Inter-regional trade volumes among EAC member states yet to pick up

News analysis by Leo Odera Omolo.

FOUR years after signing of the East African Community Custom Union protocol ,inter-regional trade volumes among EAC member states are yet to pick up.

A survey commissioned by the all powerful  East African Business Council (EABC) has authoritatively revealed.

The survey found that the majority of businesses in the region think non-tariff barriers as the main impediment to the realization of this goal of the EAC Customs Union.

Poor road  network,,high taxes and duties,extortion,delays by boarder officials and restrictions on importation of goods were felt to be major drawback in more than 15 percent of  border towns  in the region.

A truck driver transporting goods from the Kenya port of Mombasa to Kigali in Rwanda for example encounters more than 20 barriers setup by police inevitably delaying delivery of the goods in transit.

Despite the alarming situation there are no formal monitoring mechanisms for truck drivers cross border trades and clearing agents to report their experiences with non-tarriff trade barriers.

It is not surprising therefore that business in the EAC region opt to most of their requirements from the rest of the world.

Tanzania;s imports from the non-EAC world account for non 75 percent of its total imports, while the figure for Burundi is 43 percent imports from EAC countries by Kenyan and Tanzanian businesses account only for six and five percent of their total imports respectively.

Europe is the chief source of imports to the EAC countries, taking between seven and  14

Percent of the total.

This years EABC survey follows the “climate index for East Africa”  done in 2003,a year before the customs union protocol was signed.

The study listed high border-crossing charges, lengthy bureaucratic checks and verification inspections by customs authorities as the main problems hindering the smooth flow of trade within EAC partner states.

Tragically five years after EABC recommendations on their eliminations on their, the business community in the region is still facing the same problem.

In the survey under review ,EABC calls for speedy implementation of the monitoring mechanism to fast-track elimination of NTBS in the EABC.

NTB monitoring mechanism was developed jointly by EABC and was adopted by the Council of Muslims in August 2006 with the objective of facilitating the process of identifying, reporting and monitoring the elimination of current and future NTBS in the EAC.

The director of customs in the EAC Kenneth Bagamugunda was recently quoted by the mass as saying; “ NTBS increase the cost of doing business, thus rendering the region uncompetitive.

This defeats EAC’s integration objective of developing a competitive private sector both in the region and globally.

The director said that one of the serious impediments of doing business in the EAC is the sorry state of infrastructure. The cost associated with congestion and delays at the ports telecommunications, poor road and railway networks are prohibitive air travel costs;

“all undermine the relative advantage of doing business in the region ,rendering products unable to compete with cheap and illegal imports and also incompetetive in export market”.

A Kenyan permanent secretary to the EAC David Nalo says there is an urgent need for immediate removal of NTBS if cross border trade is to realize efficiency.

The PS has urged both private and public sectors to activily take part in the process of implementation of the custom union.

“ currently building needs assessment of the units charged with the responsibility for implementing the mechanism should also be considered as the basis for concerted capacity building intervention in support of EAC efforts for elimination os NTBS.” the report says.

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API