Poultry farmers are bitter that the Uganda Revenue Authority is charging VAT, withholding tax and railway levy on chicken exports to Uganda. They want the government to intervene. They argue that Ugandan poultry farmers have free access to the Kenya market. The poultry farmers are right. They should equally enjoy duty-free access to the Ugandan market as members of the common market created by the East African Community. The only problem is that Kenya sometimes behaves just like Uganda. In December Kenya slapped VAT on imports of Ugandan milk that was undercutting Kenyan dairy farmers. In a common market, sometimes your produce will be more competitive and sometimes less competitive. Kenyan chicken is cheaper than Ugandan chicken, Ugandan milk is cheaper than Kenyan. You cannot always win. East African member states need to set the same rates of VAT across the community and, where possible, align other taxes like corporation tax and CGT so that we move closer to a fully integrated market. And similarly, member states should allow the free movement of all goods, as promised by the EAC, including Kenyan poultry and Ugandan milk. Quote of the day: "I shall not waste my days in trying to prolong them." Source: The Star

The Economic Commission for Africa (ECA), the African Development Bank (AfDB) and the African Union Commission (AUC) launched the second Africa Regional Integration Index (ARII 2019). The Index includes a call to action to African economies to deepen their integration. The Africa Regional Integration Index 2019, which builds on the first edition published in 2016, provides up-to-date data on the status and progress of regional integration in Africa. It also helps to assess the level of integration for every Regional Economic Community (REC) and their member countries. The report observed that although 20 countries score above average, no African country can be considered well integrated into its region. Even the most integrated country, South Africa, scores 0.625 out of 1, less than two-thirds of its potential on the scale. The report found that much more needs to be done to integrate regional economies to make them more resilient to shocks such as the current COVID-19 pandemic. Overall, the Index shows that levels of integration on the continent are relatively low with an average score of 0.327 out of 1. “Whereas the Index edition we are releasing today has data cut off points in 2019, the present COVID-19 pandemic has reopened the question of whether enough is being done in advancing regional integration as a means to help Africa withstand systematic shocks such as the one being experienced today,” said Stephen Karingi, Regional Integration Division Director at the ECA. “This index is both a measurement exercise and a call to action;...

DAR ES SALAAM, May 27 (Xinhua) -- The Southern African Development Community (SADC) senior officials on Wednesday urged members of the regional bloc to remove trade barriers to boost economy in the region. Wilbert Ibuge, Tanzania's Permanent Secretary in the Ministry of Foreign Affairs and East African Cooperation, said the appeal to remove trade barriers among SADC members was made by SADC Council of Ministers permanent secretaries at the start of their three-day video conference meeting. Ibuge, who chaired the meeting, told a news conference in the business capital Dar es Salaam that the officials agreed that SADC member states should open their borders wide to ease trade amongst them with a combined population of about 345 million. "The permanent secretaries from the SADC felt that it was high time the member states enhanced their trade cooperation in order to improve economic and trade growth in the region," said Ibuge. He said the three-day meeting that ends on Friday will, among others, review the implementation of SADC's theme for 2019/2020 "A Conducive Environment for Inclusive and Sustainable Industrial Development, Increased Intra-Regional Trade and Job Creation". Tanzania is the current chair of the SADC, an inter-governmental organization established in 1992 to further socio-economic cooperation and integration as well as political and security cooperation among 16 southern African countries. Enditem Source: Xihuanet

Are we now in a “new Cold War,” as headlines in recent months suggest? As the covid-19 pandemic rages on, relations between the United States and China have reached new lows, and President Trump threatened to “cut off the whole relationship.” This leaves economists and policymakers considering a question that once seemed unthinkable: What would happen to global supply chains if this decoupling should occur? Which countries can step into the vacuum created by this superpower conflict? Our recent study gives some answers. We show the building blocks are already emerging for a new international trade order — with a rapidly increasing number of poorer countries navigating this system. This has happened largely without the direction of global superpowers like the United States and China. Here is what you need to know. The ‘China shock’ has hit poor countries Like the United States, many poor countries have struggled with the economic and political effects of a “China shock” since the 1990s. As China’s export dominance in manufactured goods satisfied much of the demand from wealthier nations, developing countries saw a sharp decline in trade with the global north, as the figure below indicates. These countries have also been shut out of lucrative trade agreements with Europe and the United States, which concentrated primarily on deals with the larger “BRICS” (Brazil, Russia, India, China, South Africa). 5 ways the coronavirus is making the world’s most vulnerable a lot more vulnerable Our study explores what this shock has meant for poor countries...

Economies in sub-Saharan Africa (SSA) continued to improve business climates with best performance seen in the area of getting credit. Some 25 per cent of the reforms recorded by Doing Business 2020 were in the economies of SSA. Economies of the region enacted 73 reforms in the 12 months leading to May 1, 2020. Mauritius (13), ranked the highest in the region overall, followed by Rwanda (38) and Kenya (56). Compared with the previous year, SSA economies increased their average doing-business score by 0.9 points. Notably, most reforms in the region were in the areas of starting a business, dealing with construction permits and getting credit. Be that as it may, despite the advancements, there's still a long road ahead. Seventeen economies had no reforms in the 12 months through May 2019; three economies (Eritrea, Somalia, South Sudan) have never implemented any reforms in the past five years and two (Somali and South Sudan) have never implemented reforms in the areas. Regional score at 51.8 (out of 100) is way below OECD high-income average of 78.4 and the global average of 63. Only two SSA economies rank in the top 50 on the ease-of-doing-business rankings while most of the bottom 20 economies in the global rankings are from the region. Within the context of the much-hyped African Continental Free Trade Area (AfCFTA), one indicator — trading across borders — shows the region lagging. For instance, time to clear exporting goods at the border takes 97 hours compared to eight and...

Introduced to lessen days and facilitate inter-regional and international transport and road transit, the one-stop border points (OSBPs) are reeling under the deadly coronavirus (Covid-19). When exiting one country and entering another, OSBPs combine two stops into one thus fast-tracking movement of people and improving business environment in the East African Community (EAC). However, Covid 19 has virtually crippled operations of the multi-million-shilling facilities with EAC member states witnessing unprecedented traffic jams of heavy- duty trucks. A senior Regional Kenya Revenue Authority officer said there were more than 1,200 cargo trucks stuck in Busia and Malaba alone and continues piling up in the standoff. “They are all loaded with a wide range of multi-million-shillings cargo destined for markets in Uganda, Rwanda, Burundi, South Sudan and Eastern parts of the Democratic Republic of Congo (DRC), but they are now stuck in the endless jam,” he told Business Hub. Stringent protocols The official, who requested to remain anonymous, attributed the jam to number of drivers protesting some protocols involved in undergoing the mandatory Covid-19 checks before exiting. Drivers, he added, are protesting the way they are being handled, particularly the requirement that they be tested in Kenya on exiting and also in Uganda before proceeding to their destinations. The official said when the government introduced a raft of measures to control the spread of the disease, the first to be hit were the long-distance cross-country Public Service Vehicle (PSV) drivers. Lake Region Counties Economic bloc’s Kenya National Chamber of Commerce and Industry...

Notwithstanding calls for the implementation of a continental trade deal, the latest Africa Regional Integration Index (ARII 2019) has shown that regional integration remains very poor and vital to building resilient economies that will survive the effect of the pandemic. According to the report, much more needs to be done to integrate regional economies to make them more resilient to shocks such as the current COVID-19 pandemic. Overall, the Index shows that levels of integration on the continent are relatively low with an average score of 0.327 out of 1. The second Africa Regional Integration Index (ARII 2019) was unveiled recently by the Economic Commission for Africa (ECA), the African Development Bank and the African Union Commission (AUC), with a call to action to African economies to deepen their integration. The 2019 Index, which builds on the first edition published in 2016, provides up-to-date data on the status and progress of regional integration in Africa. It also helps to assess the level of integration for every Regional Economic Community (REC) and their member countries. The report observed that although 20 countries score above average, no African country can be considered well integrated into its region. Even the most integrated country, South Africa, scores 0.625 less than two-thirds of its potential on the scale. For Nigeria and other African countries to succeed in its long-standing efforts towards closer economic integration, ARII 2019 recommended that countries improve regional networks of production and trade by enhancing countries’ productive, distributive, and marketing capacities; build...

Over the last few weeks, rumors—and then a few stories—have emerged that the long-expected implementation of the Africa Continental Free Trade Area (AfCFTA) agreement due on July 1 would be delayed for up to a year while the continent deals with an unprecedented economic crisis in the wake of the Covid-19 pandemic. While the African Union hasn’t formally confirmed any intention to pause their plans, it hasn’t seemed totally unrealistic this would be under consideration during such unprecedented times. AfCFTA, which was ratified by enough African countries last year, created the world’s largest free trade zone with a combined GDP of $3.3 trillion. Dropping trade barriers between African countries would boost trade on the continent by over 50%, according to some estimates. Others believe it would double intra-continental trade in Africa. But even with all the practical concerns around a pandemic which is not believed to have peaked yet on the continent, many long time supporters do not believe now is the time to delay the AfCFTA’s implementation—they argue the opposite. “The Continental Free Trade Agreement can be one of the most important tools of our economic recovery,” says Paulo Gomes, a former World Bank executive director and chair of the executive committee of AfroChampions, an African Union-mandated network to coordinate private sector discussions around AfCFTA. “If I’m an African finance minister I don’t have quantitative easing and the money printing money tools of the wealthier economies—trade can be our stimulus.” For Gomes and others this isn’t simply about intra-African...

Tanzania Daily News (Dar es Salaam) AS coronavirus pandemic effects are being felt across the East African Community (EAC), the community feels the need to embrace the principle of comparative advan- tage so as to keep business going and bring life back to normalcy. The idea has been floated just a few days after Presi- dent John Magufuli and his Kenyan counterpart, Mr Uhuru Kenyatta conversed and solved a border dispute about truck drivers crossing from one country to another. Tanzania has, from the beginning opted for no lockdown practice and the move has since paid off. Speaking on behalf of EAC Secretary General, Ambassador Liberat Mfumukeko, Kenya's EAC Affairs and Regional Development Cabinet Secretary (CS), Mr Adan Mohammed said that the aim of embracing the principle was to keep regional trade going and that EAC remains united and together defeat the Covid-19 for common good. "We must therefore strengthen our trade bond and utilise the principle of comparative advantage to keep regional trade going," said the CS upon handing over mobile labs from the EAC Secretariat to Kenya. "EAC must remain to- gether to defeat this disease for our common good," added Mr Mohammed. The principle refers to an economy's ability to produce goods and services at a lower opportunity cost than that of trade partners. A comparative advantage gives a company the ability to sell goods and services at a lower price than its competi- tors and realise stronger sales margins. The law of comparative advantage is popularly attributed to...

In the last few months since reporting the first COVID-19 positive case, African countries have borrowed at least $10 billion in new loans to deal with the adverse impact of the pandemic on livelihoods and economies. These add to mounting debts at a time when tax revenue is shrinking, export earnings are in free fall, and diaspora remittances are drying up. Meant to finance the region’s response to and protect its economies against ensuing disruptions from the virus outbreak, most of those loans have come mainly from the International Monetary Fund, with Africa dominating the lender’s COVID-19 emergency financing list. The Fund late April approved $1.23 billion of emergency funding for Kenya and Uganda, saying the pandemic will likely exact a severe toll on the two East African economies. The $739 million Rapid Credit Facility is meant to boost Kenya’s international reserves to help cover the balance of payments shortfalls this year while also providing resources to improve public health and support for households and companies hit hard by the crisis, the IMF said at the time. In addition to the IMF loan, Kenya has also turned to the World Bank ($6.6 million and $1 billion for budget support), the United States government, as well as raised about $20 million from private sector firms and individuals to finance its COVID-19 response. Among the six East African Community member states, Kenya has borrowed the most with an estimated $2.5 billion secured since March. Uganda meanwhile has added $540.2 million to its...