PUBLISHED ON September 1st, 2014

Greater intra-EAC trade will spur faster economic growth

Recent news reports indicate that trade among East African partner states is growing by leaps and bounds. This is a positive development that regional leaders should seek to build upon and encourage.

Rwandan exports to other East African Community countries, for instance, grew significantly in the first half of this year despite a poor showing in global markets.

Exports to the EAC amounted to $97.8 million in the first half of 2014, up from $70.7 million in the same period last year. This represented a 38.6 per cent increase.

Imports to Rwanda from the regional bloc, on the other hand, increased by 3.7 per cent from $239 million to $247.8 million in the same period.

Themain exports included tea, raw hides and skins of bovine, coffee, steel andiron rods, vegetables and malt beer. Major imports were cement, palm oil, fats and oils, fertilizers, second hand clothing and sugar.

The growth of trade among East African countries comes against the backdrop of failed negotiations for a new Economic Partnership Agreement with the European Union.

The contentious areas have been referred to the political leadership of the two blocs for possible resolution following failure to clinch agreement by the technical teams.

Kenyan exporters, in particular, will be badly affected from October, when they will have to start paying taxes on goods entering the European Union if no agreement will have been reached.

The other EAC partner states are fortunate to be covered under the Everything But Arms arrangement.

One way for East African producers to mitigate the impact of such changes on the international trading arena is by encouraging the growth of local and regional markets.

For this strategy to be effective, of course, partner states must remove all non-tariff barriers and fully implement the Customs Union and Common Market protocols.

In fact, intra-regional trade takes up a much more significant chunk of the trade statistics in other regional blocs around the world than is the case in East Africa.

There is no reason why this should not be the case in our part of the world as well.

Greater trade among our own partner states means becoming less dependent on other international markets.

It will also lead to faster growth of our economies and industries as we make use of markets next door.

This is in addition to the benefit of faster integration of the region’s population. Our growing industries will need to make use of more manpower resources, hopefully with expertise drawn from across all sectors of the region’s population.

There will be need for drivers to ferry products across borders, marketing staff in various countries, and quality experts from other partner states.

As customers in Kenya get used to finding Rwandan merchandise on supermarket shelves and vice versa, the integration effort will become that much easier to sell to the citizenry of the various partner states.

This will also lead to an appreciation of the produce, cultures and values of other East Africans outside our own home countries.

All this does not mean that we should abandon our traditional markets in Europe and America. Far from it, our countries should initiate joint promotional drives to sell the region.

However, we must be alive to the fact that these markets often put up harsh conditionalities and bend the rules to their own benefit, for which poor Third World countries have little leverage.

There is no better example of this patronizing attitude than the stalled negotiations for a new Economic Partnership Agreement.

East Africa must begin learning to rid itself of Big Brother and live with dignity.

Trading more among ourselves will not lead to overnight prosperity, but is one of the ways in which East Africans can begin confronting their problems with traditional Western partners and initiate the shift to greater self-reliance and dignity.

Source URL: IPP Media

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.