Removal of Non-Tariff Barriers Pushes EAC Intra-Regional Trade to 10b US Dollars

Trade amongst the East African Community member countries grew to 10.17 billion dollars as of September 2022, showing an improvement from the year 2021 when 9.1 billion dollars was recorded.

According to records at the EAC Secretariat, intra-regional trade was recorded at 15 percent of total trade by the region with the whole world, growing to 20 percent by September.

This is also the highest percentage recorded since the revival of the EAC 22 years ago.

EAC Secretary General Peter Mathuki attributed the increase in intra-regional trade to political goodwill among the members of the Summit of EAC Heads of State and the relaxation of Covid-19 restrictions in the region amongst other factors.

The year saw the Heads of State focus on the elimination of non-tariff barriers that were taking a toll on the intra-regional trade that affected the movement of goods between countries.

For example, Ugandan products were severally banned from the Kenyan market between 2019 and 2022 and in late 2021 Uganda threatened retaliation, prompting fresh talks over the disputes.

Early last year, Rwanda announced it was reopening the border with Uganda after a 3-year closure, while other trade hiccups were encountered between Rwanda and Burundi, Tanzania and Kenya, and Uganda and South Sudan.

Mathuki says that last year six barriers were abolished and hopes that this and other factors like using the Identity Card for travel, would help raise the level of intra-regional trade in East Africa to at least 40% over the next five years.

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To-date, 257 NTBs have been cumulatively resolved since 2007.  During the year, the state agencies in charge of standards also completed the harmonization of the standards of products in the region, making it easy for them to trade across borders.

According to the records, EAC’s total trade with the rest of the world stood at 62 billion dollars, meaning that there is still room for improvement in intra-EAC trade.

The region is also taking advantage of the requirements of the African Continental Free Trade Area, to step up best practices in the trade.

All the EAC partner states have signed up to the treaty but only South Sudan is yet to ratify it.

But despite that, the region last year moved closure to start trading under the deal after agreeing to and submitting the list of the 99 percent of the products that will be liberalized or phased out. 

According to him, there is no need to encourage more products so that the region benefits from the opportunities of the AfCFTA.

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Another achievement was the admission of the Democratic Republic of Congo into the EAC, expanding the total market size to about 300 million people and the size of the economy to 300 billion dollars.

The process to admit Somalia also was launched when the country’s President made a personal appeal at the heads of states summit.  The Secretariat is this month sending a verification mission to the Indian Ocean coastal country to assess the suitability and preparedness for admission.

The EAC Ministers in charge of Trade and Finance had adopted 35 percent as the 4th Band of the EAC Common External Tariff (CET), which means another group of products were protected from competition from imports.

“From 1st July 2022, imports of locally available goods into the region; such as meat, furniture, and textiles, have been attracting a tariff of 35 percent. The move aims at promoting local production, value addition, and industrialization,” said Dr. Mathuki.

On the East African Monetary Union, plans are going on for the bloc to have a single currency within the next four years.

Mathuki says that the Council of Ministers is expected to make a decision this year on the location of the East African Monetary Institute, the precursor to the East African Central Bank that will issue the single currency.

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The East African Business Council-EABC has hailed the show of commitment by the EAC political leaders towards integration and facilitating trade, which, among others, has led to the reduction in NTBs.

EABC Chairperson, Angelina Ngalula, however, called on the presidents to put in place the proposals that have been agreed to.

“This year, the East African Business Council Secretariat has planned to engage the Chair of the Summit of the EAC Heads of State to enhance food security, strengthen the integration of regional supply chains, eliminate Non-Tariff Barriers, restrictions to the free movement of services, double taxation, open skies, telecommunications and infrastructure development in order to boost the expansion of businesses across EAC borders,” she says in the plans for 2023.

Last year, the EABC conducted a study on business and investment outlook which showed that the rate of investments, operation, and performance of businesses in the EAC bloc is recovering amid COVID-19 and is set to increase by 11% in 2023.

The community is, however, worried about the continuing geopolitical crises like Russia/Ukraine, which are stifling trade devilment.

The world bank commodity prices outlook shows energy prices are expected to decline 11 percent in 2023 and Agriculture prices are projected to decline 5 percent.

“This year, EABC Secretariat will roll out high-level public-private dialogues to ensure the Governments of EAC Partner States put in place frameworks to reduce the effects of global disruptions on business, investment, and economies. Serving our members is our first priority,” says EABC Chief Executive John Bosco Kalisa.