The 19th century British colonialist Cecil Rhodes’ dream of unifying Africa from “Cape to Cairo’ was not too far-fetched after all. In a poetic sense, tinged with a dash of de ja vu, this dream was fulfilled with the launch of the Tripartite Free Trade Area Agreement (TFTA), in the idyllic Egyptian city of Sharm el Sheikh on the Red Sea when 26 African Heads of State endorsed an economic integration plan for the continent on a scale never witnessed before. The new trade arrangement, signed on Wednesday, June 10, was described by president Robert Mugabe of Zimbabwe as creating a “borderless continent”. It assembled three (RECs) regional economic communities into a single free trade area that establishes a framework for preferential tariffs to ease the movement of goods and people in the region. “We have told the world today…of our desire to adopt practices that are necessary to increase trade among ourselves. We will do whatever is possible to activate this agreement,” said Egyptian President Abdel Fattah al-Sisi when he hosted 26 Heads of State, representing the largest trading bloc in Africa, and one of the biggest free trade areas in the world. The Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC) and Southern African Development Community (SADC) combine a population of over 625 million people, making up over half of Africa’s population and a GDP of over $1 trillion. Negotiations for the TFTA were undertaken in two phases. Phase I covered trade in goods,...

My interest for and consumption of news and information got me at an early stage. I remember smuggling a small radio to school in primary six and hiding under the desk to listen to the budget speech one day. To be honest I don't think I understood much of what was being said by the finance minister of that time but I felt quite sophisticated and fulfilled. The pomp that comes with the event was hard for me to ignore. There is that ritual of the finance minister walking into parliament with that polished briefcase emblazoned with the country's court of arms and then going ahead to reel off huge figures and percentages punctuated with complicated technical terms always got my attention. I am now much older and a lot of that romanticism has faded away. Now that I am in a better position to understand what budget readings are really about, I instead prefer to ignore the real event and only look out for the analysis that follows. I narrow my focus to just a few sectors that I believe deserve my attention the most. I am more likely to ignore the figures allocated to security but will dig into the ones set aside for education and agriculture. I may also take note of the new taxes or tax alterations as they tend to signify where the money is or the government's social welfare approaches. A few years back, the East African member states agreed to harmonise their budget...

During the budget season business people across the region always look out for the any changes in the tax regime. Nothing impacts their businesses more than taxes. Before they read what governments what to do with the taxes, they want to know how much more or less they will have to pay. About three years ago, Amb. Richard Sezibera, the East African Community (EAC) Secretary General, said a harmonized tax policy would benefit the regional integration process by providing a conducive environment for tax administration and encouraging tax compliance. This is something regional governments should always have in mind when drawing up their national budgets. The Common Market, which we have agreed to be the best route to greater regional prosperity, will not happen if tax harmonisation is not constantly being reviewed and discussed. But fiscal policy involves governments changing tax rates and levels of spending to influence aggregate demand in the national economy. Consequently it is a touchy subject. This is because member states need to have sufficient autonomy in the tax field so as to have enough room for manoeuvre and act in the light of their relevant economic circumstances. But fiscal policy in one EAC country can also cause much uneven economic growth across the region as a whole. It is also a factor that helps to encourage unfair competition through government protectionism. Secondly, research has shown that disparities in direct taxes work to the advantage of some crafty multinational companies, as they are able to concentrate...

The African Union on Monday officially began negotiations on plans to create a continent-wide free trade zone by 2017. Addressing the AU summit in Johannesburg on Monday, Zimbabwe President Robert Mugabe, current chairman of the 54-nation organization, called the new Continental Free Trade Area essential to promoting movement of goods and people within the continent. To meet the 2017 implementation deadline, member states are expected to reduce trade barriers among themselves by drastically reducing export and import duties and, in some cases, waiving visa requirements. Kenyan President Uhuru Kenyatta hailed the launch of negotiations as a critical step toward reducing poverty and doubling the continent’s economic development. “CFTA means Africa being able to be self-reliant," he said. "CFTA means the African Union meeting to discuss what to do with our prosperity as opposed to what to do with the problems that we suffer.” The Southern African Development Community, the Common Market for Eastern and Southern Africa and the East African Community have already launched a tripartite trade agreement, and African heads of state at the summit have expressed hope the continental negotiations will run smoothly. AU Commissioner for Trade and Industry Fatima Acyl says the continental body is aware of the challenges of negotiating such an agreement. “There are some rich, resourced countries, there are some landlocked countries, there are small island countries, but we know with political will — [and] knowing the benefit of the continental free trade area — we will prevail,” he said. The African continent, whose...

Logistics is a critical yet easily neglected component of economic development. Investment in agriculture is futile, if there is no supply chain in place to get produce to market. Essential medication is rendered ineffective, if it cannot be transported in the appropriate conditions. Consumer goods cannot improve people's lives, if the cost of importing them means they are too expensive for people to access. Yet in discussions of "sustainable development goals" or "poverty reduction", there is too often a tendency to focus on headline targets and forget about the mechanics of delivery. In East Africa, transport and freight costs are among the highest in the world, with freight logistics expenditure more than 50pc higher per kilometre than in Europe or the United States. This extra cost is caused by a 'logistics gap': a lack of infrastructure, technology and expertise affecting everything from road networks to payment systems and warehousing facilities. In landlocked countries, this gap is even more pronounced. Transport costs there can reach as high as 75pc of the value of exports. Transit times are also high in East Africa. The 1600Km journey from Mombassa (Kenya) to Kigali (Rwanda) takes on average 422 hours - nearly 18 days. Trucks must stop at two border posts and are likely to encounter 45 road blocks, each of which involves delays and costs, as well as potentially damaging the goods being transited. In contrast, a truck covering a similar distance in Europe - driving from, say, Rotterdam (The Netherlands) to Budapest (Hungary)...

DAR ES SALAAM, Tanzania - Dar port has overtaken Kenya’s Mombasa in terms of handling Rwandan cargo and that destined for the Democratic Republic of Congo (DRC) writes LEONARD MAGOMBA Tanzania Ports Authority (TPA) which manages all port in the country said that last year (2014), Mombasa port handled 235,912 tonnes of Rwandan cargo which is 33% of the cargo handled by Dar es Salaam port. In contrast Dar handled 630,000 mts. The acting Director General of TPA, Mr Awadh Massawe told Rwanda’s President Paul Kagame and his host Dr. Jakaya Kikwete when they visited Dar es Salaam port. “As a matter of comparison during the year 2014, Mombasa port handled 235,912mts of cargo to Rwanda which is 33% of cargo handled by Dar es Salaam port which was 630,000mts of cargo for the same endpoint,” Massawe said. On the other hand, Massawe said cargo to the DRC which passes through Mombasa port during the same period was 407,727 mts which was 15% of the cargo handled by Dar port. The port currently handles 1,577,000 mts of cargo for the same destination. “This shows the importance of Dar es Salaam port and the central corridor to the neighbouring countries,” he said. The TPA chief said for the past five years, Dar es Salaam port throughput has continued to increase at an average rate of 12.8% per annum. Last year the port handled 14.6 million mts including 621,000 containers. “Out of cargo handled, transit cargo averaged 34% which was 5.020 million...

The East African Community will roll out improved Customs Union Rules of Origin in the next fiscal year, promising a better future for cross-border trade. The EAC Customs Union Protocol, which came into force in 2005, provides for the rules of origin, but since its inception, the business community has been complaining about its applicability. “It is our expectation that the new rules of origin will spur intra-EAC trade as they are more flexible for the private sector to comply with compared with the former ones,” said Adrian Njau, a trade economist at the East African Business Council. Currently, some partner states do not recognise some goods, forcing the business community to pay all taxes including those eligible for zero import duty, just to save time. Uganda and Tanzania, for example, have not been recognising the EAC rules of origin granted to several Kenyan tobacco products. Kampala and Dar demanded that tobacco products from Kenya comprise 70 per cent and 75 per cent of local content respectively, for them to enjoy the free import duty. But British American Tobacco says the 75 per cent local content required by Tanzania Revenue Authority (TRA) does not recognise the EAC RoOs as stipulated in the protocol. Under the current RoOs, only goods wholly produced using local inputs or those made using imported raw materials but have 35 per cent of the ex-factory value added within the region, can cross national borders without being taxed. This, among other setbacks, has been blamed for the...

Top officials from the World Bank and the East African Community have been exploring ways to improve transport links to landlocked countries. At a meeting at the Unesco headquarters in Paris on June 9, representatives of the two organisations as well as other development partners proposed ways to improve infrastructure and transport challenges along key trading corridors. The meeting, dubbed the Integrated Corridor Development Convention, was organised to assess the challenges and opportunities to facilitate better regional integration in East Africa. “In East Africa, high transport costs, poor infrastructure and underdeveloped logistics services limit the competitiveness and inhibit the integration of both the landlocked and transit countries into the regional and global market,” said Pierre Guislain, senior director for the World Bank’s Transport and ICT Global Practice. “Increasing the integration between the different modes of transport by developing the corridors can significantly improve connectivity and contribute to higher growth in the region.” The convention’s goal was to discuss solutions to facilitate the funding of trading corridor development in countries such as Burundi, Rwanda and Uganda. The meeting was a follow-up to the third EAC Heads of State retreat on infrastructure development and financing held in Kenya in November last year where EAC leaders endorsed a strategy and action plan to improve the quality of service, and reduce the costs of transport, by improving links between the different modes of transport along the key trading corridors in the region. Freight transport The strategy, which the EAC Secretariat was tasked to implement,...

TANZANIA Ports Authority (TPA) has commended Trade Mark East Africa (TMA) for funding some of the ongoing upgrading Dar es Salaam port projects. According to the Acting Director General, Mr Awadhi Massawe, TPA, upon completion the projects, efficiency at the port would tremendously improve and make it more competitive regionally. A delegation from TMA toured the Dar es Salaam port over the weekend to inspect various projects they fund. “We have some challenges in regard to some infrastructure here but TMA is helping us sort out some of them,” Mr Massawe said. He noted that currently, TMA is funding gates expansion project that aims at easing trucks congestion being experienced. Upon completion, gate number five will only be used for incoming trucks to load cargo at Tanzania International Container Terminal Ltd (TICTS). Gate number four will be used for exit of all trucks, while gate number eight will be used by trucks taking cargo from TICTS. TMA is also funding rehabilitation of a road from UDA area up to Mivinjeni that will help ease congestion of trucks as a result of closing of a section of Mandela Expressway covering an area from UDA to Dar es Salaam Institute of Accountancy (TIA) for rehabilitation and bridge construction. At the moment all traffic passes via a road near TPA headquarter offices toward Kilwa Road and meet with traffic coming from Kariakoo and city centre areas and leads to a serious road traffic congestion. TMA is funding Phase one of Dar es Salaam...

Tanzania has rolled out Phase II pilot stage of the East African Community Single Customs Territory (SCT), making it easier to clear more goods on transit via the port of Dar es Salaam to other partner states. Goods covered in phase I are rice, maize, sugar, cigarettes and edible oil. The additional products under the SCT include wheat and petroleum products imported through Dar es Salaam, and destined for Rwanda; wheat and all brewery imports including beer, malt, phosphorous acid and silicon dioxide destined for Burundi; and cement, salt and cosmetics from Tanzania to Burundi. The system will also be used to clear petroleum products, rice, cotton seeds, detergents, maize flour, households and industrial plastics, bottled water, spices and fertilisers imported through the port of Dar es Salaam to Uganda. Soaps, cooking oil, steel and steel products from Kenya to Tanzania will also be under SCT. The system seeks to eliminate dumping of goods in countries of transit, thus protecting industries and jobs. The EAC ministers meeting last month in Arusha adopted a six-month roadmap on the full clearance of products under the different customs regimes in readiness for a full rollout of the EAC-SCT in June next year. At the port of Mombasa, goods cleared under the system include fuel, clinker, wheat, vegetable oils, cement and confectionaries. A recent Northern Corridor report on the SCT showed that clearance time for cargo destined for Kampala from the Mombasa port has dropped from 18 days to four, and from 21 days...