EAC scorecard: DRC admission a big win, trade rows slow business

Saturday January 01 2022
Trucks carrying goods at Uganda-Rwanda border post of Cyanika.

Trucks carrying goods at Uganda-Rwanda border post of Cyanika. PHOTO | FILE | NMG


The East African Community (EAC) is expected to expand its membership to seven this year in a landmark development that will see the admission of the Democratic Republic of Congo into the bloc by April.

But while this marks a huge stride in regional integration, several critical issues are still pending, including full implementation of the first EAC’s four pillars; the Customs Union (2005), and the Common Market (2010), Monetary Union and the Political Federation.

The profile of the bloc as a trade and investment destination has shrunk due to non-tariff barriers, too high cost of doing business, and unharmonised tax regimes.

Experts have pointed out that trade disputes and infrastructure bottlenecks could derail trade with the DRC, just like it has happened with South Sudan before it.

The failure to amend the Treaty on the rules and procedure that could speed up the decision-making process to accommodate new members has also slowed down the integration process.

An attempt by chairperson of the Heads of State Summit, Kenya’s President Uhuru Kenyatta, to amend the Treaty on the rules of procedure has been rather slow.


“Something that is very subtle but very important is the quorum for meetings. We wanted the Summit to make a decision on that,” said Adan Mohamed, Kenya’s EAC Affairs Cabinet Secretary and chair of the Council of Ministers.

“President Kenyatta is determined to improve the governance structure of the Community during his tenure.”

The Treaty establishing the EAC was written to accommodate the founding three countries Kenya, Uganda and Tanzania. But three more partners have joined the bloc and DRC is waiting in the wings. Burundi and Rwanda joined the EAC in 2007 while South Sudan joined in 2016.

“That rule has never been changed. Now we are six members, possibly going seven, and even more if Somalia is considered.

‘‘To have all those members present at a Summit is a herculean task,” said Mohamed.

“We have suffered a lot of setbacks in EAC meetings where five countries come and one doesn’t like something on the agenda, and they have to call it off. So, we are trying to amend the rules to provide for a two-thirds majority.”

Dr Peter Mathuki, a Kenyan who took over from Liberat Mfumukeko of Burundi as the secretary-general in March 2021, is expected to lead the secretariat to clear red tape, end border conflicts among partner states, and source funding to finance EAC programmes.

Nine months into his tenure, he is still grappling with tariff issues like the common external tariff after partner states failed to agree on a fourth band.

Phyllis Wakiaga, CEO of the Kenya Manufacturers Association, said that the current tariff regime undermines industrialisation efforts by favouring imports or subsidising importation costs, resulting in reduced competitiveness of local manufacturers.

“This leads to few job opportunities and decreased development and ultimately, increased cost of living,” she said.

Imports from other countries outside of the EAC are enjoying lower rates (25 percent) than products from the EAC.

“This is not only retrogressive for the objectives of the EAC, which include building prosperity, competitiveness and stability of the region but also undermines industrial growth and its benefits,” Ms Wakiaga said.

The EAC is faced with multiple NTBs.

The EAC Elimination of Non-Tariff Barriers Act, 2017, which was assented to by the partner states and published in July 2017, provides the legal basis for the elimination of barriers, but the Secretariat is yet to develop a monitoring framework to implement it.

Rwanda and Burundi, Rwanda and Uganda and Kenya and Uganda are involved in fights over cross-border trade, which the secretariat has been unable to resolve.

There are still road blocks for goods from Uganda and Kenya within South Sudan manned by security personnel, and Juba is yet to fully operationalise the Single Custom Territory tenets five years since it joined the EAC.

Common Market

“Under the Common Market Protocol, not all the partners have implemented a Single Tourism Visa, use of a national identity card for travelling, and the One Network Area,” says a Council report for November 2021.

Again, not all the EAC partners are enjoying the fruits of these efforts.

While one can use an ID to cross the border between Kenya-Uganda, and Rwanda, an ID cannot be used in Tanzania, Burundi and South Sudan.

During the 40th meeting of the Council of Ministers held in February 2021, the Council warned that the EAC organs and institutions have been experiencing liquidity challenges caused by low disbursements.

In the 2020/21 financial year, each partner state contributed $7.8 compared with $8.2 million the previous financial year.

“There are significant balances. Every - body doesn’t pay on time. Circumstances are different and so the Secretariat works hard and the Council of Ministers is reaching out to member states that have not contributed as required,” said Mr Mohamed.

A Sectoral Council on Finance and Economic Affairs meeting held in Mombasa in October 2021, chaired by Kenya’s Cabinet Secretary for Treasury Ukur Yatani, recommended changes to the EAC contributions model.

“The current model of funding is not sustainable, which is one of the reasons the Summit directed the Council to look for other options which are more sustainable,” Mr Yatani said.

The committee proposed a hybrid model of financing the EAC budget, in which 65 percent of the budget is contributed equally by all partner states, and 35 percent be based on Partner States’ nominal GDP per capita for the previous five years, as assessed by the World Bank.

But there is no consensus on the proposal, with some partners arguing that remittances should be on equal contributions.