Customs Union comes with huge economic expectations

As part of the East African Community (EAC) integration process, yesterday, the Customs Union was officially launched and implemented in Rwanda. With this, come great expectations especially for Rwanda’s economy faced with new challenges of benefitting from this larger market base. Since its inception into the EAC on July 1, 2007, Rwanda has taken enormous strides towards creating a conducive environment that smoothens trade routes in the region.

As part of the East African Community (EAC) integration process, yesterday, the Customs Union was officially launched and implemented in Rwanda. With this, come great expectations especially for Rwanda’s economy faced with new challenges of benefitting from this larger market base.

Since its inception into the EAC on July 1, 2007, Rwanda has taken enormous strides towards creating a conducive environment that smoothens trade routes in the region.

Extending border opening hour (with a view of opening 24-7) in September last year was a first step towards creating a friendly trading environment. Scrapping off work permits for EAC citizens was another milestone achievement. Now joining the EAC customs union is another manifestation of the will to have our nation fully open for business.

Though in the short-run, the customs union will cause some financial losses to Rwanda’s fiscal position, in the long run, it will accelerate intra-regional trade mainly through an increased market base of 120 million people.

The region, Rwanda inclusive, will benefit from increased inflow of goods, promotion of production efficiency through increased competition, increased flow of foreign investments and better regional infrastructure.

Nonetheless, government needs to put into consideration some fears emerging from its private sector. Being a landlocked nation, the cost of production in Rwanda is higher than her neighbours. As a result, our private sector is afraid of being swallowed up as cheaper goods from the region flood the local market to outcompete their very own on price differences. 

Therefore, the private sector has called for more incentives to boost exports as a measure of bridging the ever growing gap in the balance of payment position. They have also called for more measures that should boost local consumption of locally produced goods.

These are important issues that government should consider as we move to consolidate our position in the EAC. We need to be active as opposed to passive players in this larger trading bloc.

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