ARUSHA - The East Africa Business Council (EAC) has congratulated East African Community Heads of State upon the historical signing of the East African Community Common Market Protocol.
But the council has also called upon the community’s top leaders to address infrastructure barriers in order to facilitate tade in the region.
In his memorandum to EAC Heads of State, the Chairman of East African Business Council, Faustin Mbundu, said the signing of the Common Market Protocol could not have been possible without the personal commitment of the Heads of State.
“The EAC integration has made the region stronger, through significant economic reforms, liberalized markets, and diversified trade,” Mbundu said.
He said the business environment in East Africa has greatly improved compared to five years ago.
“Many of the stringent restrictions which hampered trade and investment in the region, such as different policy regimes, fiscal laws, permits, and high tariffs have been removed.”
However, Mbundu noted that as the EAC moves towards a fully fledged Customs Union and a Common Market, Infrastructure bottlenecks, persistent Non-Tariff Barriers (NTBs), frequent policy reversals, and lack of active private sector involvement in trade policy formulation are some of the challenges that need to be addressed.
He urged East African governments, as a priority, to address infrastructure bottlenecks such as poor road network, inefficient railway system, and expensive and unreliable electricity supply if the region is to attain the desired competitiveness. “The current poor infrastructure continues to have a negative impact on the business environment in the region,” he said.
Arbitrary suspension of Common External Tariff (CET) by some countries through stay of CET application during pre-budget consultations is the other challenge the private sector is facing ahead of a full fledged Customs Union.
Some of the incidents where CET has been suspended without proper consultation with industry stake holders include, the Dar es Salaam Rapid Transit (DART) project where Import Duty on buses with a capacity of more than 25 seats reduced to 10 per cent from July 2007 to June 2009 (2,400 buses).
They also include duty exemption for refrigerated trucks, insulated tankers, garbage, collection trucks and 4 wheel drive tourist vehicles, trucks with gross vehicle weight of 5 -20 tonnes ( from 25% to 10%), trucks with gross vehicle weight of over 20 tonnes (from 25% to 0%) and sensitive status accorded to the cement sector was removed in June 2008 with import duty being reduced from 40% to 25%.
He said such frequent and un-transparent policy changes undermine the CET principal which is to boost domestic production and promote intra-regional trade.
“Frequent and un-transparent policy changes affect the conditions upon which investment are based and affect the competitiveness of local industries,” he said. “EAC Partner States should be committed to the spirit of the Customs Union Protocol.”
He said all due process should involve transparent consultations and discussions involving all stakeholders before decisions are made.
He reiterated EABC’s commitment to continue tracking the presence of Non-Tariff Barriers (NTBs) through constant monitoring and reporting but asked EAC governments to put more effort in eliminating NTBs.
Persistent NTBs include Police Roadblocks, weighbridges, lack of mutual recognition of Quality Standards and other NTBs in agricultural trade. He noted that EAC time-bound programme for elimination of identified NTBs is still slow and generally inefficient.
He asked Partner States to take a regional approach to eliminate/reduce NTBs through review and harmonization of policies, regulations and other legislations.
“The on going work on one stop border post should be replicated in the major border posts in the region,” he said.