Arusha — East African Community (EAC) partner states are divided on the proposed financing mechanisms to bail out the cash-strapped regional body. While the founding members, Tanzania, Uganda and Kenya, want to maintain the existing equal contribution arrangement, Burundi and Rwanda prefer differentiated contribution. A guidance on the matter will be sought during the 18th Ordinary Summit of the Heads of State scheduled to take place in Dar es Salaam on Saturday. Sustainable financing mechanism for the EAC will be among the key items on the agenda, but a report seen by The Citizen indicates that the partner states are not agreed on the proposed alternatives. One of them is to raise funds for the Community’s projects and programmes is to slap a 0.7 per cent levy on the value of dutiable imports from outside the bloc. The percentage should be reviewed after every five years by the Council of Ministers which is the policy organ of the Community and the most supreme after the leaders’s Summit. Hybrid option The other mechanism recommended is a hybrid option which will use various parameters for each country. It is favoured as a means to promote equity and fairness. An alternative financing mechanism for the EAC has been on the cards for years and has been proposed to increase the budget of the rapidly expanding Community whose institutions have lately increased. The option also aims to overcome the cash woes facing the regional body due to dwindling financial support from donors and delayed...

Manufacturers want East African Community member states to fast-track harmonisation of taxation policies to facilitate free cross-border trade. Kenya Association of Manufacturers chief executive Phyllis Wakiaga said yesterday this will support growth of industry which faces stiff competition from cheaper imports. “This year, the common external tariff is being reviewed,” she said. “(The policymakers are) are looking to review the (import) duty values that can encourage local production and improve domestic trade. Hopefully by December we will have this ready.” The review, EAC Affairs PS Betty Maina said in February, is at amending rules used in classifying goods entering into the five-nation bloc with the aim of supporting growth of the industry, which is largely still at infancy. Wakiaga singled out slow harmonisation of standardisation certificates and VAT as major hurdles to free trade within the EAC bloc. “So far we have addressed over 150 non-tariff barriers but what we are trying to ensure is how we can sustainably avoid blocking trade within the East African Community,” she said. Data collated by the Kenya National Bureau of Statistics shows that manufacturing contributed 9.2 per cent to the country’s gross domestic product down from 9.5 per cent during the previous year. KNBS data shows that manufacturing sector contribution the gross domestic product has stagnated at around 10 per cent in the last 10 years. The sector faces such challenges as illicit trade, high power costs, congested industrial zones, high labour input costs, increased overall production costs and a huge import bill....

Barely two weeks to the launch of the Standard Gauge Railway’s (SGR) Mombasa-Nairobi commuter service, the government has affirmed that all is is on course. However, commencement of cargo freight services will be delayed until December due to slow expansion and modernisation of the Nairobi Inland Container Depot (ICD). Transport Principal Secretary, Paul Mwangi said the commuter service will start as scheduled, adding that the government was keen to optimise the SGR for freight transport, both locally and to Uganda, Rwanda Burundi, South Sudan and DRC He, however, said the freight operations will start in December, in accordance with the commitment made in the Mombasa Port Community Charter, signed in June 2014. Mwangi spoke at the Mombasa port when he received additional 17 freight locomotives, six shunting locomotives, 50 flat wagons for containers and four unit cranes for use in the SGR operations. He said consultations are going on to come up with reasonable fare charges before the official launch. “We urge Kenyans not to worry, we are going to set reasonable charges from commuters which are likely to be cheaper compared to buses,” said the PS. The consignment was offloaded under the supervision of the PS, Kenya Railways Corporation engineers, China Road and Bridge Corporation, the EPC contractor for Kenya’s Standard Gauge Railway project, and the project supervisor, TSDI-APEC-EDON Consortium (Taec). So far, the country has received 25 freight locomotives out of the 43 on order; the full order of five passenger and eight shunting locomotives, the full order...

Kenya is seeking an additional Sh370 billion ($3.59 billion) Chinese loan to extend the standard gauge railway (SGR) from Naivasha to Kisumu, pushing the total cost of President Uhuru Kenyatta’s pet project to Sh847 billion. The President today led the Kenyan delegation in making a formal request for additional funds from China Exim Bank. The money will finance the construction of the third phase of the SGR, a 270km-line between Naivasha and Kisumu. “The funding request will undergo normal procedure of approval and Premier Li (Keqiang) has promised to give it the adequate consideration and urgency it deserves,” State House Spokesman Manoah Esipisu told reporters in Beijing, where the President has been attending a trade conference. NATION IN DEBT So far, Sh327 billion has been spent on the first phase between Mombasa and Nairobi and Sh150 on the Nairobi-Naivasha section. With a national population of about 46 million, every Kenyan is set to owe China Sh18,413 in SGR debt once the deal is sealed. The money does not include the interest charged. The additional funding implies that each kilometre of the third phase of SGR will cost Sh1.37 billion, almost twice the Sh693 million per kilometre rate for the Mombasa-Nairobi line. The Nairobi-Naivasha line will cost more, at about Sh1.5 billion per kilometre. Source: EABizInfo.com

The International Monetary Fund and Fitch Ratings concur on Rwanda’s positive economic outlook. While each country is unique in its circumstance, this reflects on the wider EAC, specifically Uganda, Tanzania and Kenya, which are as favourably projected. The just-released IMF Regional Economic Outlook for Sub-Saharan Africa reports that the four EAC members states are expected to sustain annual growth rates of five per cent or higher. Rwanda, for instance, is expected to grow by 6.2 per cent in 2017 as vouched at the IMF second review of country’s Policy Support Instrument in Kigali this week. The percentage growth coincides with Fitch forecasts for this year, onward to 6.6 per cent in 2018 (See “Fitch confirms Rwanda’s economic outlook as stable”, The New Times, May 15, 2017). If the projection holds, this will mean more than a slight improvement from the 5.9 per cent growth registered last year. It is the same with the other three member states. According to the IMF report, their economies’ comparative strength is due in large measure to public spending and investments in infrastructure. Generally, however, one wishes the positive outlook rubs on Burundi, which remains in economic doldrums, as much as South Sudan which continues to be wracked by conflict. But a wish is only a wish, and more a measure of intent than effective action. What is certain is that the two countries must weigh their options with the better able section of the EAC playing its role to offer the support it must,...

The Belt and Road Forum for International Cooperation (BRF) concluded here Monday, and officials and experts said the forum has strengthened international trade ties and sounded a call against protectionism. The forum has strengthened international trade ties and sought new channels of distributing goods to bring about mutual benefit for all, said Ignacio Martinez Cortes, head of the Research Laboratory for Trade, Economy and Business. "It is also a call against protectionism," Martinez Cortes said in an interview with Xinhua in Mexico. China's new commercial strategy will allow Latin America and the Caribbean to join this drive of "opening up, inclusiveness and mutual benefits," said the Mexican expert on China affairs when talking about the two-day forum held in Beijing. The Belt and Road Initiative breaks with both regionalism and corporate-driven global supply chains and will benefit Latin America in the two fields of raw materials and added-value technologies, he said. The initiative "is the gateway" to international free trade and sustainable development, and also "more focused on investment, infrastructure and development, instead of just on trade," he said. "Through this initiative, China is offering new channels, which is focused on strengthening partnerships and on the success of sustainable development," the expert said. The Belt and Road Initiative was proposed by Chinese President Xi Jinping in 2013 with an aim to build a trade and infrastructure network connecting Asia with Europe and Africa along and beyond ancient trade routes. "In his opening speech President Xi highlighted the importance of infrastructure...

The Economic Partnership Agreement (EPA) between East African Community (EAC) partner states and the European Union, search for a sustainable financing mechanism and assent to bills passed by the regional Assembly are among the agenda items of the upcoming summit, an official has said. The leaders of the six EAC partner states are due to meet in Dar-es-Salaam, Tanzania, on Saturday for their annual summit that has been postponed three times in the recent past. While in Kigali, earlier this year, the East African Legislative Assembly (EALA) passed a resolution urging the Council to find a common stance on partner states’ funding deficit by having it on the agenda of next EAC Summit. Richard Owora, the EAC head of corporate communications and public affairs, told The New Times yesterday that the provisional agenda of the summit also includes matters concerning the EAC Political Federation, the fourth goal of regional integration, after the Customs Union, Common Market and Monetary Union. According to Owora, the 18th Ordinary Summit of EAC Heads of State will also consider various reports including the “report on the roadmap for the accelerated integration” of South Sudan. South Sudan deposited the instruments of ratification of the accession Treaty on September 5, 2016, and the summit is set to appoint a judge from South Sudan to the East African Court of Justice. South Sudan has already elected its nine members for the fourth East African Legislative Assembly in June. The summit will also consider a progress report on admission...

It used to take an incredible 45 working days to transport goods from the Kenyan port of Mombasa to Rwanda, passing through Uganda, a distance of approximately 1,450 kilometers. “You can imagine how expensive that was,” said Mutaawe, Chief Strategy and Results officer at TradeMark Africa (TMA). She has dedicated her career to trade facilitation, working on the public, private and donor sides of the issue, and has seen some dramatic improvements. That shipment time is now down to eight days and counting. This makes a huge difference for traders in delicate or perishable goods which were getting damaged or ruined in transit. “And think of the difference for businesses who were having to ensure sufficient inventory as you wait for your shipment to come through; and the cost of people working across the chain, just following up on the shipment,” said Mutaawe. The improvement is also due to the hard and soft infrastructure improvements supported by TMA. Named for Trade and Markets, the agency is funded by the EU plus six member states, the US and Canada with a pot of $560 million for 2010-17. It focuses on improving trade competitiveness and expanding domestic and regional markets for the East African Community. “We have projects that are aimed at increasing physical access to markets; ensuring infrastructure is in place; that ports are working efficiently; to improve the capacity of ports, their entrance and exits,” said Mutaawe. That route from Mombasa to Rwanda used to include eight weigh-bridges and various...

Kenya Railways Corporation has received an additional 17 freight locomotives, six shunting locomotives, 50 flat wagons for containers and four unit cranes, two weeks to the expected launch of the Standard Gauge Railway. The country has so far received 25 freight locomotives out of the 43 it ordered from a Chinese manufacturer, while 763 wagons out of the 1,620 on order have also been delivered. KRC said the full order of five passenger and eight shunting locomotive and 40 passenger coaches has been delivered. as well as 763 Wagons out of the 1,620 on order. “It is expected that freight uptake via SGR will considerably increase rail transport capacity from the port once the operations commence in December 2017, and in accordance with the commitment made in the Mombasa Port Community Charter, signed in June 2014,” Transport PS Paul Maringa said yesterday at the port of Mombasa. Freight services are scheduled to start once the expansion and modernisation of the Nairobi Inland Container Depot is completed and handling equipment provided and installed. Kenya Railways will operate the freight trains between Mombasa Port and Nairobi as per the traffic volumes available. The freight tariffs are being determined and will be published in time for the commencement of the operations. Source: The Star

Kenya secured Sh21.9 billion financial assistance from China for infrastructure development and drought mitigation. The money includes a Sh19.2 billion grant to deepen ties between the two countries. An additional Sh2.2 billion (150million Yuan) is for measures to tackle drought and a further Sh500 million (5million Yuan) for refugees. The deals were agreed during bilateral talks between President Uhuru Kenyatta, Chinese President Xi Jinping and Prime Minister Li Kequang at the Great Hall of the People. The talks were on the sidelines of the just-ended Infrastructure International Conference in Beijing, China. Kenya is also angling for part of the Sh870billion China offered developing countries for the multi-billion Silk Road Fund infrastructure development. In turn, the Chinese are enticing Kenya to open her skies. President Xi and Li are seeking partnership in the aviation industry, where Kenya would buy aircraft from China and in return, allow Kenya’s registered planes to access its routes. President Xi is keen to have a comprehensive and strategic relationship with Kenya, as he affirmed his commitment to the conclusion of the Standard Gauge Railway (SGR). On the commercial front, Uhuru also sought a Sh362billion ($3.59billion) loan for the third phase of the SGR from Naivasha to Kisumu and $161million for the construction of the Western by-pass by the China Roads and Bridges Corporation signed last year. President Kenyatta urged the two leaders to accelerate the issuance of the loans sought from China’s EXIM Bank to facilitate the completion of the projects. “The bank should fast-track the...