The East Africa Community (EAC) secretariat will conduct a study on how to harmonize member states' commercial laws to increase investment and bring the region closer to full economic integration.

The study, to be implemented in two phases in 12 to 15 months, will end up establishing a common legal system in EAC member states of Burundi, Rwanda, Tanzania, Kenya and Uganda.

The project will focus on creating a common structure among member states on banking, business transactions, finance and fiscal legislation, insurgence and re-insurance legislation as well as investment laws.

Other legislations to be looked into concern procurement and disposal of assets, money, standardisation, quality assurance and metrology as well as trade.

The project, to be funded by the Investment Climate Facility (ICF) to Africa in collaboration with the EAC Secretariat (EACS), will focus on harmonising key commercial laws in the region.

Speaking at the signing ceremony in Dar es Salaam yesterday, the EAC secretary general, ambassador Juma Mwapachu, said the study will set in motion an endeavour to promote the region as a single investment area.

Said he: "This project is another milestone in the EAC integration process. It will create a harmonised legal regime in commercial laws supportive of the single market for general leverage inflow of investments in the region."

Ambassador Mwapachu noted that the project will enhance EAC's efforts to improve the region's investment climate by transforming the relationship between member states from mere co-operation to a fully-fledged integration.

However, the ICF chief executive officer, Mr Omari Issa, said the aim of funding the study was to ensure that the EAC secretariat removes barriers to doing business in the region before the full economic integration.

He said with the removal of these barriers, EAC member states will provide a healthy investment climate vital for the continent's economic growth.

"With a combined population of 125 million and a current GDP of $55 billion, the EAC is bound with an investment potential. We are delighted to be building on our existing relationship with the governments of EAC to establish regional commercial laws which will encourage cross-border trade and stimulate both domestic and international investment,"said Mr Issa.

He pointed out that governments have always been encouraged to work with the private sector and development partners to create a legal, regulatory and administrative environment that encourages business at all levels to invest, grow and create jobs.

Successes achieved by the secretariat so far include moving the EAC into a fully functional duty free region expected in January next year.

Ambassador Mwapachu said differences in commercial laws among EAC member states could hamper the region's business environment and healthy investment climate for its development.

"In East Africa, company laws differ from one member state to another. We can't do business successfully in such an environment. When you want to promote a real common market there must be similarities in commercial laws within member states," he stressed.

The project's first phase will comprise a review of all commercial laws currently operational in the EAC. The second will comprise the prioritisation of those to be harmonised and entail drafting three legislations to be implemented by the East Africa Legislative Assembly (Eala) and member states' parliaments.

Mr Mwapachu said the project would also look into the similarity of investment laws, "because if we want a real common market where commodities will be moving freely from one member state to another, investment laws should be similar to provide equal benefits in competition."

He added: "You can find an investor in Uganda benefits more than an investor in Tanzania or Kenya; so there will be no equality in competition.

"Investment laws should be the same in member states so that an investor in Tanzania is not affected just like an investor in Uganda whose commodities are flocking to Tanzania."

Under the EAC agreement, the common market will become operational on January 1, 2010. From that day, Kenya goods, which have been attracting customs duty in Uganda and Tanzania in the past five years, will have the levies removed.

If the ongoing talks between the member countries are finalised, implementation of the common market will also start.