However, for the process of integration in Africa to be successful, governments must let the private sector lead the charge, but provide the right set of policy incentives and political support needed to get things done.

African firms must be allowed to freely develop supply chains across the continent. Moreover, there shouldn’t be unjustified fears over ‘foreign’ companies taking over local jobs, as cross-border trade and investment usually helps foreign firms build symbiotic commercial relationships with local firms in different supply chains. These relationships ultimately build the capacity of local firms, allowing them to produce at scale and as a result create more jobs.

In Kenya, the private sector is ready to champion the regional integration agenda. This is the message I have gotten from my numerous interactions with business persons across the country. Businesses in both the corporate world and SME sector are keen to capitalise on the benefits of integration, but encounter difficulties doing so. One key difficulty is increased trade disputes.

Trade disputes within the EAC continue to put entire industries at risk. For example, since March 2018, Kenya no longer enjoys duty-free entry into Tanzania for confectionery products such as sweets, chocolate and chewing gum, despite EAC regulations allowing for this. In place of duty-free access, Dar has slapped a 25 per cent import duty on Kenyan confectionery products, rendering them uncompetitive in the Tanzanian market.

Tanzania’s adamancy to remove punitive import duties and reintroduce duty-free access for Kenyan confectionery is based on claims that Kenyan manufacturers rely on imported duty-free industrial sugar for production, hence gaining an unfair advantage over local Tanzanian business.

This, however, should not be an issue as other confectionery players across the region – and not just Kenya – also rely on importation of duty-free industrial sugar under the same remission scheme, since none of the EAC member states produces industrial sugar.

By introducing healthy competition, regional trade usually puts pressure on local industries to improve competitiveness. For example, the recent case of Ugandan eggs being cheaper than those produced in Kenya is a wake-up call to Kenya to address the competitiveness of its agroindustry.

We also need to identify the comparative advantages we enjoy as a region – such as a young labour force, recent investments in transport infrastructure and access to over 80 ports worldwide via Mombasa, among others – and leverage on these to develop joint import substitution plans.

There are a lot of products we import as a region that we can produce by ourselves at a lower cost, helping us build regional capacity, reduce trade deficits and strengthen macroeconomic indicators.

Importantly, much broader reforms are needed at a political level. This is because regional integration is generally more successful where there is minimal political and ideological difference among participating countries.

Tanzania and Kenya therefore need to work on their issues; but so do Rwanda and Uganda, whose ongoing diplomatic stand-off has resulted in disruptions at their borders, impacting trade and investment.

Source: The Star