Have you ever considered how competitive a country would be if donkeys and camels were the primary mode of transport for its cross-border trade? Over long distances, a donkey can trot at a leisurely 9 km/hour but it can notch up a top speed of 43 km/hour. That is approximately how efficient trade would have been for our forefathers in Africa’s ancient trading kingdoms around Timbuktu and similar cities. It took a trade caravan 40 days to cross the Sahara Desert in those medieval times. Fast forward to the twenty-first century and you would think that things must be totally different and that Africa would have considerably accelerated. Not quite, when you consider that the estimated effective speed of road transport within the Southern African Development Community, for example, is between 6 km/hour and 12 km/hour.[1] The road infrastructure has substantially improved since the medieval era and trucks can move as fast as anywhere else in the world. But when drivers have to be stopped at numerous checkpoints and are forced to spend days at borders, the average speed of an entire journey reduces to donkey pace. It is therefore unsurprising that Africa faces the largest trade costs of any region in the world. And many of the challenges are man-made. Granted, geographic constraints, such as having more landlocked countries (16) than any other region in the world, put Africa at a disadvantage. But such geographic barriers have not prevented Switzerland or Austria from participating effectively in international trade. In...

Dar es Salaam — Tanzania will this Saturday host East African Community (EAC) leaders for the much-awaited regional bloc’s Heads of State Summit. So much is at stake ahead of the high-profile meeting that was thrice postponed over the past few months at the request of the hosts, Burundi and Kenya. Apparently, as the leaders finally meet in Dar es Salaam, the main issue of interest will be what direction to take for the Community that has of late been dogged by fresh cracks, and a financial crisis, which derailed the implementation of key projects. Granted, it has been a rough year for the EAC. Member states are still entangled in the confusion that was brought by the tricky trade deal with the European Union – with Kenya and Rwanda on one side pushing for the ratifying of the Economic Partnership Agreement (EPA) and Tanzania leading a splinter group that is against the pact. Last September, the EAC presidents met in the wake of Tanzania’s stiff opposition to the deal. It was during the meeting that the leaders decided to give technocrats more room for consultations on EPAs and to review their position in January. But there is no sign yet that member states will reach common ground. Kenya has, since 2007 been pushing for the deal to be concluded with speed. Being the only developing state in EAC (the rest are classified as Least Developed Countries that enjoy duty-free trade with EU without reciprocating), Kenya has had to lobby...

Arusha — East African Community (EAC) partner states are divided on the proposed financing mechanisms to bail out the cash-strapped regional body. While the founding members, Tanzania, Uganda and Kenya, want to maintain the existing equal contribution arrangement, Burundi and Rwanda prefer differentiated contribution. A guidance on the matter will be sought during the 18th Ordinary Summit of the Heads of State scheduled to take place in Dar es Salaam on Saturday. Sustainable financing mechanism for the EAC will be among the key items on the agenda, but a report seen by The Citizen indicates that the partner states are not agreed on the proposed alternatives. One of them is to raise funds for the Community’s projects and programmes is to slap a 0.7 per cent levy on the value of dutiable imports from outside the bloc. The percentage should be reviewed after every five years by the Council of Ministers which is the policy organ of the Community and the most supreme after the leaders’s Summit. Hybrid option The other mechanism recommended is a hybrid option which will use various parameters for each country. It is favoured as a means to promote equity and fairness. An alternative financing mechanism for the EAC has been on the cards for years and has been proposed to increase the budget of the rapidly expanding Community whose institutions have lately increased. The option also aims to overcome the cash woes facing the regional body due to dwindling financial support from donors and delayed...

Manufacturers want East African Community member states to fast-track harmonisation of taxation policies to facilitate free cross-border trade. Kenya Association of Manufacturers chief executive Phyllis Wakiaga said yesterday this will support growth of industry which faces stiff competition from cheaper imports. “This year, the common external tariff is being reviewed,” she said. “(The policymakers are) are looking to review the (import) duty values that can encourage local production and improve domestic trade. Hopefully by December we will have this ready.” The review, EAC Affairs PS Betty Maina said in February, is at amending rules used in classifying goods entering into the five-nation bloc with the aim of supporting growth of the industry, which is largely still at infancy. Wakiaga singled out slow harmonisation of standardisation certificates and VAT as major hurdles to free trade within the EAC bloc. “So far we have addressed over 150 non-tariff barriers but what we are trying to ensure is how we can sustainably avoid blocking trade within the East African Community,” she said. Data collated by the Kenya National Bureau of Statistics shows that manufacturing contributed 9.2 per cent to the country’s gross domestic product down from 9.5 per cent during the previous year. KNBS data shows that manufacturing sector contribution the gross domestic product has stagnated at around 10 per cent in the last 10 years. The sector faces such challenges as illicit trade, high power costs, congested industrial zones, high labour input costs, increased overall production costs and a huge import bill....

The International Monetary Fund and Fitch Ratings concur on Rwanda’s positive economic outlook. While each country is unique in its circumstance, this reflects on the wider EAC, specifically Uganda, Tanzania and Kenya, which are as favourably projected. The just-released IMF Regional Economic Outlook for Sub-Saharan Africa reports that the four EAC members states are expected to sustain annual growth rates of five per cent or higher. Rwanda, for instance, is expected to grow by 6.2 per cent in 2017 as vouched at the IMF second review of country’s Policy Support Instrument in Kigali this week. The percentage growth coincides with Fitch forecasts for this year, onward to 6.6 per cent in 2018 (See “Fitch confirms Rwanda’s economic outlook as stable”, The New Times, May 15, 2017). If the projection holds, this will mean more than a slight improvement from the 5.9 per cent growth registered last year. It is the same with the other three member states. According to the IMF report, their economies’ comparative strength is due in large measure to public spending and investments in infrastructure. Generally, however, one wishes the positive outlook rubs on Burundi, which remains in economic doldrums, as much as South Sudan which continues to be wracked by conflict. But a wish is only a wish, and more a measure of intent than effective action. What is certain is that the two countries must weigh their options with the better able section of the EAC playing its role to offer the support it must,...

The Belt and Road Forum for International Cooperation (BRF) concluded here Monday, and officials and experts said the forum has strengthened international trade ties and sounded a call against protectionism. The forum has strengthened international trade ties and sought new channels of distributing goods to bring about mutual benefit for all, said Ignacio Martinez Cortes, head of the Research Laboratory for Trade, Economy and Business. "It is also a call against protectionism," Martinez Cortes said in an interview with Xinhua in Mexico. China's new commercial strategy will allow Latin America and the Caribbean to join this drive of "opening up, inclusiveness and mutual benefits," said the Mexican expert on China affairs when talking about the two-day forum held in Beijing. The Belt and Road Initiative breaks with both regionalism and corporate-driven global supply chains and will benefit Latin America in the two fields of raw materials and added-value technologies, he said. The initiative "is the gateway" to international free trade and sustainable development, and also "more focused on investment, infrastructure and development, instead of just on trade," he said. "Through this initiative, China is offering new channels, which is focused on strengthening partnerships and on the success of sustainable development," the expert said. The Belt and Road Initiative was proposed by Chinese President Xi Jinping in 2013 with an aim to build a trade and infrastructure network connecting Asia with Europe and Africa along and beyond ancient trade routes. "In his opening speech President Xi highlighted the importance of infrastructure...

The Economic Partnership Agreement (EPA) between East African Community (EAC) partner states and the European Union, search for a sustainable financing mechanism and assent to bills passed by the regional Assembly are among the agenda items of the upcoming summit, an official has said. The leaders of the six EAC partner states are due to meet in Dar-es-Salaam, Tanzania, on Saturday for their annual summit that has been postponed three times in the recent past. While in Kigali, earlier this year, the East African Legislative Assembly (EALA) passed a resolution urging the Council to find a common stance on partner states’ funding deficit by having it on the agenda of next EAC Summit. Richard Owora, the EAC head of corporate communications and public affairs, told The New Times yesterday that the provisional agenda of the summit also includes matters concerning the EAC Political Federation, the fourth goal of regional integration, after the Customs Union, Common Market and Monetary Union. According to Owora, the 18th Ordinary Summit of EAC Heads of State will also consider various reports including the “report on the roadmap for the accelerated integration” of South Sudan. South Sudan deposited the instruments of ratification of the accession Treaty on September 5, 2016, and the summit is set to appoint a judge from South Sudan to the East African Court of Justice. South Sudan has already elected its nine members for the fourth East African Legislative Assembly in June. The summit will also consider a progress report on admission...

It used to take an incredible 45 working days to transport goods from the Kenyan port of Mombasa to Rwanda, passing through Uganda, a distance of approximately 1,450 kilometers. “You can imagine how expensive that was,” said Mutaawe, Chief Strategy and Results officer at TradeMark Africa (TMA). She has dedicated her career to trade facilitation, working on the public, private and donor sides of the issue, and has seen some dramatic improvements. That shipment time is now down to eight days and counting. This makes a huge difference for traders in delicate or perishable goods which were getting damaged or ruined in transit. “And think of the difference for businesses who were having to ensure sufficient inventory as you wait for your shipment to come through; and the cost of people working across the chain, just following up on the shipment,” said Mutaawe. The improvement is also due to the hard and soft infrastructure improvements supported by TMA. Named for Trade and Markets, the agency is funded by the EU plus six member states, the US and Canada with a pot of $560 million for 2010-17. It focuses on improving trade competitiveness and expanding domestic and regional markets for the East African Community. “We have projects that are aimed at increasing physical access to markets; ensuring infrastructure is in place; that ports are working efficiently; to improve the capacity of ports, their entrance and exits,” said Mutaawe. That route from Mombasa to Rwanda used to include eight weigh-bridges and various...

Rwanda’s ambassador to China, Lt. Gen. Charles Kayonga has praised the Belt and Road initiative as a platform for Africa to grow with the rest of the world. He said the initiative, pioneered by Chinese leader Xi Jinping gives developing countries space to have a say in the global economy, create jobs and prosperity. The Belt and Road forum opened in Beijing on Sunday. In his opening address, president Xi Jinping said the initiative aims to promote economic interdependence, inclusiveness and win-win cooperation. “Manufacturing will open up economies of countries along the belt and road, create employment and reduce inequality,” said the Chinese leader. Hundreds of delegates are attending the forum, including 29 heads of state. Ethiopian Prime Minister Hailemariam Desalegn and Kenya’s president Uhuru Kenyatta are among the leaders in attendance. Among others, the initiative seeks to build a network of infrastructure connecting China to Asia, Europe and Africa in the form of highways, bridges, sea ports and industrial parks. China is injecting $18.8bn in the Silk Road fund to give more momentum in the initiative, Xi said. He also pledged $8bn in aid to developing countries and international organization along the belt and road for education and humanitarian work. Kayonga said the belt and road initiative the vision of Africa’s Agenda 2063, which aims to integrate the continent and to develop sustainable economies. “The Belt and Road initiative is one of the mechanisms for infrastructural development. East Africa is working with China to develop a standard gauge railway...

More than 46,000 jobs and $202 million could be added to the region’s growth domestic product (GDP) per annum if East African Community (EAC) member countries embrace the open sky policy, a new study indicates. The study by the East African Business council (EABC) estimates that liberalisation of the airspace between the six EAC countries could result in an additional 46,320 jobs and $202.1 million per annum in GDP. According to the study, there is compelling evidence that full liberalisation of restricted routes will lead to about 9 per cent lower average fares and a 41 per cent increase in frequencies, which in turn will stimulate passenger demand across the region. “This study demonstrates that increased air service and traffic resulted in positive benefits for the total EAC economy,” said Lilian Awinja, the EABC chief executive officer. Sector players say one of the factors contributing to the slow implementation of the Yamoussoukro Decision principles is a lack of clear and specific information regarding the impacts of enacting air transport liberalisation. “The East African Business Council (EABC) and the EAC secretariat, therefore, commissioned the study on the costs and benefits of open skies in the EAC bloc to understand the impact of implementing the Yamoussoukro Decision in East Africa,” she noted . She added that  liberalisation of air transport contributes to “greater trade and tourism, inward investment, productivity growth, increased employment and economic development” besides being supported by regional stakeholders. According to aviation experts, liberalisation offers a means to restructure national...