Summary The EAC regional Electronic Cargo and Driver Tracking system, will enable authorities to share test results of the drivers and crew. Kenya Transporters Association executive officer Dennis Ombok said they have not been trained on the usage of the system and he only learnt of the implementation last week during stakeholder virtual meeting. East African countries have moved to ease movement of goods with the roll-out of a system that will allow them to share Covid-19 test results of truck drivers electronically. The reliance of hard to verify manual certificates has been blamed for costly long delays at the different border points that sometimes last for weeks. The EAC regional Electronic Cargo and Driver Tracking system, however, will enable authorities to share test results of the drivers and crew facilitating easy information exchange along the transport corridor. This means no transit cargo will leave the port of Mombasa or any Kenya Ports Authority (KPA) facility without a driver being aligned with the truck and the cargo in the system. According to a notice by the EAC secretariat to relevant ministries of the member countries, all drivers must upload their Covid-19 certificates to the new system before cargo is armed with tracking gadgets,  a directive which has already been opposed by transporters faulting the short implementation notice. MINISTERIAL MEETING “Following a joint ministerial meeting responsible for Health, Trade and EAC held by video Conference on March 25 and in line with the directive of the Sectoral Council on Trade, Industry,...

East African traders have always dreamt of a smooth movement of goods across the region. However a number of bottlenecks have always scuttled this aspiration. The outbreak of the Covid-19 has complicated the matter, resulting in too much delays at the border points. It is against this backdrop that private businesses have sanctioned a study to inform future mitigations on costly delays that impede movement of imported and export goods across countries. The traders, through the East African Business Council (EABC), say the assessment to be conducted within 21 days will help create a “recovery path based on lessons learnt during the Covid-19 era”. In a tender posted on its website, EABC said consultancy firms should file their bids seeking EABC’s nod to conduct the survey. “EABC wants to understand the impact of Covid-19 on the transport and logistics industry in terms of movement of goods and people within East African countries and from outside the region,” it said. The business lobby said the study, which is supported by TradeMark Africa, will seek to flag painpoints, identify hardest hit sectors, especially small and medium enterprises, on rail, air, road and maritime transport. The tender also said the consultant is expected to offer country-specific recovery solutions that will facilitate public-private sector engagements. The Federation of East African Freight Forwarders Associations (Feaffa), that comprises clearing agents in Uganda, Tanzania, Rwanda, Burundi and Kenya, has welcomed the study saying it is has come at the right time as East African countries have started...

In a recent study by TMA, the restrictions on movement of people also cut off operations of informal cross border traders who significantly contribute to regional trade. BUSINESS   VIRUS The current outbreak of the coronavirus pandemic continues to threaten the already fragile intra East African Community (EAC) trade, pulling it back by 40%, according to TradeMark Africa (TMA). Already standing at a measley20%, TMA said a further drop in intra-regional trade was first registered in March, following measures undertaken by regional governments to curb the spread of the coronavirus outbreak. Regional governments instituted measure to control the movement of people across borders, after the outbreak, and allowed only the movement of goods. In a recent study by TMA, the restrictions on movement of people also cut off operations of informal cross border traders who significantly contribute to regional trade. Informal cross border traders, who mostly comprise women, contribute approximately 60% to trade across the region's borders. The trade represents produced goods and services, which directly or indirectly do not pass through the regulatory framework for taxation and other procedures set by Partner States. TMA said since the outbreak, most manufacturers across the region have also resorted to focusing on local markets, leaving only agricultural goods and products to swing across the borders. It also noted that: "Due to the current coronavirus pandemic, regional trade has been heavily impacted leading to a rise in NTBs." Prior to the COVID -19 outbreak, intra-regional trade had been projected to grow 5%, driven by...

The East Africa Community Trade and Investment Report shows that the value of intra-regional trade increased by 9.4 per cent to $5.98 billion in 2018 from $5.46 billion in 2017. Since the Common Market Protocol was launched in 2010, trade between East African Community member states has increased by 60.75 per cent from $3.72 billion to $5.98 billion in 2018, the latest trade data show. Despite non-tariff barriers (NTBs) continuously holding back the region’s potential, the Common Market Protocol has boosted trade in the region by easing the cross-border movement of goods and people. The East Africa Community Trade and Investment Report shows that the value of intra-regional trade increased by 9.4 per cent to $5.98 billion in 2018 from $5.46 billion in 2017. The growth was partly caused by EAC countries’ increased preference for trading with each other so as to counterbalance falling demand for the region’s products in European and US markets. All EAC member states apart from Burundi recorded growth in trade with their regional counterparts, the report showed. The East African Business Council said that the regional trade has been heavily impacted by the pandemic which has led to a rise in NTBs with most of the manufacturers shifting attention to local markets. In 2018, Rwanda’s total trade with EAC partner states increased by 13.4 per cent to $638.8 million from $563.2 million in 2017. Kenya’s trade with the EAC increased by 4.7 per cent to $1.95 billion from $1.86 billion in 2017, this was mostly...

Trade between East African Community member states has increased by 60.75 percent from $3.72 billion when the Common Market Protocol was launched in 2010 to $5.98 billion in 2018, latest trade data shows. The Common Market Protocol has boosted trade in the region by easing cross-border movement of goods and people, though numerous non-tariff barriers (NTBs) continue to hold back the region’s potential. The volume of trade among EAC member states increased rapidly between the years 2010 to 2013, but dropped for three consecutive years from 2014 to 2016. The EAC Trade and Investment Report shows that the value of intra-regional trade increased 9.4 percent to $5.98 billion in 2018 from $5.46 billion in 2017. This growth was partly attributable to EAC member countries’ increased preference to trading with each other to offset falling demand for the region’s products in European and US markets. According to the report, all EAC member states save for Burundi recorded growth in trade with their regional counterparts.

In Summary The new import tax changes for the current fiscal year are effective July 1. The decisions to stay application of the EAC CET rate and apply a higher duty rate are aimed at stimulating local production and safeguarding markets against cheap imports. East African Community (EAC) partner states—Kenya, Burundi, Rwanda, Tanzania and Uganda have adopted measures on Common External Tariff (CET) to boost local production in the region. The new import tax changes for the current fiscal year are effective July 1. They were approved during a pre-budget consultations by the region’s Ministers, Cabinet Secretary of Finance, held via video conference on May 13, 2020. The EAC Ministers have been holding the pre-budget consultations prior to reading the National budgets as a way of harmonizing fiscal measures in the region. The decisions of the Ministers/Cabinet Secretary for Finance on the CET measures were finally endorsed by the meeting of the Sectoral Council on Trade, Industry, Finance and Investment (SCTIFI) on June 3. The EAC CET is currently structured under three bands of 25 per cent for finished goods, 10 per cent for intermediate goods and zero per cent for raw materials and capital goods. In addition, there are a limited number of products under the sensitive list that attract rates above the maximum rate of 25 per cent whereby they range from 35 per cent to 100 per cent. For instance, Kenya will maintain application of the EAC CET rate of 25 per cent and apply a duty...

The East African Community (EAC) is likely to see a sharp decline in Foreign Direct Investments (FDIs) this year owing to the current Covid-19 pandemic that continues to ravage economies across the globe. According to the latest World Investment Report 2020 by the United Nations Conference on Trade and Development (Unctad) FDIs in East Africa declined by nine per cent to $7.8 billion in 2019, from $9 billion in 2018. The report forecasts FDI inflows to the continent will fall by 25 to 40 per cent in 2020, exacerbated by low commodity prices. “Although all industries are set to be affected, several services industries including aviation, hospitality, tourism and leisure are hit hard, a trend likely to persist for some time in the future,” said James Zhan, Unctad director of investment and enterprise. The decrease, according to the report, comes after the continent recorded a 10 per cent decline in FDIs flows to $45 billion in 2019 from $46 billion in 2018. Alternatively, the expected transformation of international production also brings some opportunities for development, such as promoting resilience-seeking investment, building regional value chains and entering new markets through digital platforms, the report reads in part However, capturing these opportunities will require a shift in development strategies. According to Mukhisa Kituyi Secretary-General of Unctad, export-oriented investment geared towards exploiting factors of production, resources and low-cost labour will remain important. But the pool of such investment is shrinking, and the first rungs on the development ladder could become much harder to climb. He...

Economic disruption caused by the COVID-19 pandemic has pushed East Africa’s growth projection for 2020 down to 1.2%, a rate that outstrips other African regions and is forecast to rebound to 3.7% in 2021, according to the African Development Bank’s (AfDB) East Africa Regional Economic Outlook 2020. The projection is under the baseline scenario that assumes the virus is contained by the third quarter of this year. Prior to the COVID-19 pandemic, the region’s economic growth was projected at more than 5%, well above the continent’s average of 3.3% and the global average of 2.9%. However, COVID-19-induced shocks and a locust invasion have contributed to job losses, increased humanitarian needs and will aggravate poverty and income inequality. In the worst-case scenario, in which the pandemic persists until the end of 2020, growth is projected at 0.2, still above Africa’s predicted average of -1.7% and -3.4% under the two scenarios. At the launch of the report held in Nairobi on 8 July, Simon Kiprono Chelugui, Cabinet Secretary of Kenya’s Ministry of Labour, said East African countries could overcome the effects of COVID-19 and turn their economies around by mitigating the external and domestic risks. “We need to implement a decisive and coordinated response to contain the spread of COVID-19; mitigate its health and socio-economic effects; accelerate structural transformation; improve the investment climate, and maintain the peace and security of our region,” he said. The Regional Economic Outlook indicates that the COVID-19 pandemic will affect East African economies in many ways, such...

In a bid to facilitate the recovery of struggling economies across the region, the East African Business Council (EABC) is rallying its member states to reopen the regional airspace that was closed due to the coronavirus pandemic. This, experts argue will among other factors kick start trade, tourism and hospitality sectors. EABC has commended the public health measures aimed at containing the spread of Covid-19, but further noted it was time to reopen the skies. “Air travel is vital to the economic health of countries,” Regional Director for Africa Dr. Matshidiso Moeti said in a statement. Besides Dr. Moeti pointed out, “The resumption of commercial flights in Africa will facilitate the delivery of crucial supplies such as testing kits, personal protective equipment and other essential health commodities to areas which need them most,” Additionally, “This is vital for the recovery of the aviation sector in light of the Covid-19 pandemic,” the statement adds The regional body also indicated that member states “need to come up with regional coordinated guidelines and measures on the opening of the regional aviation sector to bolster consumer confidence and support the recovery of the sector.” Experts who talked to this paper, including Col Silas Udahemuka, the Director-General Rwanda Civil Aviation Authority (RCAA) backed the proposal. For instance, according to Robert Rukundo chairman of the Rwanda Horticulture Exports Association, opening up the airspace will allow for resumption of employment in sectors such as tourism. “I fully support the idea because it will also boost the regional...

In summary New import tax changes for the current fiscal year are effective July 1. The decisions to stay application of the EAC CET rate and apply a higher duty rate are aimed at stimulating local production and safeguarding markets against cheap imports. The import duty measures in the EAC Gazette issued on June 30 can be put into three main categories which are Duty Remission for Industrial Inputs, Stays of Application, and Amendments of the East African Community Customs Management Act, 2004. The duty remission measures adopted by the EAC Partner States will ensure that local manufacturers can import raw materials and inputs which are not available in the region at a lower rate. Kenya could ramp up its growth plan for the year after East African Community (EAC) member-States sanctioned new taxation measures aimed at protecting local industries from unfair competition. The economy has been on a strict diet of austerity measures that curbed spending and lowered taxes in the wake of the coronavirus pandemic. Gloom has brought with it pay cuts and job losses and as a result local industries have been hit hard. But the new move by the bloc seeks to offer a lasting redemption package to the struggling industries after new import tax changes on the bloc’s Common External Tariff (CET) were announced last week and will take effect on July 1 following a ratification agreement signed during the pre-budget consultations by member State’s representatives. Ministers from EAC held Pre-Budget Consultations prior to reading of...