NAIROBI: Local sugar millers will continue enjoying protection against competition from other producers in the Common Market for Eastern and Southern Africa ( Comesa) for the next one year. This follows a decision by the Comesa Trade and Customs Committee to grant Kenya another 12-month extension as it seeks to privatise State-owned sugar factories. This is the fourth time Kenya has been granted an extension from the regional bloc since it was granted the protection window in 2004. Now it has up to February 28, 2017 to institute the necessary changes with a view to making it strong enough to compete with sugar from other Comesa members. Factories earmarked for privatisation include Nzoia, Sony, Chemelil, Muhoroni and Miwani Sugar Companies. A statement from the Comesa Communication department says the Trade and Customs Committee, which is composed of representatives from member States, met last month and came up with what was considered “a win-win approach”. “This Committee was mandated to process safeguards by the Council of Ministers. During its meeting, the committee considered the request from the Government of Kenya and made several recommendations,” the statement says. AGREED SYSTEM The committee agreed the Kenyan sugar sector should be given a one-year extension of their existing safeguards, subject to review and renewal for another one year. Further, the committee agreed a system allocating specific quotas to each member State should be put in place taking into account the agricultural calendar of the member states, in consultation with the member states and be...

Kenyan manufacturers are losing the East African market to Chinese and Indian firms, the World Bank said on Thursday. he bank said the share of manufactured goods imported by East African Community (EAC) countries from Kenya declined to seven per cent in 2013 from nine per cent four years earlier. Data from Kenya National Bureau of Statistics shows that exports to Uganda and Tanzania dipped last year by 6.5 per cent underlining the growing trend. “These changes are significant because almost 40 per cent of Kenya’s manufacturing exports go to the EAC,” the bank says in a new report focusing on manufacturing. Some of the Kenyan products which have lost the export market include plastics, chemicals and paper. Companies have attributed the drop in exports to setting up of subsidiaries by manufacturers in the region to make what was previously exported from Kenya. However, the World Bank has pointed to cheaper products from India and China as a source of the shift. The competitiveness of Kenyan exports is said to be slowly declining. In 2013 the country’s exports represented 0.02 per cent of global manufacturing exports down from 0.06 per cent in 1994 and 0.18 per cent in the 1980s. Source: Business Daily

Lack of competition in Kenya has seen inefficient large manufacturers remain in the market leading to high cost of goods and slow growth of the sector, said World Bank. World Bank data shows that the gap in labour productivity between an employee in the most efficient company and the least efficient within the same sector was as wide as Sh22,000 annually. Annual labour productivity is calculated as the value of goods produced by labour within a year. “Surprisingly those less productive are staying in the market,” said Maria Paulina, an analyst at World Bank. The bank noted Kenyan companies participating in the international market through exports had a higher mortality rate due to their uncompetitiveness attributable to inefficiencies. Kenya firms were found to have the second-lowest survival rate of exporters among a group of countries that included those of East African Community, South Africa and Nicaragua. Kenya Association of Manufacturers (KAM) said it was aware of the distorted competition in the market, which helped the inefficient companies to exist. “We are aware they exist and persist because people can get away with it. This market rewards low productivity firms,” said Betty Maina, the chief executive of KAM. She noted attempts to entrench efficiency in energy use by manufacturers had received low participation despite most producers citing electricity as a major cost. 280,000 workers KAM also noted the winning of State contracts was also likely to keep inefficient firms afloat especially when the tendering process was not transparent. Manufacturing sector growth...

Rwanda is, starting today, hosting the 7th East African Petroleum Conference and Exhibition 2015 this week. The summit, the first of its kind to be held in Rwanda, will feature a number of discussions which will be centered on how the region can fast track inclusive development that engages all key stakeholders in the oil and petroleum gas industry. The conference will be held under the theme: ‘East Africa Region - Proven Destination for Investment in Petroleum Resources for Regional Energy Efficiency and Lasting Socio-Economic Development.’ It will explore critical topics on emerging trends; provide awareness of the potential for petroleum development in the region and other important developments in the sector including technological advancements in exploration, development and production of the region’s petroleum resources in accordance with international best practices. This Summit comes at an exciting time for the industry, a time when the crude oil prices are falling and will provide international and national companies with an overview of the fiscal policies relating to exploration and production that are affected by the low prices, along with updates on current or future energy prospects in the world. It will foster furtherance to previous deliberations of EAC oil summit that was held last year in Arusha nearly on the same month. The envisaged growth in the sector was projected to come from improved operations, technologies, reservoir management, advancement in geology and geophysics, deep investments, risk control and new discoveries in the region. East Africa is currently one of the most...

Aviation experts from the Northern Corridor countries have converged in Kigali to discuss a concrete legal framework as the region prepares to fully liberalise the airspace among partner states. The two-day meeting has attracted civil aviation experts from Rwanda, Uganda, Kenya and South Sudan to prepare a workplan and budget for the implementation and management of the Northern Corridor airspace, accordning to Tony Barigye, the Rwanda Civil Aviation Authority (RCAA) communication manager. “They are also expected to prepare a memorandum of understanding on search and rescue, as well as aircraft accident investigation,” Barigye told Business Times in a telephone interview yesterday. “This meeting is yet another step to the liberalisation of the airspace among the Northern Corridor states. It will also help deepen the EAC integration process.” It comes on the backdrop of agreements that have been signed between states to relinquish ‘Fifth freedom rights’ as one of the ways of liberalising the regional airspace,” he added. Last year, Rwanda, Uganda and South Sudan signed an agreement establishing a legal framework paving way for negotiations that will see local airlines attain ‘Fifth freedom rights” on the Juba-Nairobi, Nairobi-Juba routes. Under the agreement, local airlines, including RwandAir, have the right to carry passengers from one country to another and from that country to a third country. Monique Mukaruliza, Rwanda’s co-ordinator for the Northern Corridor integration projects, said the initiatives will enhance competition in the aviation industry and, ultimately, make air transport in the region affordable. Alex Buterere, the RwandAir senior manager...

Rwanda will next week host representatives from about 40 British companies that have picked interest in investing in the country. According to William Gelling, the British high Commissioner to Rwanda, the potential investors represent companies dealing in sectors including energy, construction, mining, agriculture, transport and financial services. The trip is coordinated by the Eastern Africa Association, a private sector organisation comprising prominent, mainly British based companies with business interests in East Africa. The visit is scheduled for March 11-14. Last year, a UK-Rwanda Investment Forum was held in London where President Paul Kagame urged the business communities of the two countries to make the most of the excellent relationship they share to drive fruitful and longstanding investment opportunities. Rwanda’s ambition of becoming an ideal investment destination received a boost after Parliament, last week, passed a bill that will see investors in priority sectors benefit from generous incentives including tax holidays. The Rwanda Development Board is expected to pitch investment opportunities that are available in the country. According John Small, the CEO of Eastern Africa Association, beyond being ranked third on the continent for ease of doing business, Rwanda being an active member of the East African Community would make it possible to access the rest of the region. “Rwanda’s economy has been growing by over 8 per cent over the last decade and the MO Ibrahim index ranks Rwanda as the most consistent country in Africa in form of good governance improvements over the last decade. Its economy is still...

The 16th ordinary meeting of the heads of states of the East African Community (EAC) was held on the 20th February 2015 in Nairobi Kenya. These Presidents of Tanzania, Kenya, Uganda, Rwanda and Burundi made a number of resolutions. Among them is the resolution to speed industrial development in the regional block through banning importation of second hand clothes and vehicles popularly known as mitumba in Kiswahili. The need for industrial development in this part of the world is very clear if development goals are to be attained. Whereas the need for industrial development in EAC is uncontested territory, the routes through which industrialization of the sub-region is to be attained is surely contested and subject to debate. There are various perspectives through which this seemingly political decision to industrialize the EAC through banning of second hand clothes and vehicles can be looked at. In this article, the author gives selected economic perspectives on the matter. Why mitumba consumption? Before any move to ban second hand clothes and vehicles in this part of the world one has to answer the why mitumba question. There may be various schools of thoughts on the matter. In the final analysis however it is likely to boil down to cost and at times quality factor. If one was to take representative social-economic profiles of consumers of second hand clothes in Tanzania and arguably the rest of the EAC, one is likely to see the majority belonging to lower social-economic strata. For vehicles, they will...

Kampala. Intra-regional trade between the East African Community (EAC), Common Market for Eastern and Southern Africa (Comesa) and the Southern African Development Community (SADC) has grown threefold in a period of 10 years. Latest statistics show the combined intra-trade of the three regional economic communities (RECs) for the period 2004 to 2014 grew from $30 billion (about Shs87 trillion) to $102.6 billion (about Shs289.7 trillion). In this period, Comesa alone recorded growth from $8 billion (about Shs23.2 trillion) to $22 billion (about Shs63.8 trillion). Comesa is made up of Uganda, Kenya, Rwanda, Burundi, the Democratic Republic of Congo, Eritrea, Ethiopia, Egypt, Sudan, Comoros, Djibouti, Libya, Madagascar, Malawi, Mauritius, Seychelles, Swaziland, Zambia and Zimbabwe. SADC, on the other hand, registered growth from $20 billion (about Shs58 trillion) to $72 billion (about Shs208.8 trillion). SADC is made of South Africa, Botswana, Lesotho, Namibia, Swaziland Mauritius, Zimbabwe, Madagascar, Malawi, Mozambique, Tanzania, and Zambia. EAC saw its growth in trade grow from $2.6 billion (about Shs7.5 trillion) in 2004 up to $8.6 billion (about Shs24.9 trillion) realised in 2014. Uganda, Kenya, Tanzania, Rwanda and Burundi make up the EAC. Giving an update on the Tripartite Free Trade Area negotiations, the Secretary General of the Common Market for Eastern and Southern Africa (Comesa), Mr Sindiso Ngwenya, said: “This growth has taken place on the basis of the individual free trade areas (FTAs) of the three RECs”. Mr Ngwenya said the establishment of the Comesa-EAC-SADC free trade area will follow the same growth path, however at...

The East Africa Community (EAC), comprised of Burundi, Kenya, Rwanda, Tanzania, and Uganda, is one of the leading regional economic organizations in sub-Saharan Africa and has made great strides in recent years toward integrating the economies of its partner states. It has established a free trade area and a customs union, and is working toward a common market. THE U.S.-EAC COOPERATION AGREEMENT The U.S.-EAC Cooperation Agreement on Trade Facilitation, SPS, and TBT commits both the EAC and the United States to three objectives: IMPLEMENT THE WTO's TRADE FACILITATION AGREEMENT - The Agreement commits the parties to cooperate on customs issues, including the implementation of the World Trade Organization (WTO) Trade Facilitation Agreement, reducing red tape and unnecessary formalities at borders decreasing border release times, and implementing other positive reforms laid out in the WTO Trade Facilitation Agreement to help streamline and facilitate trade. This will build on the EAC's own work on customs reforms, which have resulted in substantial reductions in the time and costs of moving goods across borders within the EAC. For instance, container transit times from Mombasa, Kenya, to Kigali, Rwanda have declined from 21 days several years ago to six days, while associated transport costs are down by over $1,700 per container. ENHANCING FOOD SAFETY, PLANT AND ANIMAL HEALTH - The Agreement provides for U.S.-EAC cooperation and capacity building related to food safety and animal and plant health standards. While a majority of the region's people are involved in agricultural production or processing, the export potential...

On Thursday, the U.S. signed a trade agreement with the East African Community (EAC), comprising Burundi, Kenya, Rwanda, Tanzania and Uganda, to ease trade flows and provide American technical assistance. East Africa has some of the fastest-growing economies in the world, and the recent discovery of oil in Kenya and Rwanda make the region even more attractive in terms of future development. Trade between the U.S. and the EAC already increased 52% in 2014 to $2.8 billion, and this agreement will help it to continue expanding. The African countries’ main exports to the U.S. are agricultural goods and textiles, while U.S. exports have so far consisted in large part of heavy machinery and aircraft. But the rapidly expanding middle class throughout East Africa is a tempting and largely untapped market for American firms which sell consumer goods. The U.S. has had bilateral partnerships with the individual EAC states since 2013 but this agreement marks the first of its kind with the regional trading bloc. The mutual benefits of the EAC are becoming increasingly evident for its members, and the organization is taking regional integration seriously. Intra-EAC formal trade rose from $3.7 billion in 2010 to $5.8 billion in 2013, and it is further reducing internal non-tariff barriers. “Container transit times from Mombasa, Kenya, to Kigali, Rwanda have declined from 21 days several years ago to six days, while associated transport costs are down by over $1,700 per container,” according to the Office of the U.S. Trade Representative. Furthermore, “One-Stop-Border-Posts” soon...