Kenya, Dar increase barriers to trade, against the Common Market Protocol

Sunday August 27 2017

Oil tankers delivering fuel to Uganda from

Oil tankers delivering fuel to Uganda from Kenya queue at the Busia border. PHOTO FILE | NATION 

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Tanzania more than tripled the number of non-tariff barriers (NTBs) it imposed on its regional partners last year, according to the East African Community Common Market Scorecard 2016.

Kenya more than doubled the number of barriers, and Uganda recorded the highest compliance rate.

According to the scorecard, Tanzania’s NTBs rose from seven to 24 and Kenya’s increased from 10 to 23, putting into doubt the two countries’ commitment to easing intra-EAC trade.

In Uganda, at least 18 of the 20 capital transactions were restriction-free.

The scorecard, which analyses the movement of capital, services and goods, shows that the EAC member states are enacting laws and enforcing regulations that go against the spirit of the Common Market Protocol.

In the past year, member countries have either passed new laws, amended regulations or are in the process of doing both, which will have a negative impact on some of the provisions of the EAC Common Market Protocol.

Trade relations

At a meeting in Dar es Salaam earlier this month, Kenyan and Tanzania businessmen under the Tanzania Private Sector Federation (TPSF) and the Kenya Private Sector Alliance (Kepsa) deliberated on trade relations between the two countries, highlighting some of the barriers that are against the spirit of integration.

“The local content shareholding requirements by countries within the region restricts investment from other EAC countries because they are treated as foreigners. It is inconsistent with the provisions of the Common Market Protocol,” TPSF chief executive officer Godfrey Simbeye said.

On the movement of capital, Tanzania is said to be proposing media laws that are inconsistent with the Protocol.

The country’s Media Services Act, 2016, which is awaiting a ministerial commencement date, and the Media Services Regulations, 2017 are said to require foreigners to show 51 per cent local shareholding for issuance of print media licences.

The Media Services Act, 2016 defines a “foreigner” as a person who is not a citizen of Tanzania.

Uganda’s Insurance Bill, 2016 requires funds reflected in companies’ balance sheet to be invested in the country with the approval of the Bank of Uganda.

Rwanda also introduced a pension regulation last September that prohibits the country’s schemes from investing more than 15 per cent of their total value of assets outside the country.

On the movement of services, at least five Tanzanian laws with measures inconsistent with the Protocol were enacted last year and early this year. Kenya, through its high court, passed two Common Market rulings that favoured Tanzania.

Mandatory local partnerships

Tanzania has already enacted the Fisheries Institute Bill, 2016 and the Agricultural Institute Bill, 2016, which require mandatory local partnerships. The Medical, Dental and Allied Health Professionals Bill, 2016 is still in parliament.

It proposes additional clearance by the Medical Council and a limited practice licence for non-residents. The country also enforced the Immigration (Amendment) Regulations, 2016, which requires EAC nationals to buy $250 passes to engage in business, their profession or assignments.

Kenya restricts professionals in the law and engineering sectors from practicing within its territory. For instance, the Advocates Act, Cap 16, Section 11 (Amended 2012) restricts advocates from other EAC partner states from Kenyan courts unless accompanied by a Kenyan advocate.

Registration of foreign national (non-Kenyan) engineers is only allowed if at least 51 per cent of the shares in the firm are held by Kenyan citizens.

“On facilitating professionals, I recommend that the EAC harmonise the definition of local content to help address entry by professionals and address restrictions on entry,” said Kepsa governor George Owuor.

Kenya’s principal secretary for trade Chris Kiptoo said that they are creating regional laws that elimination non-tariff barriers.

“We have had several documents on trade, movement of goods, services and capital, but in a disjointed manner. We are harmonising these issues so that policies complement rather than compete with each other,” Dr Kiptoo said.

Uganda has proposed changing its Investment Code Bill, 2017, which is currently under consideration by Cabinet. The code is proposing an amendment to include EAC residents and citizens as domestic investors.

The code currently defines a “foreign investor” as a person who is not a citizen of Uganda, or a company in which more than 50 per cent of the shares are held by a non-Ugandan citizen.

Uganda’s permanent secretary in the Ministry of EAC Affairs, Edith Mwanje, said that they plan to place the region under one banner to foster integration.

“We need national policies to emphasise local content and harmonise regional policy,” Ms Mwanje said.