NAIROBI, Kenya, Aug 6 – Kenyans will soon be able to travel to Rwanda using only their national identity cards, thanks to efforts by the two nations to create a borderless region that allows for the free movement of people and goods.
East African Community (EAC) Minister Musa Sirma announced that Kenya and Rwanda are planning a pilot exchange program that will allow the free movement of their citizens to either Kenya or Rwanda using only their national ID cards.
“Kenya will very soon have an exchange program with the Republic of Rwanda on the issue of migration,” he revealed.
“It’s at a very advanced stage and very soon, you will see the integration process moving. I urge members to fast track their identity cards so that we can use identity cards within East Africa,” he said.
Sirma urged EAC members to take a leading role in ensuring that all organs and institutions of the community work together to provide an environment that enables the free movement of people and goods.
“The integration process in the EAC has provided an opportunity for the partner states to expand their markets into a single larger one, while adapting best practices to improve their economies and living standards of their people,” he said.
“This therefore implies the need for our countries to deepen and expand integration amongst themselves,” he added.
He noted that the integration of the region will create opportunities to lower costs of cross border trade, create economies of scale as the market expands and act as a spring board for the partner states to develop their competitive capacities so they can compete with the rest of the world.
“The East African Community Customs Union seeks to liberalize trade of goods between partner states and the establishment of the Common Market Protocol has allowed for unprecedented increase in intra-EAC trade, ease of movement of people, goods and services thus promoting cross border investments in the community,” he stated.
Recently, Rwanda became the first country in Sub-Saharan Africa to launch their one-stop electronic clearing system called Rwanda Electronic Single Window, which automates cross border trade procedures and will help businesses save around Sh758 million yearly on customs costs.
The system allows traders to submit customs documents online, cutting the time required to clear goods in half and Kenya is looking to implement its own single customs digital stop, established by President Mwai Kibaki in 2011 as the Kenya Trade Network Agency (KenTrade) with the aim of simplifying and harmonising trade documentation.
In 2011/2012, the region’s Gross Domestic Product expanded by 5.9 percent in spite of a harsh economic environment marked by rising inflation and high fuel prices and there was sustained growth of intra-EAC trade, which now stands at over Sh336 trillion ($4 billion) having risen from Sh168 trillion ($2 billion) in 2005.
“The intra-EAC trade to total EAC trade has grown from 7.5 percent in 2005 to 11.5 percent in 2011. This means that the intensity of trade among partner states is growing at a modest pace and the region has also started witnessing partner states which were net intra-EAC importers start to become intra-EAC exporters,” he said.
However, Sirma acknowledged that there are challenges with some countries rejecting the free movement of people, goods and services.
“Non Trade Barriers have become the only impediment which is remaining to make our people, goods and services move freely so we must address it,” he emphasised.
“NTB’s cause prolonged delays in the clearance of goods as well as numerous road blocks in the major corridors which continue to frustrate cross border trade in the community,” he explained.
To compound the problem, NTBs also fuel inflation, contributing to the high inflation rates on consumable goods that are hampering EAC member countries and the barriers reduce the gains from trade by restricting domestic market access to regional exporters, denying consumer’s welfare enhancing opportunities which arise from access to reasonably priced regional imports.
The NTBs therefore affect the capacity of the EAC countries to trade in the regional markets.
“Internal tariffs and non-tariff barriers that could hinder trade between the partner states have to be eliminated, in order to facilitate formation of one large single market and investment area and policies relating to trade between the partner states and other countries, such as the external tariffs, have to be harmonised,” he said.
“The effect of these barriers is delay in clearing imports and varied application of tariff duties, added costs for transit including customs bonds, delay in transport and bribes and loss of business time,” he stated.
Under Article 13 of the Protocol on the Establishment of the EAC Customs Union, each partner state agreed to remove, with immediate effect, all the existing non-tariff barriers to the importation into their respective territories of goods originating in the other partner states and, thereafter, not impose any new non tariff barriers.
Sirma noted that the EAC Customs Union has been implemented and enforced in the region since 2010, but certain member states have not made significant efforts to eliminate NTBs.
“The common external tariffs which are applicable to all the partner states have been implemented, but it’s just the partner states who don’t want to respect them,” he said.
“The aim of creating one single customs territory is to enable partner states to enjoy economies of scale, with a view to supporting the process of economic development,” he explained.
He added that in a Single Customs Territory, duties for imported goods are paid at the port of entry to help curb tax evasion by unscrupulous importers who misrepresent imports as transit goods only to off-load them mid-journey.
Sirma noted that the Single Customs Territory “will crystallize the gains of integration characterized by minimal internal border controls and a more efficient institutional mechanism in clearing goods.”
“On implementation of the Common Market Protocol, the emphasis will be on the free movement of labour provisions, as well as the integration of the regional financial markets to allow for free movement of capital,” he stated.
Regarding ongoing efforts to establish a single financial market, he said that significant progress had been made but emphasised that partner states need “to remodel their economic policies in a regional perspective with a view of creating robust frameworks for economic convergence, production of reliable comparable statistics, creation of a vibrant compliance and enforcement mechanism and independent institutions to support a robust East African Monetary Union”.
“The Common Monetary Union is scheduled to be finalized by the end of this year and negotiations are in progress but we don’t know if we will be able to realize the goal at this stage,” he said.
The proposed Monetary Union is the third phase of the EAC integration process and its attainment will see the five member states adopt a single currency.