Kenya, others ready for EAC Market

May 9, 2010 12:00 am

, NAIROBI, Kenya, May 9 – The East African Community is all set to become a single market from July following the ratification of the Common Market Protocol by the five member States ahead of the April 30 deadline but there are mixed feelings about how this integration process will pan out in the short term.

Although many people particularly those from the business community acknowledge that there will be teething problems that will be presented with the coming into force of the protocol, they are choosing to focus on the benefits that they will accrue from this regional cooperation.

PineBridge Senior Investment Manager Edward Gitahi reckons that the implementation of the protocol will help remove the bottlenecks that have existed in the past and hindered cross border trade.

“Hopefully, now we should see exports from Kenya beginning to flow more easily into all the other EAC countries and vice versa,” he says.

If and when this is achieved, it will improve the region’s competitiveness and attract more investments and capital. This in turn spells benefits for the countries involved because they will not be acting individually and thus will reap from the wider market that the protocol which allows for the free movement of labour, goods, services, capital, and the right of establishment, portends.

The services sector, manufacturing and transport and logistics are likely to be some of the immediate beneficiaries of the opening up of the East African trade area. Eastern Africa Farmers Federation President Philip Kiriro says the agriculture sector in the region also stand to benefit if statistics from various organisations are anything to go by.

“Domestic cross border trade is supposed to grow by well over 80 percent up to 2030, so that’s a lot of business,” he says.

While the EAC partner states will no longer view each other as a threat, experts have warned that competition will come from other regional blocs such as the European Union and thus the need to be vigilant.

Mr Kiriro says the EU is eyeing the East African market and therefore if it’s disorganised and not well prepared, it will lose a lot of business to the Europeans. He says the challenge will be to educate producers and the East African public on how they need to position themselves to take advantages of the situation.

This also calls for a commitment from both the political leaders and technocrats on how to implement the protocol in order to maximise benefits.

This determination is also needed in the coordination of projects so that all countries are able to benefit and achieve that regional integration process envisages, says economist Ali Mansoor.

Mr Mansoor who’s also the Mauritius Financial Secretary says for countries to attain this, there’s a need for leaders to have a framework that would enable them to collectively take ‘politically difficult decisions and actions’ and implement them.

“There’s a tendency is to focus on things that are unimportant but politically easy. But there’s a need to take a simple approach that will ensure the region achieves its objectives,” he argues.

Mr Mansoor adds that the bloc should also spend ‘political capital’ to remove barriers to trade and develop their countries.

This for poor countries would come from cohesion funds that are annual dedicated budget support to enable the region sustain the lowering of these barriers such as infrastructure problems.

“Countries could take a digestible front and for example say ‘we have a lot of barriers to remove but over the next three to five years each country gets to pick say 20 barriers that impede development and send them to the Secretariat,” he proposed.

The Secretariat would then negotiate with each of the countries and agree on the pace and time line when those bottlenecks would have been addressed and eliminated.

Such initiatives, he points out would go a long way in turning the integration process a success and ensure that these benefits cascade to people in all levels of the society.


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