Private sector to blame for blocking trade, East African integration

Sunday July 31 2022

Trucks at Webuye in Bungoma County, Kenya, making their way to the Kenya-Uganda border at Malaba on January 17, 2022. PHOTO | BRIAN OJAMAA | NMG


The private sector has come in for blame for the enduring non-tariff barriers (NTBs) that have perennially choked trade in spite of policies to eliminate them.

At a retreat on the EAC Common Market held on July 20 in Arusha, it was revealed that NTBs have significantly contributed to the declining intra-EAC trade, which is below 20 percent.

What is more, local laws and regulations of partner states continue to present barriers to increased cross-border trade and investment. And these laws are often the result of lobbying by local business groups in a bid to protect themselves from the competition beyond borders.

Since the Common Market Protocol was passed 10 years ago, the EAC Partner States have managed to resolve 230 NTBs as at the end of February, only for new ones to emerge.

Read: EAC Common Market scorecard falls short

Business rivalry


“I have heard that business rivalry among individual companies that trade within the EAC borders canvass and connive to increase or reduce tariffs on their goods in order to deny others a chance to sell their goods,” said Betty Maina, chairperson to the EAC Council of Ministers and Kenya’s Cabinet Secretary, Ministry of Trade, Industrialisation and Enterprise Development.

She is also acting Cabinet Secretary for EAC and Regional Development.

“Some of the trade issues that the private sector raise in the form of NTBs could be sorted out at the individual government level and should not find its way to the EAC level,” she told the retreat.

Read: Tax disputes, trade wars headache for new EABC board

Diversification call

Businesses are also blamed for churning out similar products such as maize, eggs, and sugar but then impose internal taxes to prohibit the same products from being imported.

Speaking at the retreat, Ugandan President Yoweri Museveni observed that EAC partner states were competing to sell the same product instead of diversifying to give due advantage to the best or largest producer.

“Policy can make things fail. For instance, a country like Uganda easily produce enough food such as maize, milk and sugar, but we don’t produce a lot of rice like Tanzania does,” President Museveni explained.

He said it was better for Uganda to import more rice from Tanzania as it was better placed to produce more and efficiently than Uganda, instead of levying taxes on rice ostensibly to protect Ugandan rice growers.

Away from food, the implementation of the high charges and taxes in the region is contributing to high telecommunications and broadband internet costs.

Read: Lack of product diversity leaves East Africa exposed

These, together with high licensing and numbering fees, unharmonised inter-operator tariff rates and the non-adoption of the One Network Area (ONA) model across the EAC Partner States has contributed to the high costs of doing business.

“For instance, the cost of making a telephone call between Kigali (Rwanda) and Arusha (Tanzania) is similar to the cost of flying between the two cities,” said Prof Manasseh Nshuti, Rwanda’s Minister for EAC Affairs.

If the one network area is implemented, it would result in eliminating charges for receiving voice calls while roaming in Kenya, Rwanda, South Sudan, Uganda, the Democratic Republic of Congo and Tanzania.

Sovereignty vs freedom

“It is high time partner states implemented decisions they themselves agreed upon. This could save us a lot of time we spend in discussing what is not working under the CMP,” said Prof Nshuti. “Why can’t we all be under the ONA by the end of 2022?”

Government policy on agriculture (food), manufacturing, telecommunication, communication, the bureaucracy by civil servants manning the immigration and Customs, and partner states’ failure to cede sovereignty over the free movement of goods and services has contributed to the slow implementation of the common market.

In goods, the partner states have deviated from their commitments through application of tariff equivalent measures, resulting in an increase in non-tariff barriers while in services, they remain non-compliant in implementing their commitments, with the total number of non-conforming measures (NCMs) rising.

It is no better in capital as partner states maintain restrictions against freedom of movement of capital.