After 12 years of divisive negotiations toward Economic Partnership Agreements (EPAs), the East African Community (EAC) last month became the latest African region to agree to a bilateral trade deal with the European Union. Concluding the talks was not easy, and sticking points among stakeholders remain, particularly around key African exports like Kenya’s horticultural products. The final deal has far-reaching consequences for East Africa’s economic development—not all of them good, as alternatives to such economic liberalization pacts, which critics contend favor the EU, emerge. Following the Cotonou Agreement in 2000 between the EU and African, Caribbean and Pacific (ACP) states, which aimed to eradicate poverty in those regions and integrate them into the global economy, there was a definitive shift in the nature of the EU’s trade relations with all three regions. Since the 1970s, a preferential trading system had been in place, informed by the idea that such states should be protected from trade liberalization to assist their development. In 2002, however, negotiations toward EPAs began with what eventually became seven subregions of the ACP states. These were justified by the European Commission as a necessary change in order to satisfy World Trade Organization (WTO) rules on Regional Trade Agreements. It was also argued that they would act as a driver of development through the removal of trade barriers. ... Source: World Politics Review

A surge in fuel imports and increased Customs revenues are the results of the rollout of the Single Customs Territory in February, reflecting the benefits of reduced trade barriers. However, the depreciation of the Uganda shilling has denied consumers price discounts. Reduced turnaround times on the movement of fuel, cement and clinker, wheat, used clothes and beverages have spurred significant growth in import volumes. “This Customs arrangement offers local businesses huge benefits in moving goods and raw materials across borders at a lower cost. “But some of these cost savings have been eroded by the depreciation of the Uganda shilling against the dollar, and this has constrained local businesses from passing on new cost benefits realised in the Customs value chain,” said Richard Kamajugo Uganda Revenue Authority’s Commissioner for Customs. The Uganda shilling fell by 2.9 per cent against the dollar during the first quarter of 2014/15. Results from a survey conducted jointly by the Uganda Revenue Authority and the Rwanda Revenue Authority show that the average time spent clearing and transporting cargo from Mombasa to Kampala dropped from 18 days, two hours and 27 minutes to an average of four days and 15 hours after implementation of the Single Customs Territory system. Similarly, clearance and transportation of cargo from Mombasa to Kigali dropped from an estimated 21 days to an average of five days and two hours. The cost of transporting goods from Mombasa to Kigali decreased from an average of $5,200 to $4,200 per trip, and the number...

From mid-2013 to early 2014, what the East African media called the Coalition of the Willing (a phrase that upsets EAC Secretary General Richard Sezibera very much) had the region all excited. Uganda’s President Yoweri Museveni and his counterparts Kenya’s Uhuru Kenyatta, and Rwanda’s Paul Kagame, seemed to have become wary of the East African Community becoming another African talking shop, and broke out. There was a flurry of activity: The standard gauge railway to run all the way to Kigali was launched, so was the Single Tourist Visa (a first in Africa), the opening of a new berth at Mombasa port and, to the credit of President Kenyatta, a reform that got rid of most the red tape that delays transit of goods to Uganda and Rwanda from the Coast. For a while it looked as though the Coalition of the Willing (CoW) threatened the EAC, with Tanzania and Burundi feeling isolated. Thankfully, it seems a lot of the ill feelings have now been soothed, and Tanzania threw up a pleasant surprise when a survey by the Society for International Development and Twaweza found that a whopping 85 per cent of the country approved of greater regional integration. Tanzanians, my friends never tire of telling me, are slow burners — slow off the blocks, yes, but still in the marathon race when fast-paced Kenyans and Ugandans have long fallen by the wayside. However it seems that though CoW took the cow to the water, it could not get it...

A Chinese-funded multibillion-dollar standard gauge railway project in East Africa is coming under fire for failing to meet the needs of the local communities it affects. The new network will sharply improve transportation links to key resource-rich areas in the region, helping to open up access to the world’s newest oil and gas discoveries, but local leaders are increasingly pushing the Asian nation to provide more of what local communities want: decent jobs and transparent deal-making. Once completed, the 2,935-kilometer network is expected to slash freight costs by more than 60%, boost regional trade and provide the first railway link to Uganda’s Lake Albertine Rift basin, believed to contain as much as 6.5 billion barrels of crude oil. But storm clouds are gathering over the project, with local communities in Uganda and Kenya increasingly questioning the bidding processes and demanding better jobs for local communities. “Contracts for the projects are shrouded in secrecy, this cannot be good for us as well as future generations” said Geofrey Ekanya, a member of the Ugandan parliament. “The Chinese are giving us cheap loans, but this should also translate into good jobs for our people.” Chinese Premier Li Keqiang signed the deal for the project with the leaders of Uganda, Kenya, South Sudan and Rwanda in May in the Kenyan capital Nairobi. Although the project is being undertaken by all the countries jointly, each nation has to individually agree financing arrangements for the section of the project in its territory. The agreement gave Chinese...

BUSIA, Uganda - Trade on the Kenya –Uganda border is likely to become much easier with the completion of the Busia One Stop Border Post (OSBP) which will be completed early next year. While briefing media last weetk, Ms Edith Mwanje , the Permanent Secretary, Ministry of East African Community Affairs said, the aim of constructing these One Stop Border Posts is to reduce on the duplication of procedures that cause delays in trade and loss of money, improving on the services offered by different clearing agencies and also enhance on regional integration for better trade. “Once complete, all different departments that do clearing of goods and services will be able to share information and sit in the same place. This means that clearing goods which has been taking days will be done in hours and this of course will improve on regional trade,” Mwanje said. TradeMark Africa has also financed the construction of one stop border points in Mutukula, Mirama hills and Elegu/ Nimule worth $10m each and also upgraded the 37km Ntugamo-Mirama hills road from murrum to tarmac. Mwanje said their Kenyan counterparts who are already using part of the facility have registered great improvement in the way businesses are transacted at the border. “The facility will accommodate different clearing agencies like Uganda revenue authority (URA), Immigration offices, Ministry of Agriculture and Fisheries, Ministry of Health, Uganda National Bureau of Standards (UNBS), insurance companies, baking services, Ministry of works and transport, customs union offices, National Drug Authority, Energy...

Bujumbura - The East African Community (EAC) private sector wants a speedy implementation of the World Trade Organisation’s (WTO) Trade Facilitation Agreement, saying it will reduce bottlenecks in the movement of goods in transit across the borders. Speaking at the third regional annual meeting of Promoting Agriculture-Climate-Trade linkages in the East African Community (PACT-EAC), which was organised by CUTS International Geneva in Bujumbura last week, Dickson Poloji, a policy analyst at the East African Business Council (EABC), said business players should be sensitised on the agreement and its benefits, especially on the need for a regional trade facilitation committee in the EAC. “The trade facilitation agreement is very crucial to us and good for the private sector. The EAC partner states are already implementing over 50 per cent of the agreement,” Poloji said. All WTO members agreed to the Trade Facilitation Agreement during the ninth WTO Ministerial Conference in Bali, Indonesia in 2013. It sets out provisions for expediting the movement, release and clearance of goods, including goods in transit and measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues. Once implemented, it would speed up the transit of goods to and from landlocked Least developing countries (LLDCs) like Uganda, and reduce the costs involved. While addressing a UN conference on landlocked least developing countries in Vienna, Austria recently, the WTO secretary general, Roberto Azevedo, said LLDCs were vocal in negotiations on cutting red tape in customs and other border procedures during...

The construction of the $3.6b double-track standard gauge railway (1,435mm) linking Kenya’s Indian Ocean port city of Mombasa to the capital Nairobi could become an open door to Uganda’s economy. The standard gauge railway line, which is set to be completed in 2018 under a contract by China Roads and Bridges Company, which the Ministry of Transport and Infrastructure has focused efforts on designing, developing and maintaining a transport and infrastructure architecture that could facilitate sector growth and accelerate national economic development. According to the budget priorities for FY2014/15, the transport sector is a major priority which aims to pursue world class transportation systems for improved quality of life by ensuring the country is connected and served by an efficient, safe, accessible and sustainable transportation services. The new railway will supplement road transport, thereby increasing the efficiency of the Northern Corridor by providing gateway linking Kenya’s Maritime Port of Mombasa to the landlocked economies of Uganda, Rwanda, Burundi and South Sudan. It will significantly reduce the cost of road maintenance hence lowering the cost of doing business in the region thereby improving trade and attracting investments. The implementation of the SGR is expected to transform Uganda and the region for the better. An example of Kenya, to satisfy the growing demand for port services brought about by growing regional economies, they are developing a second commercial port at Lamu, under the LAPSSET project. For example, Mombasa Port, Lamu Port will be the beginning of a second transport and economic corridor...

The East African Community plans to allow bond sales across four markets in the bloc as investors look to fund projects such as railways that will link up the region. The framework will allow for the sale of “multi-jurisdictional, multi-currency” debt from within or outside the four-country group, Paul Muthaura, acting chief executive officer of the Capital Markets Authority in Kenya, the region’s biggest economy, said at a conference in Cape Town today. The group that also includes Uganda, Tanzania and Rwanda is set to expand 6 percent this year, faster than the sub-Saharan African average of 5.1 percent, according to the International Monetary Fund, as governments in the region invest in roads and energy projects. Kenya sold infrastructure bonds last month for the first time in a year. A railway linking Mombasa, Kenya with Kigali and Kampala is project that may be funded with debt, Muthaura said. Another is the Lamu Port and New Transport Corridor Development to Southern Sudan and Ethiopia project, which will include an oil pipeline and refinery, he said. ‘‘As we see many domestic issuers in any one of the EAC markets moving into the others, they want to be able to capital raise relevant to their pipeline of projects in different countries,’’ he said. One ‘‘regional entity’’ has been approved for a bond sale, Muthaura said, without giving details. ‘‘They’re just looking at the markets to find the right timing for the issuance,’’ he said. ‘‘There are ongoing engagements with other potential issuers. We’re...

Flower and fruit exporters breathed a sigh of relief after officials in Brussels gave them a reprieve from new taxes that they feared would deal a severe blow to the billion-dollar industries. The European Union signed a deal with the governments of Kenya, Uganda, Tanzania, Burundi and Rwanda that make up the East African Community (EAC), to have goods enter the prime EU market duty free. The signing of the Economic Partnership Agreements (EPAs) came after weeks of negotiations and a delay when Tanzania stalled on signing the trade deal with the EU. For the deal to work, it needed all five governments to sign the pact in unison by Sept. 30. Negotiations between the EU and the EAC have been ongoing for seven years. Tanzania finally agreed to sign in late October which means that flowers and fruit from Kigali to Kampala can now enter the EU market duty free within the next few months. Oct. 1 was supposed to to be the deadline for the Economic Partnership Agreements but without consensus, goods from the region were subject to taxes as high as 22 percent. The Kenya Flower Council, an industry lobby group, said that the industry was relieved since the taxes could have made local farmers go belly up, resulting in massive job losses. “Kenya flower industry was indeed in a crippling crisis,” Kenya Flower Council CEO Jane Ngigi told AFKInsider. In 2013 horticulture exports from Kenya raked in $1 billion, 95 percent of this coming from sales...

VENTURES AFRICA – In recent times, there has been some ‘back and forth’ argument over the legality and long term usefulness of the Economic Partnership Agreement (EPA) between the European Union (EU) and several African states, according to the United Nations Economic Commission for Africa (UNECA). The EPA encourages African countries to open up to 83 percent of their markets to European imports while tariffs and fees are planned to be gradually eliminated. In exchange for this, African states are to receive customs-free access to the European market. While there may be some economic sense here, a number of African countries are not in support of the arrangement, the major concern being that they may lose their competitive trade advantage to European companies. Kenya was among the countries that refused to sign the deal, and it got significant import tariffs imposed on many of its products for that reason; this reportedly led to numerous layoffs in several African firms. Eventually the East African country caved in to the pressure two weeks ago and signed the trade agreement. This, in the opinion of a growing number of people, might just be called “economic bullying.” Notable EU officials have criticized this arrangement. One of such is German Chancellor Angela Merkel’s Africa Commissioner, Günter Nooke, who claims the EPA counteracts Europe’s development policy efforts. “Economic negotiations should not destroy what has been built up on the other side in the Development Ministry. Germany and Europe contribute large sums of tax money toward various...