Free trade is an illusion if we ignore setbacks

Monday May 14 2018

Frank Matsaert, TradeMark East Africa CEO. FILE

Frank Matsaert, TradeMark East Africa CEO. FILE PHOTO | DIANA NGILA 

By LABAN-CLIFF ONSERIO
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TradeMark East Africa CEO Frank Matsaert spoke to Laban-Cliff Onserio on how the region can help boost borderless trade.

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You attended the launch of the African Continental Free Trade Area meeting in Kigali. Is there political will for its implementation?

Yes, in fact what excited me most at the meeting is the political will among countries. Africa has the political will to trade itself out of poverty.

The continent’s trade on a global scale is still insignificant, accounting for less than five per cent. For Africa to have a seat at the table, we need to increase trade within the continent.

We have the comparative advantage in trading with ourselves than externally. I have offered TradeMark East Africa’s support to the African Union and the United Nations Economic Commission for the process.

I have also been discussing how TMEA can help in knowledge exchange and partnerships.

Looking at the AfCFTA, does the potential it has for trade in Africa excite you?

The AfCFTA is like an enabling policy. Unless action is taken on the ground by addressing the challenges, it is unlikely to be fully realised.

You can have a good trade agreement but unless you are able to trade physically, you will not take advantage of it. I think the AU is realistic about that in stepping up the work that we [TMEA] do. That is why we are focusing on working with the EAC to start that process.

What were the views of investors on doing business in Africa at the recent CommonWealth business summit?

The long term potential for African investment is promising. There are a number of global and continental factors driving that. If the AfCFTA becomes reality, the investment potential increases.

Incomes are rising while the population is large, making investment in a single market strategic.

I experienced positive views on Africa at the London summit, and that is good. I think the potential for the Commonwealth to play this up in a post-Brexit world is strong.

The agenda was progressive: The barriers to investment are self-evident. Generally, high energy costs in East Africa have been the subject of unending debate. The connection to Ethiopia should help bring that down.

We are making progress in ensuring the stability of the investment climate, but more needs to be done to reduce the cost of trading. We also need to think more strategically about the skills gap. The two gateway ports, Mombasa and Dar es Salaam, are also key to trade.

What is your view on East African integration? 

No one can deny that there are challenges at the moment, which require continued leadership to overcome. The region is still the best preforming in Africa, but the number of challenges have increased.

However, I believe that through political will, the East African Community can overcome some of the short-term challenges.

Earlier this year, you launched a one-stop border post in Busia to ease movement of people and goods between Uganda and Kenya. How has this performed?

Independent surveys on the impact of the border posts has shown an estimated 70 per cent decrease in the time it takes to clear goods and people.

After we launched the border with the  presidents of Kenya and Uganda, I went back to have a look at the impact of the border on informal trade, and I saw a burgeoning 20 acres of wholesale markets, particularly on the Ugandan side. We did not expect that.

What do you see as its potential?

We are taking this experience and focusing on the external borders to East Africa, so the region can trade with its neighbours — Ethiopia, DRC, Malawi, Zambia and Mozambique.

TMEA has, for more than 10 years supported trade and investment in the region. You are now embarking on what you call Strategy 2. What does it entail?

Our aim is job creation through increased trade. I would like to go for a stretched target of about a million jobs. We want to increase trade in the region by reducing costs.

What is different about this programme is that we are going to do pilots to bring in anchor investment to diversify exports.

The potential for Kenya to attract investment in labour-intensive manufacturing is strong. We want to help that process  as one of President Uhuru Kenyatta’s Big Four initiatives.

This also applies for the other countries where we will be piloting the programme. We are calling it a trade logistics classroom approach and it will entail developing the infrastructure then the trade aspects to bring in plug and play factory investment and basically job creation.

In Kenya, we will be doing a pilot in the textiles industry.

We are also thinking of beginning operations in Zambia and Mozambique. We also want to bring in Ethiopia to the East African network. Our target is to lift over 1.8 million people out of poverty.