticipated benefits that accrue to free trade blocs.

 

While the EAC has no means of following up decisions arrived at in Arusha, and despite other enduring challenges, the EAC member countries must remain committed to fast tracking the borderless trade which will give the region's businesses a massive boost. Outstanding leadership and commitment from the EAC member countries is therefore required for the borderless trade to be realised. To do so, the EAC leaders must look beyond their own interests and look at honouring their commitments in realising a free trade zone that will benefit its citizens.


Written by: Sandra Oder, Senior Researcher, Peace Missions Programme, ISS Pretoria

 

 

Edited by: Institute for Security Studies
 
 
 
 
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