One cannot fault the EAC cost-benefit analysis
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There has been a lot going on lately about the business climate in the region and the efforts necessary to locally make it more hospitable.
Last week saw ministers from 26 African countries conclude a meeting in Kampala on Tripartite Free Trade Area (TFTA).
Preceding this was the East African Manufacturing Business Summit in May in Kigali. The city also played host to the Common Market for Eastern and Southern Africa (COMESA) meeting last week to track implementation of the Airspace Integration Project.
In the meantime, with an eye beyond the continent, the EAC Sectoral Council of Ministers of Trade, Industry, Finance and Investment were in Arusha last month where they adopted the terms of reference of a comprehensive cost-benefit analysis of the region’s trade with third parties.
The first thing to note is that the TFTA brings together COMESA, EAC, and the Southern Africa Development Community (SADC).
The other thing to note is the signing on of South Africa to be part of TFTA, which added the country’s heft to the free trade area’s viability.
No matter that only Egypt has ratified it, with a minimum of 14 countries required to ratify the TFTA for it to become operational. The joining of South Africa, with Mauritius and Botswana expected to sign on in short order, means that the long held dream of Africa being able to trade with itself has taken another important step towards a Continental Free Trade Area.
However, to this, the recent East African Business Council study, “Costs and Benefits of Open Skies in the East African Community”, illustrates a crucial point.
As an aspect of business, let alone the freedom to trade with ourselves, it shows how only nine per cent of passenger traffic in the region is intra-EAC, compared with 16 per cent intra-African countries and 46 per cent between Africa and the outside world.
It is here that we should pay attention to the Arusha EAC Sectoral Council of Ministers of Trade meeting, and its report published by the EAC Secretariat affirming the self-inflicted plethora of malaises that not only afflict the regional block, but the larger continent.
Numbers rarely lie, and, to begin with, the report finds that EAC’s contribution to world trade stands at less than one per cent.
Africa’s share of global exports, on the other hand, is not much better standing at a measly 2.4 per cent for such a large and well endowed continent.
The EAC Secretariat’s report points to the self-inflicted causes, which remain perennial and nothing new – the poor infrastructure at the ports and the main transport corridors, ineffective management of tax exemption regimes, lack of value addition to export commodities and delays in concluding trade agreements.
No doubt, the pointing out of the challenges is well meaning, and only goes to show that we are aware of what must be addressed.
It however grants ammunition to the skeptics who question whether these very challenges do not threaten to stall joint regional and continental integration projects, in addition to slowing down individual countries’ pace of economic growth.
On this particular score, one cannot fault the EAC countries’ cost-benefit analysis in Arusha, which seeks to allow the region negotiate free trade area agreements with new partners from Asia, the Middle East, South America and the European Free Trade Area.
It speaks to the principle of not keeping one’s eggs in one basket; which is simply to say that the EAC integration project, COMESA and the ideal in the TFTA will necessarily fail.
It is more of laying of the foundation of a network of roads to join a major highway towards the much sought after Continental Free Trade Area and beyond.
This, of course, is only my view as a layman and vested citizen who firmly believes in the irreversibility of globalization.
I see no reason why EAC should not look yonder. Among countries and regions reported in the local media to have expressed interest in signing free trade area agreements with the region are Turkey, China, Singapore, the United States and the European Free Trade Area, which consists of Iceland, Liechtenstein, Norway and Switzerland.
Others are Brazil, India and the Gulf Cooperation Council, which is made up of Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain and Oman.