How Rwanda will benefit from US-EAC trade partnership

Trade Africa, a new initiative by the United States aimed at boosting trade with and within the East African Community, will help Rwanda overcome some of the biggest import and export challenges the country currently faces.
Trade Africa will help increase trade between EAC nations and USA. According to Obama, the future partnership between Africa and the US should be based on trade, and not just on aid an....
Trade Africa will help increase trade between EAC nations and USA. According to Obama, the future partnership between Africa and the US should be based on trade, and not just on aid an....

Trade Africa, a new initiative by the United States aimed at boosting trade with and within the East African Community, will help Rwanda overcome some of the biggest import and export challenges the country currently faces.

The initiative, launched by US President Barack Obama on his recent trip to Africa, will focus on boosting trade between the EAC and United States, by removing bottlenecks that hamper regional trade, to ensure that goods are transported across borders faster, and cheaply.

At a business roundtable in Dar es Salaam, President Obama said the objective is to double the regional trade between EAC countries and increase the export from these five countries to the United States by 40 per cent.

“Those are the goals we’re setting for ourselves under Trade Africa and here in East Africa. And we intend to make this the foundation for similar progress regionally that we can do across the continent in years to come,” the US President said, implying that the administration hopes to expand the initiative to other African countries in the future.

The initiative was welcomed by the business community in the country.

Hannington Namara, CEO of the Private Sector Federation, said the partnership was a welcome gesture.

Improve the competitiveness

“Whatever can be done to facilitate the movement of goods in and out of Rwanda is of great importance to the Rwandan business community,” he said.

Namara is especially content that the initiative will focus on the single custom territory, as that will improve the competitiveness of Rwandan businesses.

“Rwanda has got to move its ‘borders’ to the coast and the ports of Mombasa and Dar es Salaam, so this will have great implications,” Namara said.

While the CEO argues that it is still too early to estimate how much money and time the initiative will save local businesses, he is certain that it is going to have a positive impact on the country.

 “The initiative is going to save Rwandan businesses a lot of time and money, which is going to make it more attractive to investors. I cannot quantify the effect the initiative is going to have on the economy in Rwanda, but I’m positive that it will lead to more trade and more investments in the country,” he says.

After the Dar es Salaam meeting, Michael Froman, the newly appointed US trade representative, used Rwanda as an example to explain to reporters why reducing road blocks and other bottlenecks will hugely improve the competitiveness of EAC countries.

 “It takes 42 days to export coffee out of Rwanda. It takes 14 days to export coffee out of Columbia. Trucks will wait for, often-times, days, to get through the border crossing, crosses to the next country and face another border crossing with a different customs system. All these things add costs and create lack of competitiveness for products coming out of this region”, Froman said.

According to a factsheet on the new parternship presented by the White House, the Obama administration chose to focus on the five EAC Member States– Rwanda, Burundi, Tanzania, Kenya and Uganda – because the countries have increasingly stable and pro-business regulations, are home to promising local enterprises that are forming creative partnerships with multinational companies, and are benefiting from the emergence of an educated, globalised middle class.

 “The EAC is an economic success story, and represents a market with significant opportunity for U.S. exports and investment. Intra-EAC trade has doubled in the past five years, and the region’s GDP has risen to more than $80 billion – quadrupling in only 10 years,, the factsheet reads in part.

At the presentation of Trade Africa, President  Obama stressed that it is in the best interest of the United States to start trading more with Africa.

“More growth and opportunity in Africa can mean more growth and opportunity in the United States. And this is not charity; this is self-interest. I see Africa as the world’s next major economic success story. And the United States wants to be a partner in that success,” the President said.

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