Taxation by county governments on transit goods is holding back plans to eliminate trade barriers between East Africa Africa Community countries, Cabinet minster Peter Munya said at the weekend. The Cabinet Secretary for East African and Northern Corridor Development said double taxation will stiffle the growth of the East African economic market. “I want to ask the county governments to stop double taxation on the trucks that are on transit, that is not in the constitution,” he said. Munya was speaking in Kitale during a sensitisation workshop for Members of County Assembly drawn from Trans Nzoia, West Pokot, Busia and Turkana whch are border counties on EAC trade rules. He urged counties to minimise roadblocks that hinder movement of goods from the port of Mombasa to other East African countries saying that summit decisions stipulates that unnecessary roadblocks should be avoided on international highways. “It is very clear that there should be no roadblocks on international highways that’s a decision by the summit that must be adhered to, this is causing a lot of delays,” he said. The minister said only gazetted roadblocks placed to enhance security should be in place. He said that as a result of the roadblocks which lead to time wastage, other countries with similar goods are edging out Kenya from its traditional regional markets an advantage that Kenya has been enjoying with the signing of the East African free trade. He said that faster movement of goods from the Mombasa port will enable Kenya to...

Border counties should establish formal trade relations with their neighbours, a Cabinet secretary has said. East Africa Community and Northern Corridor Development CS Peter Munya urged such counties to avoid imposing unnecessary taxes that could hinder cross-border trade. To promote such trade, Mr Munya (pictured) urged the leaders of the affected counties to embrace regular integration and exchange programmes. “In order to create more business opportunities for our people living near international borders, we need to build sustainable business ties with our neighbours. The counties should not put barriers that will hinder trade,” he said. Munya was speaking during a two-day workshop in Kitale over the weekend. The event was organised to educate county executives and MCAs from border counties on EAC regional integration. Participants were drawn from Turkana, West Pokot, Trans Nzoia, Busia and Bungoma counties. Munya said the Government was committed to opening up cross-border business opportunities for Kenyans. Source: Standard Digital

East African countries are struggling to comply with key macroeconomic targets on fiscal deficit, inflation, public debt and foreign exchange reserves ahead of the operationalisation of a single currency regime by 2024. The mixed performance of regional economies on these targets is likely to delay the delivery of the benefits of a monetary union to regional traders and citizens such as reduced costs of cross-border transactions. A study by the United Nations Economic Commission for Africa (Uneca) conducted in October 2017 shows that while the partner states are on track to achieving the criteria on inflation, challenges remain in attaining the targets on fiscal deficit and adequate level of foreign exchange reserves. This, according to the study, is due to the countries' heavy spending on infrastructure projects and increased imports of capital goods. Countries are expected to attain headline inflation of a maximum eight per cent, a fiscal deficit (including grants) of not more than three per cent of GDP, a public debt-to-GDP ratio of 50 per cent and forex reserves of at least 4.5 months of import cover, to qualify to join the East African Monetary Union. Countries are also required to comply with the criteria for at least three years before the official launch of the single currency regime. This implies the countries have up to 2021 to comply with these conditions. However, efforts towards fulfilling these conditions have been lacklustre with signs that some countries could be forced to scale down on huge infrastructure projects to reduce...

Small businesses are being prepared to reap more from the East African Community after the government launched an outreach to empower their participation in regional trade. The Rapid Results initiative that will run for 100 days targets to sensitise business groups and individual traders on how they can do business with correspondents from Burundi, Rwanda, South Sudan, Tanzania and Uganda. EAC Cabinet Secretary Peter Munya on Thursday said traders from 13 counties that border the countries would be the first to be inducted. “We will be engaging the public through various forums to make sure they fully understand the integration journey and what is in it for them,” Mr Munya said during the launch of the initiative. TARIFFS He said Kenya is pushing for a speedy revision of the East African Community common external tariffs to save its narrowing market share within the region. A conclusion of the new tariffs would ensure that Kenya and other EAC member states remain shielded from cheaper imports from other markets like China and India. The countries are expected to make submissions on the expected revisions by the end of June to pave way for a year-long harmonisation set to be concluded in June 2019. “This review is important for the local industries to prosper because we still have more goods coming from China and India at the expense of our local manufacturers. We will also revise the rules of origin for smoother trade between member states,” Mr Munya said. Source: Daily Nation

Lusaka, Zambia–Kenya has today become the first country to deposit its instrument of Ratification of the COMESA-EAC-SADC Tripartite Free Trade Area. Kenya’s High Commissioner to Zambia and Malawi and also Permanent Representative to COMESA H.E. Sophie Kombe, presented the instrument to the Chair of the Tripartite Task Force, Mr Sindiso Ngwenya who is the Secretary General of COMESA. The TFTA, which was launched in June 2015, brings together 27 countries under the three regional economic communities. It requires a minimum of 14 countries to sign and ratify in order to enter into force. So far 22 countries have signed the TFTA with only five outstanding. Kenya is among three countries that have done both: signed and ratified the TFTA alongside Egypt and Uganda. Speaking on behalf of the other tripartite partners, EAC and SADC, Mr Ngwenya thanked the government of Kenya for demonstrating leadership not only on the tripartite but also within COMESA and the African Union. “Kenya has once again demonstrated commitment to regional integration not only in COMESA and the East Africa Community, but also at the African Union where it has equally and signed, ratified and deposited similar instruments to the newly launched Continental Free Trade Area.” “Kenya was the market leader in regional investments and second to Egypt in intra COMESA trade,” Ngwenya said noting that the country strong manufacturing sector stands to benefit immensely from the reginal trade agreements. Ambassador Kombe said Kenya has consistently advocated for Intra Africa trade among African countries as it...

44 African economies signed in March an ambitious treaty in order to form the African Continental Free Trade Area (AfCFTA). The goal is to eliminate tariffs on 90% of goods. The rationale behind more regional integration is to trade between equals and limit the share of vertical trade (exports of commodities and imports of capital). It should help ascend the value chain and increase the share of manufactured goods in African exports, since manufactured goods represent 43% of intra-African exports and less than 20% of African exports to other regions (75% is driven by commodities). The current predominance of commodity exports makes growth procyclical to commodity prices. Sizeable output volatility deters economic development. More trade openness should imply some economies of scale, through the relocation of production activities in regional hubs, although with some limitations explained by remaining capital controls. One may easily infer some welfare gains for the consumer. However, such economies of scale will also imply some losers. The recent period of low commodity prices was abruptly felt by countries with fixed exchange rates, as they lost competitiveness after other currencies depreciated (like the Nigerian Naira or the Ghanaian Cedi). In economies with low labor productivity, the likely impact of lower import tariffs is worrying trade unions. It explains why Nigeria and South Africa did not sign the free trade agreement yet, since these organizations are directly involved in political parties in these countries. A free trade area will increase intra-African exports We expect African exports to increase...

“The best is the enemy of the good” is an expression associated with Voltaire. It just might have critical relevance for the relation between the African Continental Free Trade Area (ACFTA), the COMESA-EAC-SADC Tripartite Free Trade Area (TFTA) and the regional economic communities (RECs) in Africa. But on 8 June 2018, Kenya deposited with COMESA Secretariat in Lusaka, the instrument of ratification of the TFTA, having ratified ACFTA as well and deposited the instrument with the African Union Commission. Both South Africa and Uganda were also taking the same approach of ratifying both. Just a year ago, it all looked impossible to many around the world that Africa could have a Continental Free Trade Area. But for some, this was de ja vu, for it was the same trepidation in 2015 just before the TFTA was launched on 10 June in Egypt. The TFTA was an African revelation, for it demonstrated the palpable possibility of and spurred strategists towards a continental equivalent. Having missed the deadline of December 2017, ACFTA was duly launched a mere three months later on 21 March 2018 in Kigali, with 44 out of the 55 African countries signing the Agreement on the spot. World history was made, despite entrenched scepticism rooted in pessimistic narratives about Africa but delighting and vindicating optimists around the world. There was some pending work though. Precise time frames were duly set. Annexes (with detailed regulations) to the Protocol on Trade in Goods were to be cleaned up by lawyers (scrubbed)...

Foreign direct investment (FDI) in Kenya soared to $672 million (Sh67.7 billion) last year, a United Nations agency reported on Wednesday. That robust 71 per cent increase contrasted starkly with a 22 per cent drop in FDI in Africa as a whole and a 23 per cent fall-off globally. Kenya's strong performance was due mainly to “buoyant domestic demand and inflows into ICT industries,” the UN Conference on Trade and Development said, referring to information and communication technology. The Kenyan government also provided additional tax incentives to foreign investors, Unctad noted. Political uncertainties Kenya's attractiveness last year as a destination for foreign capital is especially noteworthy given the political uncertainties associated with the pair of disputed presidential elections. Among the companies undertaking major expansions in Kenya in 2017 were South Africa's Naspers, MTN and Intact Software — all part of the ICT industry. US tech firms Boeing, Microsoft and Oracle also directed substantial sums of money into Kenya, along with Johnson & Johnson, a pharmaceutical firm. The United Kingdom's beer producer Diageo further boosted FDI in Kenya's consumer sector. Positive 2018 outlook The outlook for the current year is also positive for Kenya, Unctad suggested. The UN agency pointed to completion of the Mombasa-Nairobi section of the standard-gauge railway as one of the major infrastructure projects in Africa that is likely to boost economic growth and generate additional FDI flows in 2018. Ethiopia remains a magnet for foreign investment in East Africa despite a 10 per cent decline last year....

Last week, the United Nations Conference on Trade and Development (UNCTAD) released its annual Economic Development in Africa report. This year’s report, “Migration for Structural Transformation,” documents African migration trends and highlights the economic impact of migrants and their potential for augmenting growth. Recently, the African Development Bank also released its Annual Development Effectiveness Reviews, which included a section on African migration. A key takeaway from both reports is that the majority of African migration is within Africa—and usually to neighboring countries. As Figure 1 from the Annual Development Effectiveness Reviews 2018 shows, in 2017, the largest migrant flows in Central, East, and West Africa were to other countries in their respective regions. Interestingly, there was very little migration between East Africa and West Africa in 2017. Two other notable findings from the report are that the middle class in Africa migrates to the region’s richer countries, and the need for jobs is a major driver of migration in poorer countries. Looking further into intra-African migration, Figure 2, from UNCTAD’s Economic Development in Africa report, highlights the 15 top corridors for intra-African migration in 2017 by migrant stock. International migrant stock is an estimate of the total number of foreign-born people in a country at any given point in time. In 2017, the Burkina Faso to Côte d’Ivoire migration corridor had the largest stock of migrants at 1.3 million. Migration in the other direction, from Côte d’Ivoire to Burkina Faso, was also in the top five. According to the report,...

With the giants of Africa, Nigeria and South Africa, faced with a crisis at home, East African countries are increasingly becoming a suitable alternative for foreign investors and large consumer companies. Both of Africa’s largest economies have experienced growth at below 2%, hit hard by fall in global commodity prices in 2016. While East African countries’ led by Ethiopia, Kenya, Tanzania and Rwanda have been enjoying growth rates not less than 5% since then. Coca-Cola Beverages Africa (CCBA), the continent’s largest soft drinks bottler, recently announced it would invest $100 million in Kenya over the next five years to improve infrastructure and launch new products. Earlier in May, the company had also launched a $69 million new juice line at its Nairobi plant, one of its four bottling plants in Kenya. The South-African based company made its strategic move into Kenya, and the East African market when it bought Equator Bottlers, the third largest Coca-Cola bottler in Kenya in 2017. “With a population of over 45 million and a rapidly urbanising population, 72% of whom are under 30, Kenya offers opportunities for growth and investment,” Daryl Wilson, country Managing Director for Equator Bottlers, said after it was acquired by CCBA last year. Within sub-Saharan Africa, East African countries—especially Ethiopia and Kenya, and to a lesser extent Uganda and Tanzania — have seen an increase in investments from consumer goods’ companies. The region’s positive economic growth, political stability, an improved regulatory environment and a big market of over 120 million people...