By Lydia Shekighenda Several scholars and economists have backed the government's move to drop the Economic Agreement Partnership (EPA), saying it is in line with its priority of creating an industrialised economy. Interviewed by the 'Sunday News' separately in Dar es Salaam yesterday, they said that the move will not only protect domestic industries but also the revenue earned by the government through importation of goods from European Union (EU) countries. "If Tanzania will decide to sign the protocol, it would mean allowing the importation of duty free and quota free goods from the EU - thus imposing stiff competition with domestic manufacturers," one of them, Mzumbe University's Professor Honest Ngowi said. He noted that industries within the EU were well protected; meaning that importation of goods from the countries will make local manufacturers fail to compete in the market. Prof Ngowi further explained that the government has been getting revenue from goods imported from the EU, which also means that it stands to lose the earnings if it will endorse the protocol. "This is a right move for the protection of domestic industries and government revenue," Prof Ngowi stressed. He, however, noted that Tanzania, as an East African Community (EAC) member state, agreed to sign the protocol as a bloc. Therefore, its decision to drop the agreement may be received in a different way by other partner states, which might consider it as a slow moving or unwilling partner. He observed that in the long run, the government should...

Next week the African Union (AU) will issue the first e-passports to allow holders to travel visa-free between its 54 member-states. At first, the heads of state, foreign ministers and permanent representatives of member-states, will be the main passport holders. The ultimate aim of the AU is to gradually issue these passports to all Africans. This would be even more ambitious than the Schengen Area established by the European Union. The free movement of labour and goods is a key goal in the 2063 agenda, the AU’s 50 year action plan, to further continental integration. Much of Africa’s trade is still with European and Asian powers, particularly China, rather than between African countries. But there are regional trends towards free movement. Visa-free travel is already permitted between Ghana and the Economic Community of West African States (ECOWAS), which includes Nigeria. While the East African Community (EAC) is planning to establish its own regional passport in 2017. Critics have raised concerns of the spread of infectious diseases, as well as terrorist networks and smuggling, across borders. With just six member-states, the EAC is the most advanced union in Africa and may well try to establish a monetary union in coming years. The Financial Times provides an overview of African integration. Source: The World

A fresh diplomatic row is brewing between Kenya and Tanzania over the neighbouring country’s reluctance to sign a trade deal with the European Union. Tanzania last week said it will not sign the Economic Partnership Agreement between the East African Community and the EU. It says it needs to monitor developments following Britain’s successful June 23 referendum vote to leave the EU. The signing of the EPA by the EAC was set for July 18 ahead of its ratification deadline by the European Commission on October 1, 2016. Kenya has accused Tanzania of “intentionally” blocking her by refusing to sign the EPA. Tanzania Foreign Affairs PS Aziz Mlima said the government will not sign the deal aimed at giving East African states, as a bloc, duty-free and quota-free market access into the EU. “Tanzania wants to capitalise on its access as a least developed country to increase its market share against Kenya,” a ministry official privy to the negotiation process told the Star. If Tanzania backs out, it will jeopardise the process for the second time after a similar move in 2014. Kenyan exports to the EU will attract duty of between five per cent and 22 per cent, like it happened in 2014 when Kenya was placed under the General System Preference trade regime for three months. As a result, the country’s private sector suffered losses estimated to be Sh600 million per month before successfully lobbying to be reinstated to duty-free status. About 87 per cent of Kenya’s exports...

The Kenya Investment Authority hopes incentives under the Special Economic Zones will attract fresh foreign direct investments from India following a two-day state visit to the country by Prime Minister Narendra Modi. Managing director Moses Ikiara said Kenya is keen on attracting pharmaceuticals, manufacturing and ICT firms to set up shop. This will help bridge the trade gap between Kenya and her second-largest source of imports, India. Among incentives Kenya has put in place is a 100 per cent waiver on corporate tax for investment above $2.4 million (Sh243 million) until the full cost of investment is recovered. “This is a key incentive available to investors in different sectors. The Prime Minister’s visit with a huge delegation of investors will help increase the pace of investments and trade,” Ikiara said yesterday. Under the SEZs, investors are allowed a corporate tax relief, and will pay 10 per cent for the first 10 years instead of 30 per cent. “The investor then pays 15 per cent for the next 10 years after which they can now pay the normal corporate tax,” Ikiara said. The Kenya Association of Manufacturers is keen on a Preferential Trade Agreement that will allow locally made goods access Indian market duty free, with a focus on leather and textile industries. “We are also keen to be involved in the Cotton Technical Assistance Programme whose objective is to train and expose different stakeholders to modern practices and technologies in cotton textile and apparel sector,” KAM CEO Phyllis Wakiaga said....

Kenya, Uganda, Tanzania and Rwanda are losing about $2 billion in revenue every year to foreign investors through generous tax incentives. Tax Justice Network-Africa (TJN-A) and ActionAid International figures show Kenya loses $1.1 billion, Tanzania $790 million, Uganda 370 million and Rwanda $176 million in unnecessary tax holidays, capital gains tax allowances and royalty exemptions. On its part, Burundi lost $52 million to firms or officials who were given tax exemptions to import goods to build infrastructure and instead sold the materials. TJN-A and ActionAid said policymakers in the region have spoken about revising tax policies but questions abound on how these tax incentives will be revised, costed and phased out, and the government’s resources and expertise to carry out the exercise. The report by TJN-A and ActionAid titled “Still racing towards the bottom? Corporate tax incentives in East Africa,” reveals tax incentives are fuelling competition for investors and derailing harmonisation of policies, thereby undermining integration. “Though there have been improvements in recent years in addressing the issue, governments continue to give away domestic resources in tax incentives,” said ActionAid Tanzania’s country director Yaekob Metena. The report said the real cost of incentives remains hidden in all five EAC countries as there are neither mechanisms nor demands for accountability to reveal the huge revenue losses happening. Mr Metena said there is a need for a shift in policy as political, financial national and institutional authorities admit tax incentives harmful to revenue mobilisation need to be revised if not altogether eliminated....

Kenya is seeking to relax the rules on importation of sugar to avert a looming shortage fuelled by the underperformance of local millers. Sugar is currently trading at between Ksh100 ($1) and Ksh125 ($1.25) per kilogramme. The EastAfrican has learnt that the regulator — the Agriculture, Fisheries and Food Authority (AFFA) — is evaluating the applications of new importers and plans to increase the amount of sugar that each company can bring into the country. The import quota is currently between 500 and 1,000 tonnes of brown (table) sugar, which is largely used for domestic consumption; import permits remain active for 45 days. Kenya can import between 12,000 and 15,000 tonnes of sugar every month from Comesa and EAC member states. “We don’t produce enough sugar so we must import. We have had cases where millers don’t pay farmers on time, and farmers are not motivated to plant cane,” said Alfred Busolo, the director-general of AFFA. The authority has recommended a minimum price of Ksh3,550 ($33.5) per tonne of cane to be paid to the farmers, and has also drafted new rules to discipline millers who flout contractual arrangements with the farmers. The proposed rules are currently at the Attorney General’s Office. AFFA said the new price takes effect this month. “We want an industry that observes the agreements between parties. We want an industry that is self-regulating,” said Mr Busolo. Currently, farmers are earning Ksh2,800 ($28) per tonne of cane delivered. The market price of sugar is between Ksh4,300 ($43)...

After a year of uncertainty since protests against President Pierre Nkurunziza's decision to run for a third term in office began, the East African Community has now declared Burundi safe to host its activities. The EAC suspended its activities in Bujumbura in the run-up to the June 2015 elections at the height of protests by activists who insisted that Nkurunziza's candidacy violated the Constitution, even though the country's highest court had cleared him to run for the presidency. Last week, an EAC security mission comprising representatives from the other four partner states was in Burundi for four days to assess the situation. The team released a report showing that they were satisfied that the security in Burundi "is satisfactory for continuation of activities with minimal risk to staff and delegates." The mission comprised the assistant director in Tanzania's Ministry of Foreign Affairs and EAC, Aman Mwatonoka, Uganda's director of strategic intelligence at the military headquarters, Lt-Col David Lumumba, advisor on EAC Affairs in Burundi's Ministry of Public Security, Emmanuel Niyonizigiye, and the director of political affairs in Kenya's State Department for EAC Ministry, David Njoka. According to the delegation, Burundi has returned to normalcy especially in the capital which has been a hotspot for violence that claimed more than 500 lives and led to thousands fleeing the country. Kenya's ambassador to Burundi Ken Vitisia, asked the East African countries to support the country end the political crisis. "Burundi has a lot to give back to the Community especially in the...

The decision by Dar to bolt out of the comprehensive Economic Partnership Agreement (EPA) between East African Community (EAC) and the EU leaves Kenya’s exports exposed to heavy taxes. These taxes have been estimated to range from eight to 12 per cent of the value. Kenya exports tea, coffee and flowers to the 28-member market which has lately been pushed into a fire-fighting mode after citizens of one of its members, Britain, voted to leave the union. The decision which has come as a shocker to other members of the EAC might also spell doom to more than 600,000 workers mainly in the flower farms and fresh foods producers. Friday, Tanzania’s Permanent Secretary for foreign Affairs Dr Aziz Mlima said his country would not sign the EAC-EU EPA citing ‘turmoil’ in the EU occasioned by the impending exit of the United Kingdom. Apart from Kenya, the other four EAC member States - Tanzania, Rwanda, Burundi and Uganda- which are still classified as least developed countries (LDCs) will not be affected by this development as their low economic status allows them to access the EU market tax-free. “Tanzania has been proving difficult and slow in firming up the new deal, which if not actualised by end of September, it will have serious implications,” said a senior government official, who asked not to be named. He added, “Tanzania’s decision is not surprising, going by her behaviour lately.” President Uhuru Kenyatta informed the African, Caribbean and Pacific (ACP) ambassadors in Brussels, Belgium recently...

Tanzania has said it will not sign an economic partnership agreement (EPA) between East Africa Community (EAC) and European Union (EU) following Brexit. The announcement caused anguish and shock at the EAC headquarters in Arusha. A number of officials at the Secretariat were apparently at a loss on Friday on learning of the country's U-turn as announced in Dar es Salaam by Foreign Affairs permanent secretary Aziz Mlima. "Has the Tanzania government withdrawn?" inquired a surprised official who said if it was true, the move would be a setback to the negotiations which have been going on for years between EAC and EU. On Friday, Dr Mlima told reporters in Dar es Salaam that Tanzania had decided to halt the signing because of “turmoil” that the EU is experiencing following Britain’s exit. The agreement between the EU and EAC was scheduled to be signed on July 18. Dr Mlima said signing the pact would risk exposing young EAC countries to harsh economic conditions given the prevailing conditions in Europe. The official said Tanzania’s Parliament would first peruse and advise the government before committing to the deal. “Our experts have established that the way it has been crafted, the EPA will not benefit local industries in East Africa. Instead it will lead to their destruction as developed countries are likely to dominate the market,” Dr Mlima said. Dr Mlima's remarks echoed strong criticism of the pact by former president Mkapa who warned EAC not to rush to sign the pact because...

Burundi has lauded efforts by Kenya Ports Authority to enhance clearance and logistics of goods at the Port of Mombasa. Burundi's transport minister Jean Bosco Ntunzwenimana said the ongoing construction of the alternative route from Mombasa, Voi, Taveta, Moshi, Arusha, Singida to Bujumbura will significantly reduce the distance from the Port of Mombasa to the Port of Bujumbura. The new route covers a total of 1,545 kilometres compared to the other 1903km route from Mombasa via Nairobi-Malaba-Kampala-Katuna-Kigali to Bunjumbura. “We are working towards promoting good working relations between the Port of Mombasa and the Port of Bujumbura so that we jointly bolster trade in the region," Ntunzwenimana said. Last year, a total of 75,811 tonnes of Burundi imports and exports passed through the Mombasa. KPA acting managing director Catherine Wairi said the container throughput will reach 1.6 million TEU’s in 2018 when the second container terminal starts operations. "The authority has also acquired a 50-acre land at Taveta border with Tanzania where we intend to construct an inland container depot. The improved road infrastructure coupled with an inland container depot will boost onward transit, outright export and transshipment of cargo," she said. Source: The Star