Business community wants EAC states to seek trade deal with UK as one bloc
Monday December 21 2020
The Hela Intimates EPZ Ltd factory in Athi River, Kenya. The EABC argues that it would be more beneficial if the region is marketed as a single investment destination. PHOTO | LUCY WANJIRU
The East Africa Business Council wants the region’s partner states to start negotiations with the United Kingdom, following the signing of the Brexit trade deal between Kenya and the UK.
The region’s private sector umbrella body made the appeal during its Annual General Meeting held virtually on December 16. It said that while it supports Kenya’s decision, the region’s enjoinment to the deal would enable the bloc to export larger volumes of goods and enjoy economies of scale by marketing as one investment destination.
“As EABC, we want to push for the EAC Secretariat to urgently start negotiations with the UK so that we can reach a consensus if possible as a bloc,” said Peter Mathuki, EABC chief executive, adding, “But in the absence of this, we must make sure that none of the partner states loses out on trade with the UK.”
Two weeks ago, Kenya signed an Economic Partnership Agreement (EPAs) with the UK worth £1.4 billion ($1.9 billion), which will ensure that all companies operating in Kenya, including British businesses, can continue to benefit from duty-free access to the UK market.
The deal was signed in London by the UK’s International Trade Minister Ranil Jayawardena and Kenya's Cabinet Secretary for Trade Betty Maina.
“The tricky part is that the EAC partner states are not categorised in a similar manner. So it puts Kenya in a corner because they are not at the same level as other partner states,” Dr Mathuki said.
Tanzania, Uganda, Rwanda, Burundi and South Sudan are categorised as Least Developed Countries (LDCs) by the United Nations, and thus could not be part of the deal.
The EABC boss said that even though the UK is yet to sign an agreement with the rest of the EAC, the partner states could still access the UK market because they are categorised as LDCs. Kenya is categorized as a developing country while the rest are LDCs. However, the deal has room for the EAC to join.
“While other partner states can export under EPAs ‘Everything But Arms’, Kenya must be on a negotiated agreement in order to enjoy free market access to the UK market.”
The “Everything But Arms” (EBA) initiative, introduced in 2001 under the European Union’s Generalised Scheme of Preferences (GSP) scheme, grants LDCs duty-and quota-free access for almost all products. As the programme’s name indicates, arms and ammunition are excluded.
EABC argues that it would be more beneficial if the region is marketed as a single investment destination. And also that some of the EAC partner states should work hard to graduate from the LDC category so that countries can better take advantage of the global economy.
“We all have a responsibility to improve the investment climate in East Africa to attract more investments into the region. Let’s wave the flag of Open Markets and East Africa,” said Nick Nesbitt, EABC chairman.
At the two-day virtual conference on Trade and investment opportunities in East Africa beyond Covid-19 each member of the EAC Partner States Investment Authority took the chance to sell what their part of the region had in store. Uganda, through Martin Muhangi, deputy director-General, the country’s investment authority talked of competitive electricity rates, and adequate labour, and that the government has identified 27 potential areas for industrial parks.
On its part, Zanzibar Investment Promotion Agency said it was moving beyond scaling up tourism to unlocking the potential of aquacultures such as fish processing and seaweed farming.
John Mnali, director of Investment Promotion at Tanzania Investment Centre (TIC) touted the reduced registration time for businesses in the country.
“Acquiring an investment licence in Tanzania has reduced to 14 days and we are working to reduce this further to seven days,” he said
The Rwanda Development Board said the country has introduced various incentives to attract investors such as the seven-year corporate tax holiday for investors putting up more than $50 million investments.
“Rwanda also offers a one-stop centre for investors with dedicated investment acceleration and aftercare services,” said Zephanie Niyonkuru, deputy CEO, Rwanda Development Board.