EAC Trade and Investment Report 2015

Entry Date Oct 27 2017 // News, Key Documents, Reports

EAC Trade and Investment Report 2015

One of the underlying facets of a Customs Union and Common Market is generation, analysis and dissemination of data relating to trade, investment and other key variables that constitute the integration milestones. This becomes even more fundamental with a Monetary Union that requires sustainable measurement and keeping track of the macro-economic performance. Since 2005, the EAC has been producing Trade reports focusing on trade, revenue and investment flows.

This EAC Trade and Investment Report analyses the trade and investment flows in 2015. Its main purpose is to gauge EAC trade performance in the global macro-economic and trade contexts and particularly analyses the intra-EAC trade in goods for the year under review, EAC trade with the rest of the world, tax exemptions, revenue yield and investment flows of Partner States. It also highlights challenges and provides recommendations which inform policy direction.

The EAC Trade and Investment Report for the last 11 years have shown that intra EAC trade has grown from $1.5 billion in 2005 to $5.1 billion in 2015 with the highest level being $5.8 billion
in 2013. The Revenue collections have also continued to exhibit positive growth on year to year basis in all the Partner States. The EAC has also witnessed exponential growth in Foreign Direct
Investment and Intra EAC investment flows. Although not yet at the desired levels, the trend gives indication that EAC is becoming an attraction of viable investment projects. The flows depicted
by these reports are supported by other empirical studies such as the Regional integration Index of 2016 carried out by Economic Commission for Africa and African Development Bank and the
improved rankings in the Doing Business Reports of the World Bank.

On the flipside of the positive performance over period since 2005, EAC intra-trade performance in 2015 depicted a downward trend with a decrease of 10 percent from US$5.6 billion in 2014 to
US$5.1 billion. Investment flows in 2015 also declined by 16.4% from the previous year although the total investment was nearly double than that of 2012 and 2013. Likewise the trade deficit with the rest of the world continued to increase in 2015. The one year disparity may not be a good measure for the future trends given that 2016 may have experienced a rebound in the fundamental parameters used in the reporting.
The EAC Trade and Investment Report 2015 reveals the challenges that impede trade in EAC as Non-Tariff Barriers (NTBs) that raised the cost of doing business; poor infrastructure at the ports
and along the main transport corridors; exemption regime that distorts the implementation of the CET; low value addition in the Region that affects the export earnings of the Partner States; lack
of human and financial resources by the implementing agencies such as the investment agencies; delays in conclusion of trade agreements; investment related policies and strategies that are not
harmonized at the regional level; and cumbersome administrative and regulatory practices with regard to registering a business and getting licenses.

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