THE East African Community (EAC) is optimistic of realising its integration agenda, with development partners injecting 500m US dollars in the past five years, to jack up the agenda. The figure entails both direct and technical support to various aspects of the EAC integration. Addressing the Second Community's Development Partners Forum here, EAC Secretary General, Ambassador Liberat Mfumukeko was confident about the prospects of realising the integration agenda, thanks to the support from development partners. "With this revamped collaboration, the EAC has been able to spearhead the integration agenda with remarkable speed," noted the Secretary General. The main contributors to the EAC Development Programmes include Germany, the USA through the United States Agency for International Development (USAID), European Union (EU) and the African Development Bank (AfDB). "The EAC has transformed itself from a loose co-operation framework into a fast-emerging, solid and dynamic regional economic bloc... it has also evolved strong institutions and vigorous programme delivery, which are already making an impact on the economies of the region," he said. The economic bloc was recently ranked as first among the eight Regional Economic Communities in the Africa Regional Integration Index Report. launched in Addis Ababa through the collaboration between the UN Economic Commission for Africa (ECA), the African Development Bank (AfDB) and the African Union Commission (AUC). Ambassador Mfumukeko, however, called for more partnerships with the business community and, in particular, the East African Business Council(EABC) in industrial development through investment in private sector development and improvement of business environment. The...

In an effort to reach common ground on the harmonisation of domestic taxes in the region, EAC partner states have agreed not to levy value added tax on some essential goods and services that are consumed domestically. They have also agreed to offer tax incentives under an agreed set of rules and regulations to avoid unhealthy tax competition. The EAC’s Committee on Fiscal Affairs noted that although the best practice is to subject all domestically consumed goods and services to VAT, the reality in all partner states is that, for various considerations, some goods such as medical supplies and educational materials are given some tax relief. Currently Kenya levies 16 per cent VAT on books and other learning materials and eight per cent VAT on fuel. In Uganda, Rwanda, Tanzania and Burundi, learning materials have been zero rated. Kenya’s standard VAT rate is 16 per cent, while Uganda, Tanzania, Rwanda and Burundi are at 18 per cent each. However, a domestic taxes harmonisation progress report prepared by Kenya’s Ministry of East African Community Affairs shows that the process of harmonising domestic taxes (VAT, income tax and excise tax) is moving slowly largely because some member states think it will lead to loss of revenue. The partner states had criticised the domestic tax harmonisation policy for failing to provide guiding principles, and ordered that the document be reviewed by February. However, some partner states like Uganda had not submitted their country-specific comments on the draft policy by the time of its...

The African Development Bank (AfDB) will fund infrastructure projects by Eastern African countries to the tune of $2 billion over the next four years. The funding, unlocked by the recently approved East Africa Regional Integration Strategy Paper (RISP), could be scaled up to $3 billion in the same period, bank officials said. The Strategy Paper lays out the roadmap to accelerated regional integration through joint infrastructure development, and covers regional transport connectivity, energy infrastructure, ICT connectivity, and management of transboundary water resources. The East African Community (EAC) Secretariat has been driving the push for regional infrastructure that would increase competitiveness and bring about structural transformation. The Strategy Paper was developed in consultation with regional economic communities (RECs) and is aligned with key REC strategies for the EAC, the Common Market for Eastern and Southern Africa (Comesa) and the Inter Governmental Agency on Development (Igad). “The key objectives of this four-year strategy are fast-tracking structural transformation, increasing trade and promoting financial sector integration and inclusion,” said Nnenna Nwabufo, AfDB deputy director general for East Africa. The funding programme also covers Djibouti, Eritrea, Ethiopia, Seychelles, Somalia, and Sudan. In Tanzania, AfDB is offering to finance the country’s 2,100MW Stiegler’s Gorge hydroelectric plant and the modernisation of the Dodoma Airport. In May, AfDB president Akinwumi Adesina said that President John Magufuli of Tanzania was considering seeking funding for the Stiegler’s Gorge project. “We are looking at that with him and the government, but we are also very keen on alternative sources of energy,...

Dar es Salaam. Massive investments in infrastructure, real estate, technology, hospitality and construction in Tanzania, Ethiopia, Kenya, Uganda and Rwanda have made East Africa the most preferred investment destination on the continent, a new study shows. In its study findings titled Africa Attractiveness Report 2018, Ernst & Young (EY) says East Africa last year overtook its western, southern and northern Africa peers in attracting foreign direct investments (FDI) for the first time in history. East Africa bagged 197 FDI projects in 2017, EY says, far above the 185, 172 and 162 projects registered in the north, west and southern Africa, respectively. The 197 new projects in East Africa were an 82 per cent improvement over the 2016 investments. “The project numbers for 2017 made the region Africa’s major FDI hub,” the report reads in part, adding that Kenya, Ethiopia and Tanzania received the highest number of FDI projects – 67, 62 and 35 respectively. The 35 projects registered in Tanzania were a 59 per cent improvement over the 22 registered in 2016. “Nine of the projects were in real estate, hospitality and construction (RHC),” the report states, attributing the improvement to government investments in related infrastructure, and private sector investments in the region’s hydrocarbons sector. Tanzania is currently building a 300-kilometre stretch of the standard gauge railway (SGR) between Dar es Salaam and Morogoro. This is part of the government’s wider goal of eventually linking Dar es Salaam to Rwanda and Burundi with high-speed electric-powered train services at a total...

The global trade wars have resulted in noticeable instability and lower economic growth is some African countries, says the global trade organisation. Keith Rockwell, WTO’s Director of Information and External Relations Division, said the rising US dollar as a result of the trade tensions was also hurting African economies. He said between 2013 and 2017, sub-Saharan African debt levels denominated in foreign currency were up 80 per cent, adding that in non-resource intensive countries the jump was about 18 per cent. Rockwell was responding to the Financial Times that had requested him to explain the impact of the ongoing trade friction between the United Stated and China at the regional dialogue on Challenges for the Multilateral Trading System-Perspectives from East Africa held in the Kenyan capital Nairobi last week. The dialogue was jointly organized by the Friedrich Ebert Stiftung (FES), a German organisation promoting democracy and good governance, social justice and globalization with a human face and the WTO. “Per capita income growth remains sluggish. Rapid increase in the working-age population means that by 2035, the number of people in low-income countries reaching working age (15–64) will exceed that of the rest of the world combined,” he told the dialogue that brought together civil society organisations from Kenya and journalists from Tanzania, Kenya, Uganda, Rwanda and Ethiopia. Rockwell recalled an African proverb that says: “When two elephants fight, it is the grass that suffers most”. “And when global economic powers are engaged in trade wars it is African countries that...

For twenty years, only soldiers, refugees or rebels had ventured to the border between the enemy brothers of the Horn of Africa, Ethiopia and Eritrea. But with the normalization of their relations, the former desert no man’s land is now quivering with activity. Trucks loaded with bricks and wood, fruit and vegetable carts and local buses visiting their families are now crossing the border under the benevolent eye of soldiers who until a few months ago looked at each other as dogs from their trenches dug in the rock. “We have everything we didn’t have before, from the smallest to the largest,” says Abraham Abadi, a merchant in the Eritrean city of Senafé, whose shop is full of cookies, drinks and other goods from Ethiopia. We have everything we didn’t have before, from the smallest to the largest But the dramatic reopening of the border this summer has also brought its share of problems, with an influx of Eritrean refugees in Ethiopia and a chaotic exchange market between the currencies of two countries with very unbalanced economic development. Once a province of Ethiopia, Eritrea gained its independence in 1993 after several decades of bloody war. The border demarcation then caused a two-year conflict in 1998 that left tens of thousands dead, before ending with more than 15 years of Cold War, with Ethiopia refusing to comply with UN recommendations on the demarcation of the border. Until the arrival in Addis Ababa of the reformer Abiy Ahmed, who decided last June to...

The African Development Bank has approved the East Africa Regional Integration Strategy Paper (RISP) laying out the roadmap for accelerating regional integration in the region with regional infrastructure development among the main pillars of the plan. The bank has earmarked $3.3b (sh12.5 trillion) to finance the strategy according to a statement from the bank. The strategy will guide the bank’s regional operations in 13 countries, namely Burundi, Comoros, Djibouti, Eritrea, Ethiopia, Kenya, Rwanda, Seychelles, Somalia, South Sudan, Sudan, Tanzania and Uganda. The Regional Integration Strategy Paper 2018-2022 maps out the direction of the Bank’s regional integration work in Eastern Africa over the next five years. The key objectives are fast-tracking structural transformation, increasing trade and promoting financial sector integration and inclusion. The strategy is focused on two mutually reinforcing pillars namely regional infrastructure development for competitiveness and transformation. The other is strengthening of policy and institutional frameworks for market integration, growing investments and value chains development. Eastern Africa is the fastest growing region in Africa, with real gross domestic product (GDP) growth rate of 5.9% in 2017 compared to the continental average of 3.6%. But countries in the region grapple with poor infrastructure including power shortages, low electricity connection rates and high cost of electricity for manufacturing enterprises – about four times higher than the global average. They are also characterised by low-level industrialisation, with manufacturing added value below 15% in all the region’s member countries. “Most Eastern African countries depend on agricultural and mineral products for their exports,” said...

Small- and medium-sized enterprises portend the future growth for industry and trade in this country. They constitute the next frontier for economic growth and transformation. They contribute 25 per cent of the gross domestic product, but have potential to expand exponentially, if properly supported. Policy papers have been published and the government has on several occasions expressed its desire to promote SMEs. However, oftentimes the discussions take place at workshops and conferences or exist just on paper. There is little evidence to demonstrate that the policymakers are actually seized of the matter and, therefore, driving it to the desire destination. INFRASTRUCTURE Precisely, the growth of SMEs lies in practical support, including incentives and markets for the products, which is what the government should focus on. President Uhuru Kenyatta has aptly captured the state of SMEs and, in particular, did the right thing to admit that the government has given lip service to the sector. Speaking at a conference at Strathmore University this week, the President was candid that the government has done little to support SMEs other than giving lofty promises that are never actualised. The role of government is basically facilitation, which means providing the right infrastructure, formulating proper policies, minimising administrative and legal bottlenecks in addition to operating a favourable financial and tax regime. RESTRICTIVE In reality, the obtaining scenario is restrictive and punitive. In major cities like Nairobi, the areas where SMEs operate are poorly serviced in terms of infrastructure, water and sewerage. Take the case of...

THE East African Community (EAC) will join other regional economic communities for a Tripartite Transport and Transit Facilitation Programme (TTTFP) validation workshop for cross border road transport agreements, model laws and regulations in Eastern and Southern Africa slated for Addis Ababa, Ethiopia next week. TTTFP’s goal is to assist EAC, the Common Market for Eastern and Southern Africa(COMESA) and the Southern African Development Community (SADC) member states to harmonise road transport laws, policies, regulations, standards and systems. Funded by the European Union (EU), the programme is coordinated by a Programme Management Unit hosted by SADC Secretariat on behalf of the Tripartite. According to a statement released by the EAC Secretariat, the programme is relevant for the Agenda 2030 as it not only contributes primarily to the progressive achievement of Sustainable Development Goal number nine but also promotes progress towards the goal. This does not imply a commitment by the Member States of SADC, COMESA and EAC benefiting from this programme. The overall strategic objective is to facilitate the development of a more competitive, integrated and liberalized regional road transport market in the East and Southern African region. The project purpose is to develop and implement harmonized road transport policies, laws, regulations and standards for efficient cross border road transport and transit networks, transport and logistics services, systems and procedures in the East and Southern African region. Target participants in the workshop are experts from 21 beneficiary member states representing Ministries and Government Agencies. Fifteen other regional subsidiary organisations with a...

Traders in landlocked states in East Africa are pushing for a single customs bond guarantee scheme for the whole region amid concerns that high cost of complying with Kenyan and Tanzanian laws have raised their cost of production. While the region operates as a single customs territory, Tanzania does not recognise the Common Market for Eastern and Southern Africa (Comesa) Customs Bond Guarantee Scheme which shippers execute at the Mombasa port to move goods through Kenya, Uganda, Burundi, Rwanda and South Sudan. Tanzania is the only East Africa Community (EAC) state that does not belong to the Comesa trading bloc, having opted to integrate its market with Southern Africa Development Community countries. That means a trader who orders goods through Dar es Salam will have to execute a Tanzanian security bond then revert to either national or Comesa one after crossing the border. “Manufacturing in a landlocked country that imports nearly everything through Kenya or Tanzania is a real challenge,” said Mr Salim Somji, chairman of Burundi-based Siphar S.A, a pharmaceutical manufacturer. “When everyone is thinking of competing in the expanded EAC market, we can only think of competing in other landlocked states of the region.” Regional customs bond guarantees ensure that the government is able to recover duties and taxes from the guarantors should the goods in transit be illegally disposed of for home consumption in the country of transit. While Comesa bond is more expensive, with its value being at 0.5 per cent of goods on transit, traders...