EABC moots new strategies to benefit from African continental free trade zone

Regional governments should move fast and expedite integration process to give the East African Community a competitive edge in proposed continental free trade zone, the East African Business Council (EABC) leaders have said.

Monday, March 26, 2018
Mbabazi (left) checks out some of the products made by young agro-processors at the workshop. / Michel Nkurunziza

Regional governments should move fast and expedite integration process to give the East African Community a competitive edge in proposed continental free trade zone, the East African Business Council (EABC) leaders have said. Last week, 44 African Heads of State and government officials signed the historic agreement which will enable the creation of the African Continental Free Trade Area (CFTA).

The treaty, signed in Kagali on March 21, is expected to create largest trade bloc globally, with market share of almost $3.4 trillion and a population of over 1.2 billion people.

However, EABC leaders say the slow implementation of projects expected to improve business climate in the region could put the region at a disadvantage when the treaty finally comes into force. This may leave the region behind if nothing is done to have the projects fast-tracked and late alone cost the region an opportunity to fully participate in the bigger "African market”.

EABC vice-chairman and managing director Kigali Heights, Denis Karera, said full EAC integration will give the region competitive advantage, enabling it to benefit more from continental free trade zone. According to experts, the creation of African free trade area means regional blocs like EAC must find ways that will enable them to compete and benefit from the bigger market. Karera said delaying to ratify or implement some of the important regional treaties and projects could lender EAC almost non-player and irrelevant once CFTA comes to life.

"The competition that comes up with CFTA can only be dealt with if we cooporate as a region and embrace strong public-private partnerships,” he told The New Times over the weekend. He was speaking on the sidelines of EABC Excellence Business Awards in Nairobi, Kenya.

Karera said the regional single customs territory and the common market protocol were yet to be fully ratified by all members.

Speaking at the event, Jim Kabeho, the EABC chairman, said EAC states now have no choice, but to fast-track the integration to "ahead of the game”. "There is no doubt that EAC is one of the most organised trade blocs in Africa. However, governments and other stakeholders should do more if the region is to become more competitive in the larger continental free trade area,” he said.

Felix Mosha, the EABC former chairman, called for research-supported solutions in the integration process. He added that it is also important to position the private to take the lead in this integration process, saying this will help make them relevant in the newly created continental free trade market.

The experts said that regional integration can only be expedited when member states avoid protectionism of national interests. Kenya’s cabinet secretary for EAC affairs and Northern Corridor initiative, Peter Munya, said those championing "trade protectionism” should be isolated, saying EAC members should look at a bigger picture and benefits that come with integrating markets. The regional private sector says that integration will, not only boost trade, but equally increase the bloc’s exports to the rest of Africa.

Addressing unharmonised tax regimes

Meanwhile, Donald Kaberuka, a member of nine eminent Africans tasked with reforming the African Union, called on member states to address the question of ‘unorganised’ tax regimes to benefit from the newly-signed CFTA agreement. "The biggest impediment has always been unharmonised tariffs; therefore, if we succeed in streamlining and bringing them down, then we are good to go,” he said.

EAC growth projections

Growth in the East African Community (EAC) remained broadly resilient last year despite challenges related to bad weather. National Bank of Rwanda (BNR) recently indicated that a positive rebound in growth for EAC economies was expected this year, thanks to the improvement in weather conditions. The World Bank has already projected in sub-Saharan Africa is projected to expand to 3.2 per cent in 2018 and to 3.5 per cent in 2019 on the back of firming commodity prices and gradually strengthening domestic demand.