What is the role of the East Africa Business Council in driving industrialisation in the region? EABC has a primary role of ensuring the creation of enabling policies that not only support the business sector to increase its competitiveness, but which are also conducive to enhancing opportunity for attractive returns to investment. However, there are still challenges toward the full realisation of potential benefits and advantages presented by the EAC integration. It is these challenges that have seen the manufacturing sector developing at slow pace besides contributing minimally to regional GDP. Several industries set up in the region operate at below capacity and one of the prevailing factors is the high cost of doing business in the bloc coupled with several barriers to accessing the wider regional market. We can do better as a region, but we (government, private sector and other stakeholders) need to take deliberate steps to improve the business environment. How do you rate manufacturing sector in terms of contribution to regional GDP? While the EAC region has been registering significant economic growth averaging over 6 per cent for years, the performance of the manufacturing sector is discouraging. Apart from modest growth of the regional manufacturing sector of 4.7 per cent, its contribution to the regional GDP has continued to shrink to less than 10 per cent. Between 2000 and 2017, the contribution of manufacturing sector to GDP of individual EAC partner states, has been shrinking, except in Tanzania. Some experts attribute the low industrialisation process in...

Djibouti has formally inaugurated its 690-hectare Doraleh Multipurpose Port, heightening competition with Kenya for regional maritime business. Djibouti port is the main point of entry for goods from Asia, and also serves landlocked Ethiopia which recently opened the Chinese funded 752 kilometre-Addis Ababa-Djibouti railway. Kenya had in 2012 signed a joint pact with Ethiopia and South Sudan to build a corridor linking their economies to the 32-berth port being built at Lamu. Djibouti’s Doraleh port opened on May 24 and features a container terminal with yard capacity of 200,000 TEUs, a break bulk terminal with six million tonnes per year capacity, and a bulk terminal capable of handling two million tonnes per year, among other facilities. It cost $590 million (Sh61 billion) venture has capacity to accommodate 100,000 deadweight tonnage vessels. “With this new world class infrastructure, Djibouti confirms its position as a major trading hub for the continent. We are proud to show the world our capacity to deliver major infrastructure projects — some of the most technologically advanced on the continent,” Djibouti Ports and Free Zones Authority ( DPFZA) chairman Aboubaker Omar Hadi said in a statement. Mombasa port and Tanzania’s Dar es Salaam port are traditional competitors but the Kenyan government plans a huge new port at Lamu, while Tanzania is developing Bagamoyo port. Tanzanian authorities expect Bagamoyo port to handle 20 million containers a year, 25 times more than Dar es Salaam port. Kenya’s planned Lamu port is expected to be just as big. Apart from serving their own...

A fall in import tax collections in the last nine months has raised eyebrows in East Africa, pushing national revenue agencies to the overdrive as they seek to seal leakage loopholes and increase efficiency. All the East African Community (EAC) states have missed their import duty collection targets in the nine months to March with Kenya, the biggest of the economies, recording Sh65.8 billion against an expectation of Sh70 billion. Official data shows that both the dry and wet cargo import volumes fell in the nine months, causing a cumulative effect even on consumption taxes. Following a meeting in Burundi last week, tax bosses from Kenya, Uganda, Rwanda, Tanzania, Burundi and South Sudan have agreed to implement a uniform system for valuing imports. This means that the customs authorities in the EAC would use the same formula in determining the value of goods coming into the bloc and by extension impose similar duties. “… the [commissioner generals] directed the establishment of a common valuation approach in order to ensure maximisation of revenue mobilisation opportunities through sealing loopholes that permit cargo undervaluation,” said a communiqué released after the meeting. Common valuation is a requirement of effective operation of a Customs Union. However, despite the existence of a Common External Tariff, member states are yet to implement it. This means the EAC members are currently playing into the hands of tax evaders by levying different absolute amounts. The countries also agreed to harmonise cargo scanning mechanisms to align them with the Kenyan...

The 2nd East African Manufacturing Business Summit was held in Kigali, Rwanda at Kigali, Serena Hotel on 23-25 May 2017. The Business summit was officially opened by Rt. Hon Anastase Murekezi Prime Minister of the Republic of Rwanda.  The Summit was attended by Rt. Hon. Dr. Ali M. Kirunda Kivejinja, Second Deputy Prime Minister and Minister for EAC Affairs, Republic of Uganda who is also Chairperson of the East African Community Council of Ministers; H.E. Dr. Mukhisa Kituyi, UNCTAD Secretary General; Amb. Liberat Mfumukeko, Secretary General of the EAC; Hon François Kanimba, Minister of Trade, Industry and EAC Affairs, Republic of Rwanda; Mr. Patrick Nduati Mwangi, representing Cabinet Secretary for Industrialization and Enterprise Development, Republic of Kenya; Mrs. Edith Mwanje, Permanent Secretary, Ministry of East African Community Affairs, Republic of Uganda; Amb. Dr. Aziz Ponary Mlima, Permanent Secretary Ministry of Foreign Affairs and East African Cooperation, the United Republic of Tanzania; Ms. Betty Maina, EBS, Principal Secretary, Ministry of East African Community (EAC), Labour and Social Protection, Republic of Kenya; Ms. Rosemary Mbabazi, Permanent Secretary, Ministry of Trade, Industry and EAC Affairs, Republic of Rwanda; Hon. Jesca Eriyo, Deputy Secretary General, in charge of Finance and Administration, East African Community; Hon. Christophe Bazivamo, Deputy Secretary General, in charge of Productive and Social Sectors, East African Community; Mr. Denis Karera, EABC Vice Chairman; Ms. Lilian Awinja, Executive Director of the East African Business Council; private sector foundations; manufacturers from across East Africa and beyond; EAC Institutions; Development Partners; Regional Economic Communities...

Experts attending the second high-level East African Manufacturing Business Summit and Exhibition (EAMBS) held in Rwanda’s capital city Kigali said Wednesday that innovation is key for the East Africa manufacturing sector to compete globally. “We have to understand that our industries are operating in a global context, in an open globalized market place, and that is not going to change. We have to be innovative and work on our efficiencies. We should be able to produce high quality products that are competitive at international markets,” said Ali Mafuruki, board chair of Trade Mark East Africa. He added that regional economies should strategically position themselves in the global business environment through producing locally made products that are price competitive. Rwanda hosts the forum from May 23 to 25, 2017 dubbed “harnessing the Manufacturing Potential for Sustainable Economic Growth”. The three-day meeting includes an exhibition where investors, enterprises, researchers and academia will collectively showcase new products and services as well as exhibit the latest advances in manufacturing technology and innovation, particularly those with relevance to Small Medium Enterprises. Lilian Awinja, executive director of East African Business Council (EABC), called for innovative strategies that will raise competitiveness levels and expand the region’s manufacturing and export base. “Innovations are now shaping the business environment. We need to add value to products produced in EAC. Our regional industries can now begin to raise manufacturing output and increase its share of global trade and production,” she added. Mukhisa Kituyi, secretary-general of United Nations Conference on Trade...

East African heads of state have jointly agreed that the EAC members who have not signed the European Union-EAC Economic Partnership Agreement (EPA) should not do so pending clarification of contentious issues that have been highlighted in the agreement. In a joint communique of the EAC Heads of Summit in Dar es Salaam last weekend, the presidents said the new chair Ugandan President Yoweri Museveni has been mandated to reach out to the EU within one month to communicate the EAC’s decision. If an acceptable solution is not reached with the EU within the next six months, the chairperson, working with the Council of Ministers, is expected to explore the use of variable geometry in the implementation of the EPA by EAC member states. “I have been mandated to harmonise the vision of the EPA within the EAC,” said President Museveni while addressing the Summit. He added that an agreement will only be reached with all members of the EAC on board, and not a few countries. He said there is no way the EAC can move forward until the issue of sanctions against Burundi, is resolved. Only Kenya and Rwanda have signed the EPA agreement while Tanzania, Burundi and Uganda are yet to sign. The summit also agreed that the EU sanctions on Burundi should be discussed alongside the EPA discussions. READ: EU woos Tanzania to sign trade deal “Burundi is a member of the EAC. How can they sign the EPA with the European Union when they are...

The pipeline that will take crude oil from Uganda to export markets has moved closer to financial closure after the waiver of taxes on the product by Tanzania paved the way for the signing of a bilateral agreement between the two countries. Ministers from the two countries signed an agreement on May 26, itself a formality since Presidents Yoweri Museveni and John Magufuli had thrashed out the contentious issues a week earlier during the EAC Heads of State Summit in Dar es Salaam. The accord frees financiers led by Total to start firming up funding options for the pipeline, especially because the tax waiver makes the oil more competitive and the project more bankable. “It will unlock East Africa’s oil potential by attracting investors and companies to explore the potential in the region,” said Total’s General Manager Adewale Fayemi. He added the pipeline would increase foreign direct investment in the two countries by 60 per cent. Design report Details of the financing, however, are not expected until August this year when Gulf Interstate Engineering, a consultant, gives a report on the specifications and costs of the pipeline from its Front End Engineering Design study. The contract was awarded in December 2016, under a determination to have pipeline related activities run concurrently with a 2020 target for getting the crude to markets. The FEED will enable Uganda and Tanzania approach financiers. The pipeline concept paper targets a mix of debt and equity with the former ranging between 60 and 70 per cent. Initial...

Clothing and shoe traders could face a steep tax increase on imports in new proposals that are aimed at reviving the East African Community’s ailing textile and leather sectors. The proposals to raise taxes by up to 50 per cent are included in a report that was commissioned on the two sectors by the EAC, and whose findings were presented to the region’s heads of state last week.  They seek to limit cheap imports that have undercut once vibrant local industries. “… over the years, the clothing and shoe manufacturing industries have collapsed due to the emergence of informal sector trade in used clothes and shoes (UCS) and the impact of trade liberalization,” reads a policy brief  on the report that was submitted to the EAC heads of state. East Africans spend an estimated Sh36.1 billion ($350 million) on second-hand clothes and shoes (mitumba) annually. While the report endorses an existing proposal to ban mitumba, it also proposes a 40 per cent tax on “readymade garments or $5 per kg whichever is cheaper”. This implies that importers of new clothes would also be affected. The report, authored by the EAC secretariat, proposes increasing the common external tariff (CET) on new shoes from 25 per cent to 50 per cent or $20 per pair (for leather shoes) and $5 per pair (for plastic shoes), whichever is higher. A three-year tax waiver for textiles inputs and shoe manufacturing equipment that are not available locally has been proposed as is a ban on...

East Africa’s leading tourism exhibition, the Karibu Travel and Tourism Fair (KTTF) kicked off today in Tanzania’s sprawling northern tourist city of Arusha. The KTTF 2017 is the premier East African regional tourism show and one of the top two “must visit” events of its kind in Africa with a superb, secure, and more convenient venue in a natural setting with an ideally-designed layout – the biggest and only outdoor tourism fair in Africa. Standing as the most competitive and dedicated travel market that brings the Eastern and Central African region and the world under one roof, providing overseas tour agents with an ideal platform to maximizing their networking opportunities, KTTF is taking off this Friday and will close on Sunday. Organizers said the event has attracted exhibitors who area regional in-bound tour operators and tourist boards, as well as camping and safari companies. Others are service providers for wildlife lodges and hotels, local and regional airlines, as well as supporting travel trade services providers, manufacturers, and suppliers of tourist equipment. KTTF represents a major business platform and contracting opportunity for long-established businesses in Tanzania and across East Africa, reflecting the ongoing growth in the tourism industry and in the global and domestic sphere. According to organizers, delegates and international buyers will enjoy the benefit of exclusive access on the “Trade Only Day,” which also includes a private, corporate cocktail on the first day of the event. KTTF has become “the place to meet,” for the African travel industry partners...

Tanzania is struggling to find financiers for its proposed $1.2bn standard gauge railway as leaders continue to raise questions about the viability of the project. A group of MPs recently said the project is likely to stall due to lack of financing unless the government considers alternative sources of funds outside low-interest loans such as a 15-year railway bond. President John Magufuli has in the past few months been lobbying heads of state and international financial institutions to help his government raise money. Last week, he asked his South African counterpart Jacob Zuma who was visiting Dar es Salaam to help Tanzania secure low-interest loans from the Brics Development Bank. Brics is an association of emerging economies, Brazil Russia, India, China, and South Africa. "I have asked president Jacob Zuma to help us secure a low-interest loan from Brics to finance particularly the SGR project," Magufuli said. About the project The 1,200km railway line, which is expected to handle 17 million tonnes of cargo per annum, will be built parallel to the existing central railway and the government believes that its completion will increase trade volumes between the country and its landlocked neighbours. However, it is unclear whether Brics will agree to finance the project. A Chinese company awarded the contract to build the railway by the Jakaya Kikwete government had its contract suspended by Magufuli over alleged irregularities in the tendering process. Magufuli also asked the World Bank Group president Dr Jim Yong Kim who visited Tanzania in March...