The EAC Common Market Protocol was signed by the five East African Community Heads of State on the 20th November, 2009 and is slated to come into force on 1st July, 2010 upon ratification by member states. The Protocol is the second step towards forming a Political Federation.
Under the EAC Treaty, the member states agreed to form a Political Federation in five steps; a Customs Union (signed in 2004), a Common Market, a Monetary Union (like the European Union) and ultimately a Political Federation.
The main objective of the Common Market Protocol is to accelerate economic development and foster social ties of the East African citizenry through the elimination of barriers to regional trade and movement of East African nationals.
Free movement of East African citizens and labour
As per the Protocol, member states agreed to ease movement of EAC nationals within East Africa.
It is intended that an East African citizen will be able to stay in a member state not being his/her own for up to 6 months without requiring a work permit or visa. Also, electronic IDs will eventually replace passports or “laissez passers” as travel documents when moving within EAC territory.
Currently only Rwanda uses electronic IDs. Other member states are expected to follow suit so as to make this provision workable.
While the Protocol does not abolish work permits, it is hoped that member states will abolish them gradually. Rwanda waived work permit fees for East African Citizens in 2009.
As per the Protocol, the member states further agreed to keep border posts opened and manned for twenty four hours. Accordingly, Rwanda and Uganda started keeping the Gatuna border post 24 hours open from April, 2010.
In addition, the member states agreed to mutually recognise the academic and professional qualifications granted by other Partner States and harmonize their curricula, examinations, certification and accreditation of educational institutions.
Also, save for public service jobs, it is intended that all other jobs within the EAC shall be open for competition to all EAC citizens once the Protocol comes into effect in July.
However, while the Protocol promotes free movement and the right to reside in any EAC territory, it stipulates that access to and use of land shall be governed by the national policies and laws of the member states.
Land being a highly explosive issue in East Africa, the framers of the Protocol wisely left it to member states to determine their own land policy vis-à-vis citizens of other EAC member states.
Free Movement of capital
As per the Protocol, the EAC member states pledged to remove all restrictions between member states on the movement of capital belonging to EAC citizens save for where such restrictions are justified by public policy considerations. They further undertook to ensure convertibility of currencies and promote cross border investments in capital markets.
It may well be remembered that in 2008, due to capital movement restrictions in Tanzania, Tanzanian investors were barred from participating in Kenya’s Safaricom Initial Public Offer, while Ugandans and Rwandans fully participated. Similarly, in 2009, investors from East African Partner states were blocked from participation in Tanzania’s NMB bank’s IPO.
Tanzania is currently in the process of easing capital movement restrictions in order to prevent a repeat of the same and align itself with the requirements of the Protocol.
Free Movement of goods
According to the Protocol, goods produced in a member state which are exported to a fellow member state will not be subjected to customs taxes. In addition, goods imported in one member state which are exported into another member state will be subject to a common tax regime.
This will mean East African consumers will be exposed to a wider variety of commodities and at cheaper prices while sellers will benefit from a wider market (about 120 million people).
Free Movement of Services
The member states further agreed to progressively remove restrictions on the movement of services so that EAC nationals can freely supply services within the EAC on the same terms as nationals of the country they are supplying services to. The Protocol sets out specific deadlines for the removal of the restrictions on the provision of services.
The East African Common Protocol is the most ambitious step yet towards the attainment of an EAC Political Federation in recent years.
If fully implemented it is likely to radically change the economic and social landscape of the EAC in ways that we could previously only dream of.
Richard Balenzi is a lawyer