EAC PRIVATE SECTOR EXPECTATIONS FOR THE UPCOMING HEADS OF STATE SUMMIT
The East African private sector is urging EAC Heads of States to direct relevant Government bodies to fast track the admission of the Democratic Republic of Congo (DRC) into the EAC bloc, embrace a coordinated approach in responding to COVID-19, adopt the EAC Open Skies Policy and come up with solutions to persistent Non-Tariff Barriers (NTBs) in the upcoming 21st Ordinary Summit of the EAC Heads of State.
Finalization of the comprehensive review of the EAC Common External Tariff (CET), harmonization of EAC domestic taxes and tapping into the African Continental Free Trade Area (AfCFTA) are also some of the key issues the private sector is keen on.
Through EABC, the private sector has tabled these to the EAC Council of Ministers among the matrix of issues to be considered in the Summit slated for 27th February 2021. This, in a move set to improve the business environment in the region and rebound an economy embattled by the pandemic.
According to a study conducted by EABC in collaboration with GIZ Creating Perspectives last year, on the Opportunities for trade in the DRC, the value of goods imported in the DRC in 2019, stood at USD 6.6 billion. However, EAC exports to the DRC in 2018, stood at USD 855.4 million, representing 11.5 % of total DRC imports while China dominated as the top exporter with a 31.2% share.
“DRC offers a large market for EAC SMEs to tap into. DRC will in turn benefit from the larger EAC Common Market and Common External Tariff Framework,” said EABC CEO Dr. Peter Mutuku Mathuki.
Uncoordinated approach on the Covid-19 pandemic has brought forth new trade barriers leading to congestions at EAC border points, increased cargo transit time and escalated the cost of doing business. For instance, cargo transit time more than doubled in the Northern corridor between January and September 2020.
Intra-EAC trade contracted due to COVID-19 and is exacerbated further by the persistent NTBs related to Rules of Origin and import bans that continue to deny market access of products made in East Africa.
“We urge the EAC Heads of State to direct relevant Government bodies to fast track bilateral and diplomatic engagements to solve these persistent trade disputes and NTBs and finalize the operationalization of the EAC Trade Remedies Committee. This will improve intra-EAC trade and economic resilience amid COVID-19,” said Dr. Mathuki.
Total EAC exports decreased by 4.7 percent to USD 14.0 billion in 2018 from USD 14.7 billion in 2017 of which, intra-EAC exports accounted for 22.4 percent. The trade deficit for the EAC regionincreased by 39.4 percent to USD 24.3 billion in 2018 from USD 17.4 billion registered in 2017. (EAC Trade & Investment Report, 2018).
The reviewed EAC CET is expected to encourage more value addition and protect priority value chain sectors in the region. Strengthening of regional value chain is paramount as COVID-19 disrupted the global supply chains hence necessitated manufactures to rely more on the region to source raw materials and inputs.
Implementation of the Open Skies for cargo in the EAC will increase connectivity, improve consolidation and boost export of fresh products (horticulture & fish) to international markets amid the pandemic. EABC is also calling for the implementation of the EAC Regulations on Liberalization of air transport services to reduce air ticket and freight costs.
With the AfCFTA now in force, the private sector is calling for the finalization of EAC remaining tariff offers and ratification by all partner states to take advantage of the 1.3 billion people market.
EABC is also calling for the adoption of the One Network Area(ONA) model by all EAC Partner States to reduce the high cost of telecommunications in the region.