At the Chilly Willy factory in Dubai, the lorries roll in with giant drums of raw tomato paste from China and roll out with tiny sachets of the processed product bound for Africa. “It’s a 24-hour operation,” says director Iain Cusick as workers pack boxes destined for shops and restaurants from Mozambique to Somalia. Business is booming. The rise of the African consumer is encouraging companies across the UAE to look west, from the factories and warehouses of Jebel Ali Port and Dragon Mart to the banks and fund managers of Dubai’s financial heartland. The race is on to become Africa’s staging post. “The fact is that over the next 10 to 15 years, the growth prospects on the African continent are the best in the world,” says Rudi Lohmeyer, a director of the Global Business Policy Council at AT Kearney, the management consultancy. • Take a look inside the Chilly Willy factory in Dubai Yet it also remains the least integrated region in terms of cross-border trade, which is where Dubai and other potential entrepôts to the continent’s $3 trillion economy see an opening. The tomato paste business of the catchily named Chilly Willy is a case study of the logistical challenges Africa faces. With 60 per cent of the world’s uncultivated arable land, the continent has plenty of space to grow and process tomatoes of its own. But moving them across poor roads and closed borders is where African trade starts to wither on the vine. It is...

African leaders have agreed to create the largest free-trade zone ever attempted on the continent, and the world’s second largest. The Tripartite Free Trade Area (TFTA) deal, signed in Egypt, will ease the movement of goods across 26 member countries comprising three current trade blocs: The Southern African Development Community (SADC); the East African Community (EAC) and the Common Market for Eastern and Southern Africa (Comesa). It has also been dubbed the “Cape to Cairo” super bloc. Analysts forecast intra-Africa trade will more than double to 30 per cent, and one report said it could stimulate at least $1 trillion’s worth of economic activity in the bloc. Now, each national parliament will have to vote for it, and it will also be presented to the continent’s big chiefs at the African Union this weekend in South Africa. And several African cynics and pragmatists immediately said that, with that, the project had been handed over to the burial committee. Good reason Going by the past, there is good reason not to be optimistic that TFTA will become reality on the ground. Perhaps it is a good time to go ask why economic integration has been so troubled in Africa. Some years ago, when Rwanda’s President Paul Kagame was still vice-president, and Rwanda was still in the very early stages of exploring entry into the EAC, I raised this question with him in an interview. His answer surprised me. He said the biggest stumbling block to economic integration was Customs taxes. African...

Mobile money transfer tariffs within East Africa Community member States could become uniform, if proposed regulations are passed into law. Fred Matiang’i, the ICT secretary, says the plan is part of a wider strategy by Uganda and Rwanda to also harmonise data and SMS tariffs. The proposal to have the mobile money and SMS charges harmonised were arrived at during the East Africa ICT ministers’ meeting held in Kampala on June 5. “We are working on a proposal to have tariffs of SMS and those of mobile money transfer be harmonised within the region. Each of the East Africa member State will have to put a proposal to their respective Treasury and get their advice because it will have a revenue implication on the governments,” Dr Matiang’i told Business Daily in an interview. He added that the mobile operators will have to negotiate and agree on inter-operator rate, which will then be presented to their respective ICT ministries before tabled to the East Africa ICT ministers for discussion in the next Northern Corridor summit. “The consultation with the private sector is necessary since we understand that they are also in business, however, we would also want to see that our people are not overcharged.” The Kampala meeting follows a communication from the Communication Authority of Kenya (CA), to Safaricom, Airtel and Telkom Kenya’s Orange, seeking their views on the application of a harmonised data roaming charges within Kenya, Rwanda, Uganda and South Sudan. The move by the CA, follows a...

Officials in East Africa are working to ease money transfer across the region in a move to boost trade. Low cross border money transfer rates are set to be a reality as Kenya, Rwanda, Uganda and South Sudan formulate harmonised money transfer guidelines. Through the One Area Network Agreement ICT ministers of the four countries have arranged with finance ministers and central banks to draft a proposal that is currently under discussion by individual governments. “Presidents Uhuru Kenyatta and his counterparts directed ICT ministers to ensure they have a definite position on the negotiations by the next Northern Corridor Summit. We have asked operators to negotiate an inter operator rate for the money transfer,” said ICT Cabinet secretary Fred Matiang’i at a media briefing. The deal is likely to come through by close of 2015. It will mean international remittances between M-pesa, Airtel, and Telkom Kenya through to MTN mobile money customers in Uganda Rwanda and South Sudan. FOCUS NOW ON MONEY TRANSFER Through the One Area Network Agreement, partner states last year lowered roaming rates, the focus is now on mobile money transfer rates for ease of doing business. “This is a bigger market, if we facilitate communication it will be better for business, whatever stands in our way must be removed,” said Mr Matiang’i. “We want you to be able to move money from your M-pesa account here to a relative in Kigali and vice versa or from Airtel Uganda to Safaricom in Nairobi.” Latest data by Central...

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...

Cross border workers between Rwanda, Uganda and Kenya will no longer have to acquire working permits, as the East African Community continues to realise its protocol on free movement of labor.The good news came in over the weekend following an agreement between the three states to abolish work permits. A statement released on Monday by Trademark East Africa, notes that:Increasingly over the past years qualified staff from East Africa have been recruited into managerial positions and a number of professionals. Accountants, lawyers and doctors too have benefited from the mutual recognition of qualifications, allowing them to practice their vocation in any of the three states, subject to registration with the respective professional bodies, the communiqué reads in part. Trademark East Africa is a body that funds integration projects and it believes that the move is expected to help the three countries in recruiting competent skilled workers, which in the past was often sourced from international markets. In particular in the hotel industry Rwanda has previously gained expertise from Kenyans and Ugandans. This is yet another tangible benefit for citizens of the Northern Corridor Integration Projects which have benefited through a range of measures, from common phone tariffs when calling into one of the other two countries to passport free travel, from a widening of air transport choices to recognition of professional qualifications and now work permit free employment Trademark East Africa notes. Among all the five partner states, only Rwanda had previously waived work permit fees on citizens of the...

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)...