For over a month now, tension has heightened in the east of the Democratic Republic of Congo, and the region, after the resurgence of the M23 rebellion even after the country made a big step forward in joining the East African Community (EAC). Besides the difficulties in the bloc’s new member, in May, EAC Ministers in charge of trade and finance adopted 35 per cent as the 4th band of the region's Common External Tariff (CET). Implementation of the reviewed EAC CET commences on July 1.
In an exclusive interview with The New Times’ James Karuhanga, EAC Secretary General, Peter Mathuki, maintained a positive outlook while discussing the Congolese issue, among other prevalent challenges. Mathuki insists that however difficult the situation may look, there is always a way out. Mathuki also talked, at length, about the region's revised Common External Tariff, stressing that it is, eventually meant to benefit the region’s common man.
Excerpts:
After your first year in office and the admission of DR Congo into the bloc, what is the secretariat’s view on the state in eastern DRC?
As you are well aware, the Heads of State admitted the DRC and it ascended to the Treaty on April 8. I think that is a huge benefit for East Africans. But again, as we do this we are aware there are some situations in the eastern part of DRC. And issues in eastern DRC, or in any part of the EAC, are a challenge to all of us and we must admit this.
A challenge in any part of the EAC becomes a collective challenge. I know, the Heads of State at their level, have come up with a framework. The first time when they met on April 8, in Nairobi, they tried to see the best way to best resolve this challenge. I am very confident that it will be done.
The situation is not supposed to be like that, but again, the fact that at the highest level, the Heads of State themselves are concerned about it and are discussing about it and have already formed a framework to talk about it, is something positive.
So, it is my expectation and it is our hope that this will be resolved. But secondly, [there is] our own framework of the EAC mechanism for preventing and supporting such kinds of situations. We are going to put [measures] in place to make sure that we support and facilitate towards having a very peaceful East Africa because that is in our interest.
But you need to understand that however difficult a situation is, there is always a way out. I strongly believe that, because it can’t always be like that. And I look forward to a very prosperous East Africa.
With the spirit, the energy and enthusiasm of the Heads of State, I am very convinced that this regional bloc will not only be one of the most integrated in Africa, but in the world.
Does the EAC really understand the conflict in eastern DRC; for example, the resurgence of the M23 group?
We can’t claim to be experts in that per say, but we know that there is a situation. And there is a team that is following up very closely. As it follows up closely, using the mechanisms that we have, we try to see how best we can get around it to complement what the Heads of State are doing.
But obviously, our department of peace and security is getting information. And this information becomes useful to us in terms of how to intervene. And it is our prayer that with that information, we will be able to see, identify or understand how to support the mechanism initiated by the Heads of State.
How is the EAC department of peace and security doing, since from what we gather, it’s underfunded and possibly understaffed?
I wouldn’t say it is underfunded. I would say that we have resources and the capacity even to mobilise more resources towards intervening in such circumstances.
Some situations may require even a bigger number. And when it requires a bigger number or resources, we can identify more experts to come and help us. But I think that the department has the capacity to support and give advice or give us information which could be useful in trying to intervene.
Ministers in charge of finance recently adopted an EAC CET of 35 per cent for fourth band goods. What does this mean for the common man?
Actually, it simply means; made in East Africa by East Africa. It means goods produced within East Africa are protected so much therefore; one, we increase our manufacturing capacity, we increase local production. In layman’s terms, it means we consume what we produce in East Africa.
It means the capacity of countries in East Africa; whatever they have, we produce and we protect it so that it is not competed out of the market by the goods from out of the region.
I think, in simple terms, it means we are promoting local production and local manufacturing. We are encouraging East Africans that; let us consume what we have. For example, now the crisis we are facing in the entire world. We hear that there’s the Ukraine-Russia war and therefore we are unable to get wheat…because of this, prices have gone up. Why can’t we produce our own? Why can’t we identify incentives that can be offered to encourage local production?
Can’t we do all that when the CET is at 30 per cent?
What we are saying is that we are protecting more because the more duties we increase for the goods that are coming from out, the more we say; why can’t we buy our own? For example, wheat coming from Ukraine, when we put it at 35 per cent, and our own local wheat here at zero percent, which is cheaper? It is our wheat, which is duty free!
Duty free means that anything we produce here is being sold within East Africa and it attracts zero percent. So, when the Council passed 35 per cent [revised CET] it said that for any good coming into East Africa that is fully processed, or manufactured, then we impose 35 percent because we want to produce our own. It has a direct impact on people’s lives because it affects the cost of production, the cost of living.
Two, it creates jobs for our youths. We really encourage more people to come and invest in East Africa and produce from here, instead of bringing finished products because bringing finished products means they are processed and manufactured elsewhere and you are creating jobs elsewhere.
Job creation is good, many can be employed but issue is: how much are they paid? Considering, for example, the cost of living in the region and everything that is happening outside such as the Ukraine crisis and affecting us…
If, for example, we take the landmass in the newly created EAC [with entry of DRC], which is close to about five million square kilometres, and we say let’s produce food, we will produce enough and use whatever we are farming as raw materials [for industry].
What it means is that; one, there will be food security. People will be able to produce enough food for their own first. Food will be less costly. Two; because of the raw materials that you are not getting from outside, it [local produce] will be much cheaper too.
And therefore, it means that eventually, the cost of living will also be lowered. The reason why things are expensive now is because we are importing everything and, once we import, by the time we clear everything, it is very expensive, and we are not even creating jobs at all.
So, I think we must appreciate that the only sustainable way to create jobs is to do local production. And with this crisis, it is high time we became food secure in East Africa. And it is possible because we have the land, and manpower. And three; we have the market, close to 300 million people now.
What do you make of the decision to increase CET to 35 per cent, at a time when regional interventions have not resulted into an EAC industrialisation policy?
Manufacturing is a process, unlike trading. Trading is simply buying goods and selling them. What the [new] CET is doing is encouraging production. Production means manufacturing; manufacturing means you have the opportunity to add value.
And therefore, the issue of whether it is benefiting one calibre of people or another depends, because, private sector or the people who produce have to do so with support from the government. Governments will give incentives and all manner of requisite environment that ensures businesses thrive.
Therefore, the CET is not only for businesses. Actually, the CET is for the common man because we want local production. If it is produced here and it is cheaper, it means the common mwanainchi will be able to buy cheaper from all over East Africa.
The gain is both ways, because producers will pay taxes and therefore the government is also able to provide whatever it is supposed to provide and the private sector is producing and creating jobs and revenue.
In addition, it is about being competitive. It will be in the interest of those business people to ensure that the price they set is competitive. You cannot be getting incentives and support from government and then you increase or put prices more than actually is expected.
If you do that, then you are not doing business. It will be about mass production and therefore, prices will remain low. It benefits the common man in terms of jobs, in terms of income and our whole economy in East Africa becomes sustainable. So, the spirit is buy East African, build East Africa.
We are informed that a Heads of State retreat on the common market is planned sometime soon. Why exactly and when?
Until the Heads of State confirm their own schedule, you can only plan. The common market is the second pillar of our integration. We have had it for close to 20 years. It is high time we take stock and reflect on whether it is properly functional and on what it is that we need to do so that in the region, the common people can benefit better.
It is high time we take stock and reflect and see what else we need to do, or not to do, so that we can have this second pillar of the Common Market work for the people of East Africa.
And therefore, the Summit or the Heads of State have to get an opportunity to reflect and ask ourselves; where are we with the common market now? What is not working? Why is it not working? Can we do it better? Can we change? And what aspects are we going to change? That’s what it means by simply having a reflection with the summit to look at it and possibly put everything on track.