Charles Mutuma Mbogori
19 July 2007
Kigali — Following the signing of the Accession Treaty in Kampala on June 18 this year, Rwanda and Burundi are finally on board the EAC wagon. The entry of the two countries could not have come at a better time as it will boost the East African Business Council (EABC).
Rwanda is an ideal investment destination as that country's government is committed to creating a favourable climate. Rwanda's Vision 2020 - whose theme is "Development of entrepreneurship and the private sector" - is commendable. This, coupled with an expanding financial sector, will be a big boost as the country joins the EAC.
There will be immense gains for the EAC as well. One such gain is in information and communication technology (ICT). Rwanda is ahead in this dynamic industry in which it has invested heavily. The value of products and services is increasingly becoming a function of their information content and the knowledge used to produce them rather than the raw material content.
Although a landlocked country, Burundi, with a developing manufacturing sector, is bound to catch up. Its economy is predominantly agricultural, with more than 90 per cent of the population dependent on subsistence farming.
Economic growth depends on coffee and tea exports, which account for 90 per cent of foreign exchange earnings. The ability to pay for imports therefore rests primarily on weather conditions and international coffee and tea prices.
Political stability at the end of the civil war and the signing of the historic peace deal are also a major plus towards realising improved aid flows and increased economic growth. These should now provide an impetus for enhanced economic reforms.
Collectively, the entry of both nations will be good for business in the region. East Africa is rapidly gaining importance as an investment location on the African continent. We expect that there will be major economic boom for the region, which has a population of about 115 million people and a combined GDP of more than $40 billion.
In general, the benefits of enlarging the East African Community, from a private sector perspective, will be the advantage of economies of scale in the exploitation of various opportunities. Markets should also be protected and expanded through harmonisation of internal tariffs and adoption of common external tariffs.
Common projects in trans-boundary issues such as environment, security, infrastructure, tourism, energy and water resources also need to be promoted.
EABC, which was founded as an umbrella body of business associations in Kenya, Tanzania and Uganda in November 1997, was born out of the realisation of the potential of an enlarged Community. Since business is all about markets, the EAC has the potential of being an "economic tiger" because of its vast population.
One can safely state that regional integration is in line with the current trend of globalisation to which we must adjust or be swallowed up by other blocs.
Prior to the entry of the two countries into the EAC, the business council signed memoranda of understanding with the Rwanda Private Sector Federation (RPSF) and the Chamber of Commerce, Industry, Agriculture and Handicraft (CCIB) in Burundi.
The agreement allows the private sector bodies in both countries to access the services of EABC, which include participation in working groups and top level visits. In addition, representatives of the business community in both countries were to strive to win additional members into the business council.
During its last annual general meeting in Nairobi last month, the business council changed its constitution so as to give an opportunity to both the Kigali and Bujumbura associations to formally become members.
The council is committed to enhancing competitiveness, providing sound comparative data and information for decision making to the business community, undertaking public-private dialogue, promoting business reform and enhancing industrialisation by eliminating growth inhibitors. All activities of the council are now being carried out with Rwanda and Burundi in mind.
Indeed, as the EAC celebrates the new muungano initiative, the nuts and bolts of integration, including the meshing of the common external tariffs among various harmonisation issues, will need to be addressed sooner or later.
The ongoing protocol on the Common Market will need to be completed so that the citizens of East Africa can move freely, work and boost trade.
Customs issues such as centralised revenue collection and integrated computerisation at the border points and ports need to be addressed urgently.
The EAC also needs a seamless border. When these aspects are realised, then and only then will the fruits of one big EAC family be realised and enjoyed.
The writer is the executive director of the East African Business Council in Arusha.
ENDS
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