DR Congo’s admission into the East African Community (EAC) on Tuesday, March 29, comes with increased GDP and expanded market size making the bloc home to about 300 million people, leaders observed as they welcomed the seventh member.
Kenya’s President Uhuru Kenyatta, the Chairperson of the EAC Heads of State Summit, opened the meeting by noting that world over, countries are integrating and organising themselves into regional economic blocs to strengthen intra-regional trading and increase inter-regional competitiveness through economies of scale.
With DR Congo’s admission, Kenyatta said, the EAC will expand significantly in various aspects of mutual benefit.
"Indeed, a combined population and GDP of our community will grow by 50 per cent and 25 per cent, respectively, implying a correspondent expansion of the market for goods and services. These numbers imply expanded market opportunities for producers located within the EAC under the Customs Union. The expanded Community will attract more investments across all sectors and will attract more investments as we also create wealth and employment for our people,” he said.
"The Community will be in a better position to combine resources to develop the much-needed infrastructure, especially the main transit corridors running from east to west. The same infrastructure is crucial in facilitating cross border movements of goods, people as well as physical capital as envisioned in the East African Common Market.”
With a larger market, Kenyatta said, the EAC will achieve better outcomes brought about by the economies of scale and pooling of productive human and financial resources.
According to the EAC Secretary General, Peter Mathuki, the country’s admission comes with increased GDP and expanded market size making EAC a home to about 300 million people, which is mutually beneficial to the people of both EAC and DR Congo by providing employment and investment opportunities that come along with this new development.
Mathuki said: "The EAC now spans from the Indian Ocean to the Atlantic Ocean making the region competitive and easy to access the larger African Continental Free Trade Area (AfCFTA).”
With lower tariffs on goods and the removal of trading restrictions among partner states, he added, we anticipate that goods and services will move more freely.
"With a larger market, manufacturers in the EAC, whether large or SMEs, will benefit from economies of scale, making them increasingly efficient and competitive. We, therefore, invite the private sector to work closely with the public sector to tap the benefits of this new development in our region.”
President Paul Kagame congratulated "our brothers and sisters from the Democratic Republic of Congo” and welcome them into the East African Community family.
"Rwanda commends the Council of Ministers and the East African Community Secretariat for speeding up this admission process,” he said.
President Samia Suluhu Hassan of Tanzania also commended Tshisekedi for his decision to seek admission into the EAC.
She said: "And to the people of the Democratic Republic of Congo, your country’s decision to join the EAC will afford you a great opportunity to extend space for peace and security, prosperity and solidarity within your country as well as to the region.”
Congolese President, Félix Antoine Tshisekedi, addressed the meeting and noted that his country’s admission to the bloc "which we celebrate today” is, without doubt, the happy conclusion of his counterparts’ personal efforts to build a community of men and women united and determined to share a common destiny.
He said: "I always recognized that the East African Community was superior in terms of free movement of goods and services, the integration of infrastructure, economic and commercial integration compared to other sub-regional economic blocs in Africa.”
Tshisekedi said it is why, in his January 2019 inaugural speech, he made his country’s admission to the bloc one of the objectives of his mandate.
He observed that his vast country already shared borders with the majority of countries in the bloc, shared people, languages, as well as customs and had, for several decades realised important economic exchanges.
"In effect, we Congolese have, for centuries, always been part of the East African Community. All that remained was to formalize this membership in an organized structure,” he said.
Among others, by joining the bloc, DR Congo is now set to benefit from the larger EAC Common Market and Common External Tariff framework, and have access to the seaports of Mombasa and Dar es Salaam at competitive rates.
Mathuki said DR Congo’s entry also "requires integrating our trade infrastructure, intermodal connectivity, One-Stop Border Posts (OSBPs), and trade systems to reduce trade time and costs.”
Enhancing trade facilitation, he said, will enable formal and informal cross-border trade along the region’s transport corridors.
Upon ascension to the EAC Treaty and depositing of the instrument of acceptance with the Secretary General, DR Congo will join EAC’s cooperation in all sectors, programmes and activities that promote the four pillars of EAC integration.
With French as an official language of the Community, Mathuki said, the Secretariat developed a proposal for simultaneous translation of Kiswahili and French in EAC statutory meetings to accommodate the admission of DR Congo as directed by leaders during the Summit on February 27, 2021.
"This proposal is due for consideration by the next Council. Once approved, it will allow us to seamlessly conduct business in the Community,” Mathuki said.
Perceived impact of DR Congo’s entry into EAC
DR Congo is expected to bolster the bloc’s potential through various ways including opening the corridor from the Indian Ocean to the Atlantic Ocean.
Speaking about the perceived impact of the new partner state, Kenya's Permanent Secretary EAC, Kevit Desai, who chairs the bloc’s Principal and Permanent Secretaries coordination committee, told The New Times that the EAC currently has a positive trade balance with DR Congo and with tariff liberalization under the free trade area, "this positive trade balance is likely to translate into increased export volumes from EAC states mainly driven by Rwanda and Uganda.”
He sees DR Congo’s entry as "a game-changer to the bloc’s trade performance given its natural resources base and a huge consumer market” of nearly 90 million people, almost half the population of the EAC.
DR Congo is the world’s biggest producer of cobalt, a major component in the manufacture of rechargeable batteries for electric vehicles, and Africa’s main copper producer.
It is also a major producer of gold, diamonds, uranium, coltan, oil and other precious metals, making it one of the most resource-rich countries in the world.
Desai noted these resources, coupled with appropriate transport infrastructure, can boost the EAC’s industrialisation agenda, given also that DR Congo share borders with five of the six EAC countries – Rwanda, Burundi, Uganda, South Sudan and Tanzania.
According to the data on merchandise export trade between the EAC countries and DR Congo from 2010 to 2018, all EAC countries are net exporters to DR Congo with Rwanda and Uganda being the largest trade partners while Burundi has the lowest export values.
Notably, EAC’s exports more than doubled from $419 million to $855 million between 2010 and 2018.
Desai said that Kenya was the second largest exporter to DR Congo between 2014 and 2018 among the EAC Partner States. Relatedly, he said, imports from DR Congo in the same period equally increased albeit by a lesser 28 per cent.
Hence, he noted, trends in export data suggest that DR Congo’s membership is likely to witness growth in export trade flows to the EAC bloc.
"More succinctly, trade effects and export trade accrued to Rwanda and Uganda to DRC are poised to be largest compared to other EAC members.”
Overall, he said, DR Congo’s membership is likely to have a positive effect on the bloc’s exports mainly driven by trade creation as EAC is poised to be a cheaper source for DR Congo’s imports compared to the rest of the world.
"Nonetheless, these exports are largely dominated by primary goods rather than high value manufactured products. In light of this, EAC partner states should adopt a long term strategy in the production of high technology products such as machinery, electrical equipment and motor vehicles which are DRC’s leading imports. EAC members can establish themselves as re-export or assembling hubs to supply high value manufactured products such as electronics and machinery, with a strategy to manufacture these products themselves.”
To tap into the vast market for food stuffs, Desai said, there is need to develop agro-processing industries (food) to add value to raw agricultural products especially sugar and palm oil and cereals alongside investing in commercial agricultural production to supply inputs to the agro-food industries.
"To increase the exports of iron and steel products, the government should promote the growth of the iron and steel industry production and attract private investment to overcome the supply constraints.”