It is emerging that tough decisions need to be made by the East African Community member states if they are to implement the Common Market Protocol.

New details show that member countries are delaying implementation, which could delay full integration of the bloc.

A new report by the EAC Secretariat shows that the East African partner states are still lagging behind in the process of implementing the common market protocol at different levels just two years away from the 2015 deadline.

The biggest challenge, the report says, is delays and commitment in harmonising national laws to fit with the requirements of the protocol.

The protocol, which calls for the free movement of goods, labour, capital and services in the region, came into effect on July 1, 2010 and was to be implemented over a five-year period.

While implementation of the Common Market protocol is still in progress, the reality on the ground is that most of the targets are missing their deadlines.

Over the past seven years, reforms in the EAC have focused on simplifying regulatory processes, such as trading across borders and starting a business in the region.

Such delays saw EAC presidents postpone key issues — mainly the monetary union and admission of South Sudan and Somalia into the bloc — to last year December, to allow more time for consultations.

The Heads of State attending the summit in Nairobi, directed that the deadline for the establishment of the East African monetary union be pushed to November this year — a whole year after the set target.

READ: State of the EAC: Too many delays

The final report on the monetary union was not submitted to the EAC Heads of Summit for approval as the presidents directed that the document be presented during an extraordinary summit this April.

Business executives and government officials are decrying delays in implementing the EAC common market protocol saying it is slowing down economic growth within the region, which is already affected by delays in the removal of non-tariff barriers (NTBs) to trade.

Removal of NTBs

The new report says the removal of NTBs has been too slow. While the five EAC partner states had in principle agreed to remove NTBs by December 2012, in the absence of a legally binding framework, implementation largely depends on the willingness of the different countries.

Meanwhile, businesses continue to incur huge costs from weighbridges, roadblocks, poor infrastructure, unnecessary delays at border posts, a lack of harmonised import and export standards, procedures and documentation.

“It’s only when the protocol is fully implemented, that the larger integrated market will encourage more investment and if this increase in investment is sustained then the level of economic growth will be higher than it otherwise would be,” said Patrick Obath, chairman of the Kenya Private Sector Alliance (Kepsa), a business lobby.

“A Common Market offers opportunities for all countries to gain provided that all elements are implemented. Partner states must co-operate on matters of harmonising policies, they must also share information and experiences on how to regulate markets,” said Mr Obath.

While the protocol requires that the partner states guarantee the free movement of EAC citizens within their territories, this is far from being achieved, according to the EAC Secretariat. In Uganda, the Citizenship and Immigration Act, which would pave the way for the free movement of EAC citizens, is still under review.

Uganda only recently started freely issuing visitors’ passes to citizens from East Africa to ease mobility of people, goods and services within the region.

The pass, however, only allows EAC citizens to enter and stay in Uganda for two months and not six months as provided for in the Common Market protocol.

According to the EAC protocol, a worker from each of the five partner states whose permit has been cancelled may within 30 days leave or regularise their stay. In Uganda, the law immediately renders such a worker an illegal immigrant.

Tanzania is also in the process of revising its Immigration Act of 1995 so as to comply with the Common Market protocol. In the meantime, any East African citizen entering the country is given three months stay, which is subject to renewal for another three months.

Holders of EAC passports are entitled to a six-month stay. However, partner states are yet to start issuing the EAC passport as required by the protocol.

READ: Concern as partner states play the protectionist card

Frustrations are growing among landlocked countries like Rwanda, which are paying a heavy price for the unnecessary and costly delays caused by NTBs like weighbridges and port inefficiencies in Kenya.

“The continued presence of NTBs shows a lack of commitment to the implementation of the Common Market protocol,” said Edith Mwanje, Permanent Secretary in Uganda’s Ministry of East African Community Affairs. According to a recent EAC Secretariat report, since the protocol came into force, only 36 NTBs have been resolved while 35 NTBs remain unresolved and 10 new NTBs have been reported.

Harmonising laws

There is still no free movement of labour in the region and none of the EAC partner states has implemented or harmonised their labour and employment laws, the report shows. Although Rwanda has already finalised the amendment of its immigration and labour laws, they are yet to be implemented.

ALSO READ: Investors call for speedy removal of trade barriers

Kenya has also amended its immigration laws but is yet to amend the labour laws adopted in 2007 to reflect the requirements of the Common Market protocol, says the EAC secretariat.

Tanzania still does not allow foreigners, including citizens of East Africa to invest in government bonds and limits their level of participation in the stockmarket — denying the government a cheaper source of money.

“Portfolio investments that are still not allowed in the country are a good source of foreign currency but it will be up to the government to decide when they would open up [to investors],” said Moremi Marwa of Tanzania Securities Ltd.

Economists have long urged the Tanzania government to open its economy to more foreign investors to ease the challenge of raising development capital and ease the debt burden being heaped on the citizens. According to the protocol, all the member states were required to amend the operationalisation of the EAC Competition Law.

“In Rwanda, a competition law establishing a competition authority has been enacted but is yet to be gazetted. Burundi is also in the process of finalising the establishment of national competition commission while Uganda has drafted a national competition policy and law, which is awaiting cabinet approval,” said the EAC Secretariat progress report.

The protocol also requires common standardised national identification documents and so far only Kenya and Rwanda have made progress by agreeing to use national identification cards as travel documents in the two countries. In Uganda the registration of all Ugandan citizens is ongoing with citizens being issued with bar-coded ID cards.

The government is in the process of producing biometric ID cards and will commence issuance to all citizens above 18 years of age by the first quarter of this year.  

Uganda reported that a task force has been established to review the current labour and employment legislations. The Labour Inspection Checklist and Labour Unions Act (2006) are also under review.

Tanzania has identified and is in the process of reviewing the Employment Promotion Services Act of 1999; Employment and Labour Relations Act 2004; Labour Institutions Act of 2004; Zanzibar Employment Act No. 11 of 2005; and Zanzibar Labour Relations Act.

All the EAC partner states are required to harmonise their National Social Security Legislation. The EAC Secretariat is now in the process of working out modalities to standardise the work/residence permit fees charged by the partner states as required under the EAC Common Market protocol regulation on free movement of workers and the right of residence. 

Currently only Kenya and Rwanda issue work/residence permits free of charge to East Africans. The process of standardisation will therefore apply to Burundi, Uganda and Tanzania.

Tanzania’s laws are currently strict on traders, businessmen, professionals and others who are not Tanzanian citizens. Last year, the country increased its work permit fee by 33 per cent for EAC residents, making it difficult for them to access the country’s labour market.

Article 16 of the protocol provides that the partner states guarantee the free movement of services supplied by nationals within the Community.

Burundian officials said that the country was embarking on the review of some of the domestic laws and regulations that impose restriction of free movement of services.

Uganda said it had  developed a National Implementation Strategy, which together with the National Development Plan and National Trade Policy will guide the implementation of the Common Market protocol.

Rwanda on its part reported that it was conducting business law reforms with an eye on harmonising and reducing restrictions of free movement of services. It has also identified unregulated services and accordingly assigned them to different institutions.

Kenya has identified laws for amendment, which include the Miscellaneous Amendment Bill, 2012, which has been submitted to the State Law Office.  The country is also reviewing its Investment Act to waive the minimum investment capital requirement of $100,000 to accommodate East Africans.

Negotiations are also still underway to harmonise domestic tax policies and laws. A draft Excise Bill and a VAT legal framework has been developed for consideration by the respective organs. Investment promotion authorities in the region are also undertaking the harmonisation of investment incentives offered by the partner states.

The Council approved the EAC Vehicle Load Control Bill, 2012 to harmonise the vehicle load control within the region but the Bill still awaits clearance by the East African Legislative Assembly (EALA) before it can be implemented.

ALSO READ: Fresh hurdles to free trade emerge, NTBs push up costs

The EAC countries, in February last year, agreed to adopt a harmonised weight limit of 56 tonnes, but this rule is yet to go through the relevant statutory procedures before it is ratified by member states.

Last year Kenyan transporters went on strike, demanding that the Kenya National Highways Authority (KeNHA) shelve its directive of weighing trucks using the axle load instead of the gross weight to determine the maximum weight limit.

 They were demanding that gross weight be used in determining the maximum weight (48 tonnes for a six-axle truck in Kenya), arguing that it was not practical to use the axle since the load keeps shifting as the truck moves.

Burundi and Rwanda both have axle load limits of 53 tonnes while Uganda and Tanzania have theirs at 56 tonnes.

Kenya has a gross weight limit of 48 tonnes. The Approximation and Harmonisation of Policies, Laws and Systems governing contracts and sale of goods is yet to be finalised.

Achievements

According to Betty Maina, chief executive of the Kenya Association of Manufacturers (KAM), a major achievement of the protocol is the fact that Kenya’s exports to the region grew by 19 per cent over the past one year and the other countries are equally exporting into Kenya, a clear indication that there is a high potential of boosting the economic well-being of the five countries.

“However, this can only work and give the expected results if steps are taken to ensure that the protocol is fully implemented by all partner states. As a business community, we would like to urge the five partner states to take urgent remedial action to rectify the situation by expediting the implementation of the protocol,” said Ms Maina.

Richard Sindiga, Kenya EAC Director for Economic Affairs, says that although the region has recorded a number of achievements in the protocol, much more still needs to be done.

“Non-tariff barriers to trade, inadequate infrastructure, particularly roads, railways and energy, are the major cause of the high cost of doing business within the region, making it hard for the partner states to implement the protocol. The member states need to channel more resources and more investments towards infrastructural development in order to ensure all countries are at par,” said Mr Sindiga.