Regional trade hits $2.7m, just 5 years into Customs Union

In just five years of the Customs Union, trade within the East African Community has risen by 49 per cent.

Last year, it reached an all-time high of $2.7 billion in exports and imports, against $1.8 billion in 2005 when the region’s Common External Tariff started.

A publication of the EAC Secretariat, “Towards a Fully Fledged Customs Union” released in Kampala, says pioneer member states of the community — Kenya, Uganda and Tanzania — have reaped huge benefits from the Customs Union.

“Exports of Tanzania and Uganda to the EAC have recorded a phenomenal increase of 119 per cent and 125 per cent, respectively, since 2005. Kenya’s exports also rose by 25 per cent during the same period,” the publication says.

Five years ago, the private sector in Uganda and Tanzania — the lesser economies of the region — harboured deep fears over the opening up of their borders.

Their concerns were that more competitively produced goods from Kenya, attracting lower Customs duties, would flood their markets and kill local industries.

But their fortunes in the export sector have turned around more significantly than those of Kenya, the bloc’s biggest economy.

Ideally, there should never have been any fear in Uganda or Tanzania.

Rwanda and Burundi, for instance, which are smaller economies, acceded to the EAC Treaty only two years ago, but as of July this year, the two countries had already complied with the region’s Common External Tariff structure of zero rating for capital goods, 10 per cent for intermediary goods and 25 per cent for finished products.

The EAC publication — an audit of the Customs Union’s performance since its launch — relates a romantic chronology of East Africa’s integration, dating back to the construction of the Kenya-Uganda Railway.

The railway would shape culture, urbanisation and commerce between Kenyans and Ugandans, thereby becoming the first real symbol of socio-economic integration.

It also paved the way to the first “Customs Union” between Kenya and Uganda, established in 1917.

Two years later, Tanganyika joined this union. In other words, until its collapse in 1977 and the revival 12 years later, the EAC has existed since colonial times.

Officially though, the EAC became a reality only in 1967, and even when it collapsed a decade later, the region was never in doubt about the economic benefits of such a partnership.

Besides intra regional trade growing significantly since 2005, the region’s exports to the rest of the world have also been rising.