This really does have to be one of the sillier pieces of economic policy now being tried out. The East African Community has proposed banning the import of second hand clothes. In February, however, the East African Community (EAC), an intergovernmental organisation, proposed a ban on imported used clothes and shoes. The aim is to encourage local production and development within member countries: Burundi, Kenya, Rwanda, Tanzania and Uganda. The problem here is that people are not understanding the most basic point about trade, poverty and jobs. Imports are the purpose of trade, poverty is the inability to consume and jobs are a cost of doing something. Thus this is nonsense: Many orthodox economists disagree with banning imports because it goes against the principles of free trade. Rather than having the freedom to choose imported used clothing, east African consumers will have to buy higher priced local goods or new clothes imported from Asia. Increasing the cost of clothing will hit east Africa’s many low-income consumers, but the shock effect could be reduced if a ban was imposed gradually. If a tax on used clothing imports was introduced before an outright ban, this could subsidise local production and increase local manufacturing capacity. A revitalised local market would ultimately boost the EAC’s economy by providing more jobs than the second-hand sector while retaining money that currently goes to Europe and the US to pay for second-hand imports. It's not that economists oppose this in order to support free trade. It's that economists...

Tanzania has firmed up its position as East Africa’s fastest growing economy, boosting its chances of attracting high net worth investments. Tanzania, the region’s second-largest economy after Kenya, grew by 6.9 per cent last year, racing ahead of Rwanda’s 6.5 per cent, Kenya’s 5.6 per cent and Uganda’s 5.2 per cent. Tanzania romped to the high growth trajectory in 2014 when its economy grew by 7.2 per cent, outpacing Rwanda (six per cent), Uganda (5.9 per cent) and Kenya (5.3 per cent). The International Monetary Fund expects Tanzania to maintain the pole position this year with an estimated growth of seven per cent against Kenya’s 5.9 per cent and Uganda’s 5.5 per cent. In spite of strong growth, exports to Tanzania have fallen sharply as frequent trade disputes lock a number of products produced in Kenya from its markets. Data released by Kenya National Bureau of Statistics (KNBS) shows Kenyan firms exported goods worth Sh33.7 billion to Tanzania last year, a 21 per cent drop from the previous year’s Sh42.7 billion. By comparison, Uganda absorbed Kenya’s goods worth Sh68.6 billion, a 12.8 per cent growth over the 2014 export level of Sh60.8 billion. Tanzania and the conflict-prone Burundi are the only markets in the region where Kenya’s exports dropped. Exports to Burundi decreased to Sh6.6 billion last year, 16.5 per cent down from Sh7.9 billion the previous year. During that period, Burundi’s economy also decelerated to -7.2 per cent. The KNBS figures show that Rwanda, which recorded a growth of...

Across the African continent second-hand clothes from developed countries are a mainstay of many informal traders, dominating local market stalls. East Africa alone imported $151m of second-hand clothing last year, most of which was collected by charities and recyclers in Europe and North America. In February, however, the East African Community (EAC), an intergovernmental organisation, proposed a ban on imported used clothes and shoes. The aim is to encourage local production and development within member countries: Burundi, Kenya, Rwanda, Tanzania and Uganda. In the 1970s, east Africa’s clothing manufacturing sector employed hundreds of thousands of people, but when the debt crisis hit local economies in the 1980s and 1990s, local manufacturing struggled to compete with international competition and factories were forced to close. Today, the small sector remaining is geared towards production for exports. Many orthodox economists disagree with banning imports because it goes against the principles of free trade. Rather than having the freedom to choose imported used clothing, east African consumers will have to buy higher priced local goods or new clothes imported from Asia. Increasing the cost of clothing will hit east Africa’s many low-income consumers, but the shock effect could be reduced if a ban was imposed gradually. If a tax on used clothing imports was introduced before an outright ban, this could subsidise local production and increase local manufacturing capacity. A revitalised local market would ultimately boost the EAC’s economy by providing more jobs than the second-hand sector while retaining money that currently goes to...

Cape Town — International Relations and Cooperation Minister Maite Nkoana Mashabane says South Africa is aiming to boost trade with African states by half a trillion rand before the end of the current administration. The Minister said this when she briefed the media ahead of delivering the department's Budget Vote at the Old Assembly Chamber, in Parliament, on Tuesday. "We are targeting half a trillion trade with Africa by 2019." The Minister said the increase in trade and investment relations in both the African continent and the Asia and Middle East markets was linked to the growth of South Africa's diplomatic missions in those areas. She said the same applied to SA's traditional trade partners like the Americas and Europe. "With additional economic diplomacy efforts and enhanced national coordination, South African trade with the world can reach R2 trillion by the end of this administration. "Without a doubt, an unprecedented trade expansion," she said. She said SA's diplomatic presence in the continent has brought tangible benefits in the form of economic growth and job creation. The Minister said the work of the department has increased the country's presence on the continent from seven diplomatic missions in 1994 to 47 in 2015. "Consequently, South Africa's trade in the continent increased 39 times from R11.4 billion in 1994 to R385 billion in 2015. "In 1994, trade with Asia and the Middle East combined was approximately R760 billion for Asia and R116 billion with Middle East," the Minister said. SA signs eight MoUs...

Importers, exporters and clearing agents are optimistic that the new cargo handling procedures at Port of Mombasa will reduce the cost of doing business, and enhance cross border trade. The Kenya Ports Authority (KPA) last week issued new container handling rules for importers and exporters. The new procedures, according to Andrew Opiyo, KPA’s senior documentation officer, are designed to improve efficiency and to boost competitiveness. According to the new procedures, inspection of imports will be done once in the first country of entry. All shippers, agents and shipping lines are therefore required to comply with the new procedures. Opiyo who was speaking during a sensitisation workshop on the new SOLAS, customs and shipping declarations and process organised by KPA in Kigali last week advised traders to embrace cargo consolidation to further ease the process of clearing and efficiency. The Kenya Ports Authority entered into an agreement with private CFS’s in 2011 to help decongest the port, where CFS operators are required to clear cargo within 48 hours after being discharged from a vessel. Last year, the authority banned private CFSs and shades from operating within the port’s premises, forcing them to invest outside. Single customs territory processes streamlined According to the single customs territory processes, the shipping line and agents will now lodge the sea manifest 48 hours before estimated time of arrival of the vessel for long hauls and for short hauls it will be six hours before to the Kenya Revenue Authority Manifest Management System (MMS) which is...

Number of harmonized East Africa Standards has increased contributing to a reduction in time and cost of conformity assessment at the borders, thus helping to spur regional trade. Kampala, Uganda -  April 29th, 2016: A recently conducted independent evaluation of the Standards Harmonisation and Conformity programme in East Africa indicate that there is a 59 per cent reduction (from $500 to $205) in testing cost  and 74 per cent reduction (from 38 days to 10 days) in average testing time achieved across the East Africa Community (EAC) region. The results also indicate that the number of products complying with quality and standards requirements has increased through certification thus contributing to increased intra and Extra EAC trade values and volume by 23% and 50% respectively (from $ 857,997 in 2010 to $ 2,094,748 in 2014). TradeMark Africa (TMA) has invested US$ 11.6 million between 2011 to 2014 in the Standards Harmonization and Conformity Testing Programme. The broad aim was to support the National Standards Bureaux (NSBs) in achieving regional harmonization of standards and improving their testing capacities with the aim of improving trade competitiveness in East Africa by reducing the time and cost of testing in the region. This is expected to ultimately contribute to increased regional trade. Further results indicate 79 East Africa Standards (EAS) were harmonized and gazetted with support from the programme. This has greatly reduced the testing cost and the clearance time of products because goods with these marks are no longer required to comply with multiple...

Uganda has borrowed $48 million from two German banks to construct an inland port at Bukasa on the shores of Lake Victoria, in a move that is aimed at widening the database of non-concessional lenders. Over the past eight years, Uganda has invested heavily in infrastructure and the increasing cost and number of projects has caused the country to look beyond concessional lenders like the World Bank, African Development Bank and Western governments to China, which had become a popular option. But reports of Chinese reluctance appear to have forced Uganda to look at other institutions that can provide funding for infrastructure. These include the German banks which are now showing interest in lending more to Uganda. Speaking at the signing ceremony of the Bukasa port loan agreement, Doris Icke, the senior vice president for European Export and Trade Bank (AKA Bank) said the new deal represented an opportunity for Uganda to access funding for other projects in future. AKA Bank and Commerzbank AG are the two German banks that have lent Uganda the money to construct Bukasa port. The loan will be paid back within 15 years, at an interest rate of the Eurobond average rate plus 1.8 per cent. At the moment, this translates into an interest rate of 2 per cent, per annum.  Uganda will provide $8.5 million in counterpart funding to make a total project cost of $56.4 million. “The project, which is part of the Central Corridor Development Programme aims to secure an alternative way...

Liberat Mfumukeko last week took over the post of EAC Secretary-General with three things at the top of his agenda: A viable financing mechanism for the expanding East African Community; full implementation of all signed protocols, and inclusion of South Sudan in EAC activities. Mr Mfumukeko, who succeeded Richard Sezibera on April 26, faces an $11 million deficit at the Secretariat, and his first assignment will be to ensure that the EAC restores confidence to donors and the partner states on the issue of financial management. In his acceptance speech, Mr Mfumukeko, who was in charge of finance and administration for a year at the Secretariat, conceded that the EAC was going through challenging financial times and that forecasts for the month of June show a deficit of more than $11 million. The situation has been aggravated by the fact that development partners, who account for close to 70 per cent of annual budget, are dragging their feet in disbursing funds to the Secretariat, due to allegations of financial malpractice. Sweden, Belgium, Canada, Denmark, Finland, France, Germany, Japan, Norway and the United Kingdom contribute to EAC Partnership Fund. Others are the European Commission and the World Bank. Mr Mfumukeko as the new head of EAC Secretariat, an executive arm of the six partner states with 150 million plus people, is mandated to, among other things, develop strategies, spearhead negotiations with the donors and the government, local and international communities. “I know work on sustainable financing of the EAC is advanced, but...

Rwanda is in talks with Tanzania and Burundi for a shared standard gauge railway through the Central Corridor after it realised that Uganda was not prioritising the Kampala-Kigali connection that would have seen it transport its goods through Kenya. The EastAfrican has learnt that Rwanda’s Infrastructure Permanent Secretary Christian Rwankunda held a series of meetings with senior officials from Tanzania and Burundi in Dar es Salaam last week to thrash out the details of the Central Corridor project. The meeting was with lands, legal and infrastructure officials drawn from Tanzania and Burundi. These meetings followed another one in Arusha in March, of the joint technical monitoring committee, which was attended by infrastructure ministers from the three countries. “The ministers commended the prevailing commitment among the three partner states to realise the implementation of the railway project and its importance to foster physical integration of transport modes, economic growth and improved social services in the sub region,” said a statement issued by the joint secretariat of the three countries. But it did not say much apart from their commitment to fast-track the project. The three countries are said to be looking at mid next year as the starting time for the construction of the railway, with the tendering expected to start in the next two months. On Monday, Jules Ndenga, Rwanda’s acting special projects implementation unit co-ordinator at the Ministry of Infrastructure, said the three countries were looking for a consultant to advise on the drafting of the tender documents for the railway deal. “We had a joint technical monitoring committee meeting in...

Speakers from the East African Community (EAC) are optimistic that a new body on legislative matters, the East African Parliamentary Institute (EAPI), will help bolster capacity of lawmakers from around the bloc. The creation of EAPI was announced at the closure of the EAC Bureau of Speakers’ 11th meeting last Friday in Arusha, Tanzania. Operationalisation of the EAPI was high on agenda as the Speaker of the East African Legislative Assembly (EALA) Daniel Kidega took over the chair from Tanzanian Speaker Job Ndugai. The EAC Speakers’ Bureau is the umbrella body under which EALA and national assemblies of partner states champion the cause of parliaments in the region: legislation, oversight and representation. It also plays an advisory role to the Summit of the EAC Heads of State. At the meeting, Rwandan Parliament was represented by deputy Speaker, Jeanne d’Arc Uwimaninpaye, while second deputy Speaker of the Burundi National Assembly, Edouard Nduwimana, represented his country. Both the Speaker and president of the Kenya’s National Assembly and Senate, Justin Muturi and Ekwee Ethuro, respectively, and the president of the Burundi Senate, Reverien Ndikuriyo, were also in attendance. According to a communiqué from EALA, the operationalisation of the East African Parliamentary Institute is expected in the next Financial Year once the EAPI Act, 2011, has been gazetted by the EAC Council of Ministers. The one day EAC Bureau of Speakers meeting considered a number of key areas deemed important to the realization of EAC integration. National legislatures and EALA are to commence on...