Protection of East Africa’s dairy and motor vehicle industries from competition is one of the stumbling blocks facing a trade agreement with southern African states. The East African Community (EAC) is negotiating a deal with the Southern African Customs Union (SACU) to scrap import duty on at least 60 per cent of products traded between the blocs. However, a report released last week by the Council of Ministers on EAC Affairs and Planning shows that the two bodies failed to agree on several key tariff lines in a September meeting in Johannesburg. SACU requested that the EAC scrap duty on dairy products and motor vehicles within five years of signing the deal. The EAC did not respond positively. “On motor vehicles and dairy products, (the) EAC has responded that the products are sensitive due to their strategic importance for economic development in the EAC,” says the report. The EAC did agree to carry out an analysis on the implications of scrapping duty on motor vehicles. SACU also asked for immediate the liberalisation of trade in refrigerators, plastic tubes, beef, salt and wines once the deal is signed. EAC “agreed to offer only refrigerators for immediate liberalisation,” pleading time to consult on the rest. The southern African countries were similarly unreceptive of EAC’s request to liberalise trade in textiles, cut flowers, edible oils, fruit juices, coffee and vegetables. SACU’s member states are South Africa, Botswana, Lesotho, Namibia and Swaziland. The blocs have already agreed to liberalise 66.7 per cent and 64.25...

For the typical entrepreneur, profit is the main motive. This, after all, is the presumed reward for taking on risk. The bottom-line often keeps executives awake at night. Progressively growing profits and keeping shareholders happy with handsome dividend payouts is the ultimate measure of how the business is doing and, by extension, how effective the leadership is. This is the way we have always looked at and evaluated business. Not anymore. PROFIT Profit, on its own, no longer offers an accurate measure of the success of today’s business. It is an insufficient measure that does not give the full picture of the state of a business. Impact is actually the new measure of success. Focusing only on profit without considering a business’ positive impact is outdated. The true measure of the success of a business is its impact on the wellbeing of people and the planet. Wellbeing is the ultimate measure of success. Social and environmental impact can no longer be ignored. The business model of the future is one that is keen on not only maximising profit, but also positive impact that benefits people and the planet. Business has to take the lead in prioritising an inclusive economy, where enterprise plays a role in promoting the greater good, broadening prosperity and tackling inequality. In the business environment today, massive prosperity and technological innovation notwithstanding, globalisation continues to intensify, leading to complex global issues that have negatively affected society. SOCIAL ILLS This ranges from massive environmental depletion and degradation due...

Experts from 14 regional countries including Rwanda will this week deliberate on how they can consolidate the strong performance of the region while ensuring the economic transformation needed to reduce poverty and achieve the Sustainable Development Goals. This will be during the Intergovernmental Committee of Experts (ICE) which meets in Moroni, Comoros, next week. It is organized by the United Nations Economic Commission for Africa (ECA) in partnership with the government of Comoros. “This will constitute an excellent opportunity for experts from the region to discuss some of the major bottlenecks and catalysts for growth,” said Andrew Mold, the acting director of the ECA sub-regional office in Eastern Africa. “There is also a special session dedicated to discussing the development trajectory of the host country, during which ECA’s Comoros profile will be presented. The session will focus on the country’s long-term growth strategy, and opportunities in the tourism and energy sectors.” According to the Commission, the growth rate of Eastern African countries has been among the fastest in the world in recent years, averaging 6.8 per cent between 2012 and 2015. However, it is noted that in 2016 and 2017, the regional growth rate declined to 5.6 per cent. The evolution of per capita income growth has reportedly been much more modest while instability has increased, and the meeting will focus on different sectors that constitute either catalysts or constraints to growth and structural transformation. It is noted that the expansion of the tourism sector, the vast potential of the...

President Paul Kagame has said that regional integration and close partnership between members of regional economic communities can fast-track development and prosperity for individual nations. Kagame was yesterday speaking at the Global Business Forum on Africa held in Dubai, United Arab Emirates. The session was moderated by John Defterios, the emerging Markets anchor at CNN UAE. The Head of State noted that regional integration in Africa would enable countries to get past divisions that have long prevented the continent from being as prosperous at it should. Citing the example of the East Africa Community integration, Kagame said the initiative has yielded positive impacts such as free movement of people, customs union and joint infrastructure projects. “If you look at the East African region, even more progress has been realised, for example, in the area of customs union, integration in the area of infrastructure that bring the countries of the East African Community together, whether it is telecommunication in the area of realising one area network, where there are no roaming charges,” Kagame said. Other impacts, he noted, include working together to implement reforms that cover aspects such as the economy and security that’s necessary. EAC integration has, among others, seen the liberalisation of free movement of people, goods and services, consequently increasing opportunities for the over 160 million citizens of the bloc. Four countries in the bloc (Kenya, Uganda, Rwanda and South Sudan) in 2014 rolled out the One Area Network, scrapping calls roaming rates which brought down the cost of...

On October 12th the New York Times brought the discussion of second hand clothing in East Africa to the mainstream. Unbeknownst to most in North America, the United States trades millions of dollars worth of used clothing to East African countries essentially tax free. African countries export duty free products to the United States in return. The bilateral trade agreement that makes this transaction possible, the African Growth Opportunity Act (AGOA), is the center of a controversy roiling African-US trade relations. Six East African countries (EACs) created a pact in Spring of 2017 that would increase tariffs on imported used clothing from the US with the eventual goal of an outright ban by 2019. By June, a US lobby, the Secondary Materials and Recycled Textiles Association (SMART), filed a petition with the United States government against limiting clothing imports. The grounds for this petition were that a ban on used clothing would induce disastrous economic effects for tens of thousands of American jobs as well as potentially violate the terms of the AGOA. The United States Trade Representative initiated an “out-of-cycle” review of three out of six countries – Rwanda, Tanzania, and Uganda – to assess the allegations made by SMART on June 20th. Rwandan President Paul Kagame and Finance Minister Claver Gatete fiercely defend the used clothing ban despite threats of sanctions from the United States. The goal, according to the finance minister, is to increase local production and “minimize the health risks that come with the used product”. Kagame also doubled down on...

A majority of East African economies are yet to make significant reforms to create an easier environment to do business, a new World Bank report shows. Only Rwanda and Kenya made notable changes to improve doing business in the region, moving more than ten places up globally, according to the World Bank's Doing Business 2018 report. Rwanda remains the easiest place to conduct business and is ranked 41 from 56 last year. Kenya, East Africa’s largest economy, moved 12 places up to position 80 from 92 last year. The two countries, which rank second and third after Mauritius (25) in sub-Saharan Africa, eased paying and filing taxes by establishing online platforms and dealing with construction permits by eliminating licence fees in the case of Kenya and introducing risk-based inspections in Rwanda. Kigali, the report notes, also improved in corporate governance, online registration of property transfers and allowing public access to judgements on commercial cases. Nairobi’s reforms included merging procedures for business registration, reliable electricity with specialised teams to restore outages, access to credit information and reducing time in cross-border trade by enabling electronic submission of customs entries through the single window system. Laggards Despite impressive economic growth, Ethiopia dropped ranking from 159 last year to 161. The country only reforms included removing the requirement to open a bank account for company registration and eliminating the paid-in minimum capital requirement. It also strengthened its customs authority to better cross-border trade. Tanzania increased land and property registration fees and was ranked 137 dropping five...

EAST African Community (EAC) moves towards surmounting financial control to improve management of donor-funded projects amid shrinking contribution of development partners (DPs). EAC Secretary General Ambassador Liberat Mfumukeko (pictured) told the first EAC Development Partners Consultative Forum here yesterday that the secretariat has already recruited the manager for the Partnership Fund, with the view of enhancing fund management and efficiency. "The Partnership Fund is key in coordination of EAC development partner support. It has continuously played critical role in supporting activities to accelerate EAC agenda since its inception a decade ago," Ambassador Mfumukeko said, hinting that the fund manager has already reported for work. The EAC mission is to widen and deepen economic,political, social and cultural integration to improve the quality of life of all citizens in the region through increased competitiveness, value addition to agricultural produce, trade and investments. The community secretariat is responsible for fund mobilisation from DPs and other sources for project execution. Ambassador Mfumukeko said that the EAC has significantly strengthened its financial systems and procedures. The PF was established in 2006 to coordinate and channel contributions by DPs to projects and programmes towards regional integration and socio-economic development as well as facilitate harmonisation and alignment of their support to the EAC. Head of Corporate Communications and Public Affairs Department at the EAC Secretariat Owora Othieno said the new unit will deal with administration of the fund, communication with fund members, monitoring and evaluation of the achievements, budgeting, financial control, auditing and supervision of work-plan execution....

Logistics costs and operation time in Kenya significantly dropped last year on the back of strong digital processes at key points and improved infrastructure, a new survey shows. According to the 2017 Logistics Performance Survey recently unveiled by the Shippers Council of East Africa, cost and time indicators for road freight, sea, air and rail in Kenya last year dropped compared to 2015. Road freight turnaround time between Mombasa and Nairobi in 2016 was 26.4 hours down from 36.8 hours in 2015, and 10.7 days between Mombasa and Kampala, down from 15 days. Time taken by trucks from Mombasa to Kigali dropped from 17.5 days in 2015 to 12.5 days in 2016. This illustrates a 40 per cent truck turnaround between 2014 and 2016. Truck turnaround for Dar es Saam to key corridor destinations like Kigali, Bujumbura and Kampala remained steady with a marginal decrease of 18 per cent. Port dwell-time, the time it takes a vessel to arrive at the port area to the first berths, improved from 68 hours in January 2015 to about eight hours for the Port of Mombasa. This is attributed to the introduction of fixed berthing by the Kenya Ports Authority and the expansion of the port which increased its capacity. The custom processes at the port also decreased from 55 hours to 43 hours within the year. Nairobi has the shortest airport dwell-time in the region at an average of 28 hours for exports and 33 hours for imports while the airport in...

The financial cost of meeting Africa's infrastructure needs is estimated at $93 billion annually until 2020 to close the infrastructure gap, states Giovanie Biha, deputy executive secretary at the United Nations Economic Commission for Africa. Speaking at the 23rd inter-governmental committee of experts of Southern Africa last week, Biha expressed concern that the financial cost of meeting the continent’s infrastructure needs are substantial. “According to the African Development Bank, it is estimated that Africa needs about $93 billion annually until 2020 to close the infrastructure gap. Africa must look inwards in financing its infrastructure development and dismantling obstacles to intra-Africa trade and the movement of persons across the continent. "We need to prioritise and sequence the implementation of our infrastructure needs,” she stressed. Infrastructure deficit stumbling block for trade According to Biha, the continent’s road freight cost was about four times more than other regions of the world. Specifically, the intra-SADC cost of export is $1,904 per container and to import is $2,428 per container. Whereas the equivalent figures for intra-Association of South-East Asian Nations trade were $743.5 and $787.5, respectively. “Other RECs (regional economic communities) in Africa register even higher figures. Up north of the continent, a truck transporting millet/sorghum on the Koutiala–Dakar corridor has to pass through almost 100 checkpoints and border posts, and the driver can expect to pay bribes of about $437,” she said. As such, the infrastructure deficit is a major contributing challenge to trade facilitation, intra-regional trade and economic development and transformation in Africa. Energy...

Regional business leaders and experts have called for harmonised Information Communication Technology (ICT) and e-commerce policies, saying this would help fast-track socio-economic development in East Africa. Lilian Awinja, the East African Business Council (EABC) chief executive, noted that ICT is a key business enabler for sectors like trade, tourism, education and agriculture, finance and transport, among others. She added that many components of the ICT sector are cross-cutting and cross-border, hence the need for a harmonised legal and regulatory framework. The official added that the region must improve its e-commerce systems to boost trade and related services, among others. “The EAC region needs improved cross-border ICT infrastructure development to facilitate interoperability, and increased connectivity and digitalisation of government processes to reduce transaction cost of operations and ensure efficient and quality public services delivery,” said the EABC chief executive last week in a statement. Awinja was speaking ahead of the second East African Business and Entrepreneurship Conference and Exhibition, scheduled for November 14 to 16 in Dar es Salaam, Tanzania. EABC is the apex advocacy body of business associations of the private sector and corporate firms from East African Community (EAC) bloc. Lack of regional financial interoperability platform Robert Ford, the Northern Corridor Technology Alliance chief coordinator, said different ICT laws have hampered growth of regional e-commerce sector as they affect transactions. He said, without uniform policies, growth of services like mobile money and other money transfer services is limited due to lack of a regional financial interoperability platform. “So, we...