Flower and fruit exporters breathed a sigh of relief after officials in Brussels gave them a reprieve from new taxes that they feared would deal a severe blow to the billion-dollar industries. The European Union signed a deal with the governments of Kenya, Uganda, Tanzania, Burundi and Rwanda that make up the East African Community (EAC), to have goods enter the prime EU market duty free. The signing of the Economic Partnership Agreements (EPAs) came after weeks of negotiations and a delay when Tanzania stalled on signing the trade deal with the EU. For the deal to work, it needed all five governments to sign the pact in unison by Sept. 30. Negotiations between the EU and the EAC have been ongoing for seven years. Tanzania finally agreed to sign in late October which means that flowers and fruit from Kigali to Kampala can now enter the EU market duty free within the next few months. Oct. 1 was supposed to to be the deadline for the Economic Partnership Agreements but without consensus, goods from the region were subject to taxes as high as 22 percent. The Kenya Flower Council, an industry lobby group, said that the industry was relieved since the taxes could have made local farmers go belly up, resulting in massive job losses. “Kenya flower industry was indeed in a crippling crisis,” Kenya Flower Council CEO Jane Ngigi told AFKInsider. In 2013 horticulture exports from Kenya raked in $1 billion, 95 percent of this coming from sales...

VENTURES AFRICA – In recent times, there has been some ‘back and forth’ argument over the legality and long term usefulness of the Economic Partnership Agreement (EPA) between the European Union (EU) and several African states, according to the United Nations Economic Commission for Africa (UNECA). The EPA encourages African countries to open up to 83 percent of their markets to European imports while tariffs and fees are planned to be gradually eliminated. In exchange for this, African states are to receive customs-free access to the European market. While there may be some economic sense here, a number of African countries are not in support of the arrangement, the major concern being that they may lose their competitive trade advantage to European companies. Kenya was among the countries that refused to sign the deal, and it got significant import tariffs imposed on many of its products for that reason; this reportedly led to numerous layoffs in several African firms. Eventually the East African country caved in to the pressure two weeks ago and signed the trade agreement. This, in the opinion of a growing number of people, might just be called “economic bullying.” Notable EU officials have criticized this arrangement. One of such is German Chancellor Angela Merkel’s Africa Commissioner, Günter Nooke, who claims the EPA counteracts Europe’s development policy efforts. “Economic negotiations should not destroy what has been built up on the other side in the Development Ministry. Germany and Europe contribute large sums of tax money toward various...

VENTURES AFRICA – The United States is keen on boosting trade ties with East Africa and has launched a $65 million trade hub in Kenya to further such relations. Robert Godec, US Ambassador to Kenya, announced this on Monday at the opening of Origin Africa, a two-day textile industry trade fair in Nairobi. The trade hub will run under President Obama’s “Trade Africa” initiative, which was launched in July last year. It serves as a partnership between the United States and sub Saharan Africa aimed at growing regional and international trade between both regions. Godec said Kenya was selected because of its position as the region’s leading economy and its speedy implementation of productive trade policies. It is also home to promising local enterprises that are forming creative partnerships with multinational companies, a lot of which are US companies. Kenya’s President, Uhuru Kenyatta, said in a statement that “Kenya wants to be among the first movers in Africa by creating an enabling environment to attract investment (by foreigners and locals)”. The government has therefore organised a detailed programme to improve Kenya’s business sector and its standards in the global market . “This includes a 40-month programme to inject over 5,000MW of electricity into the National Grid and reduce the cost of power by over 40 percent by end of this calendar year; and plans to fast track the Standard Gauge Railway project and build 10,000km of road infrastructure through an innovative financing model,” President Kenyatta said. Kenya’s Textile industry has...

DURING the last week of October, an eleventh hour East African Community and European Union comprehensive trade deal under Economic Partnership Agreement was initiated. This development was reached following intense lobbying and pressure from Kenya, the EAC most advanced economy and the only non least developed country in the bloc. Nairobi was desperate to have the EPA agreement initiated because its horticultural producers were facing a new tax regime in Brussels for the EAC's failure to kickstart the free trade pact which by 2025 will see heavily subsidized European producers export into the EAC or rather Kenya and by implication the EAC bloc, tax free. In a statement, the EU said that under the proposed EPA trade pact, exemptions are also included and cover mostly agricultural products which remain sheltered from EU competition and to allow time for domestic preparations. The EAC will liberalise progressively to 82.6 per cent of its imports by 2025 after the pact enters into force. Responding to critics of the deal who fear that the EPA deal will simply unlock about 17 per cent of the bloc's tariffs barriers because under the EAC Customs Union Protocol, already about 65.4 per cent of imports from across the world are already liberalised. Tanzania which is a big player in the EAC Customs Union, has indeed benefited from the bloc's integration although critics argue that while exporting raw materials to feed Kenya industrial base, imports of manufactured goods have also increased tenfold. A brief background check of EAC's...

Tanzania’s senior official at the permanent mission in Geneva, Switzerland, Prisca Mutani, has said that the Trade Facilitation Agreement (TFA) as a legally binding pact is not balanced in a manner consistent with the development agenda. In her presentation paper at the Third Regional Meeting of the PACT EAC Project in Bujumbura, Burundi, Mutani said that the TFA has no binding commitment on the question of technical assistance and capacity building as it lacks clarity on source of funds, and terms of accessing the same. “Trade Facilitation Agreement Facility was launched by the WTO but it only addresses assistance on soft projects such as workshops, needs assessments and other related aspects,” she said. She went on to say that the system must work for all and not just for selected few and for the timely correction of any imbalance or abnormalities in the system or its rules is critical. “If the system fails to function in a fair and just manner then the most vulnerable sections of the world's population would be left behind. She added: “The other challenge that is emerging is the Plurilateralisation of the TFA due to the failure to adopt the Protocol of Amendment of which this is being opposed by some of the developing countries including the African Group and the LDCs claiming that these are isolationist in nature and undermine multilateralism”. She pointed out that the African ministers in various African Ministerial Conferences took a stand against plurilateral approaches and so far there has...

The cost of engaging in cross-border trade has spiralled in Kenya to nearly double charges in Tanzania, putting a speed bump on the country’s bid to control East Africa’s logistics business. It costs an average of Sh200,695 ($2,255) for a firm based in Kenya to export a 40-foot container and Sh209, 150 to import same cargo size, the World Bank’s Doing Business 2015 shows. The survey shows that Tanzania, the only other East African state with a seaport, charges just Sh97, 010 ($1,090) to facilitate export of a standard container and Sh143, 735 to import one. “Tanzania has invested in port infrastructure. New cranes, a conveyor belt and anchorage tankers at the port of Dar es Salaam helped reduce berthing and unloading time as well as congestion,” notes the survey released last week. It adds: “The reduction in the time required for port and terminal handling activities benefits not only traders in Tanzania but also those in the landlocked economies of Burundi and Rwanda that use the port.” Kenya has been on an aggressive reforms drive to boost efficiency at its transport corridors and attract landlocked traders to Mombasa Port. Under a recent pact signed with Uganda and Rwanda, Kenya has significantly reduced regulatory barriers and initiated a number of programmes to boost efficiency along the Mombasa-Malaba road. It now takes about five days to clear goods from the port of Mombasa to Malaba with transporters going through only two road blocks and two weighbridges. In 2013, a trip from...

Egypt will host a conference in December to create a free trade zone between the largest economic blocs in East and West Africa which account for 60% of the continent’s trade, according to Minister of Trade and Industry Mounir Fakhry Abdel Nour. Abdel Nour said during a press conference held on Monday that Egypt has taken tough decisions in recent times with respect to economic reforms. The Egyptian government made cuts to energy subsidies during fiscal year (FY) 2014/2015, while simultaneously imposing taxes on incomes above EGP 1m by 5% over three years. Egypt aims to reduce the budget deficit to 10% of GDP by the end of FY 2014/2015, according to Abdel Nour. Abdel Nour also said that the Egyptian government hopes to reduce the trade deficit during the coming phase. The trade deficit reached 22% in July, according to the Central Agency for Public Mobilization and Statistics (CAPMAS). Abdel Nour believes that the coming phase will witness the launch of several projects in the infrastructure sector through private sector partnerships. “The government has worked to support small investors, because supporting them opens new markets in different parts of the world,” said Abdel Nour. Source: Daily News Egypt

TradeMark Africa is working with East African Community member countries to harmonise the standard regulations of the commonly traded goods in the bloc to stimulate business in the region. This is based on a study by East Africa Business Council conducted last year, dubbed: Prioritisation of EAC standards and technical regulations for development, harmonisation, revision or withdrawal. The survey determined that agricultural and manufactured products are the most traded in the bloc. It also identified 93 most traded goods such as tea, cement, iron and steel products, petroleum oils and related items. Edible fats and oils, tobacco and tobacco products, soap and detergents, paper and paperboards, containers, medicaments, beer and other fermented products were also categorised as most traded. A total of 170 specific raw materials used for manufacturing various products in the EAC are also traded the most. Import products from the rest of the world were 44 and the most exported goods to the rest of the world were 68. According to the director of Non-Tariff Barriers (NTBs) and Standards at TradeMark Africa (TMA), Mr José Maciel, standards can cut the cost and time of doing business by huge amounts. “The difference in technical regulations and standards among partner states and lack of EAC technical regulations framework are some of the constraints to intra-EAC trade,” reads the report. The five partner states are now in the process of preparation, approval and adoption of the standards related to these products under national standards bodies in each member country. “Standards...

The East African Community should form regional regulatory agencies instead of each country having its own, which adds to trade barriers, according to the African Development Bank. "The complex set of separate organisations existing at present often overlap and capacity would be more effective if it were operating in a less complicated environment," AfDB says in its East Africa Annual Report 2014. The pan-African lender says single agencies would help the bloc to streamline and boost efficiency of cross-border processes by removing non-tariff trade barriers. In an interview last week, Trade Mark East Africa chief executive Frank Matsaert, whose firm is helping in the regional integration process, said the countries must understand the various forms of non-tariff barriers to ease cross-border flow of people and goods. "All member states need to invest in monetary mechanisms that can help expose and deal with these barriers both at national and regional levels, because they keep popping up from time to time," he said. Eliminating non-tariff barriers is anticipated to reduce costs of doing business within the trade bloc, which shares some of the infrastructure such as ports, roads and railways. Source: The Star

The Government has expressed commitment to improving infrastructure with the the aim of opening up Kenya’s economy to neighbouring countries. Transport Principal Secretary Nduva Muli said the Lamu Port-Southern Sudan-Ethiopia Transport ( Lapsset) corridor project and the Standard Gauge Railway would expand the economy and spur trade between Kenya and its neighbours. Mr Muli said Kenya and other countries in the region were poised for major economic development following the discovery of minerals, oils and natural gas. There was, therefore, need for proper infrastructure – a good transport network and efficient port services. In a speech read on his behalf by the Director General of National Transport Safety Authority (NTSA) Francis Meja, Muli said the Government supports maritime transport as a major contributor to trade development. He said the Government was aware the continent could not develop its intra-continental trade to reach the vast market presented by its huge population if there was no transport connectivity. And to ensure the country opens its borders, the Government is planning to make the northern corridor a dual-carriage road from Mombasa to Malaba. ENHANCE TRADE “It is for this reason the Government recently commissioned the Voi-Taveta road to link the Mombasa port with its hinterland of northern Tanzania and Burundi through Holili,” said the PS in his speech. He said the Lapsset project was an attempt by the Government to open up the northern frontier to enhance trade with neighbours like Ethiopia, South Sudan and beyond. He said the Government was finalising settlement...