5 November 2012

East Africa: Why EA Businesses Need Forums

Bujumbura — The private sector pays taxes to governments who in turn use them to provide services to the people.

If the private sector are experiencing problems, they can't contribute to the country's gross domestic product and if they have no way of approaching their governments to find solutions then it means infrustracture will suffer.

Therefore the idea developed by the East African Business Council (EABC) and East African Community EAC to hold regional private sector forums will provide solutions to existing problems ultimately contributing to the region's socio-economic growth.

Amb. Sezibera told East African Business Week in Bujumbura, Burundi that the overall objective of the forum is to provide a platform for the continuous dialogue to ensure the integration process works for business and trade, EAC competitiveness, and ultimately socio-economic growth of the region.

Comprising five national forums and one regional forum annually, the East African Community Secretary General's chief executive officers (EAC-SG's CEO) forum is hosted by the East African Community (EAC) secretariat in partnership with East African Business Council (EABC) and TradeMark East Africa (TMEA) based on the three organizations' shared objectives of fostering the interests of the business community in the integration process.

The forums provide a platform for regular dialogue with the business community on how to improve the EAC integration process and the business environment to increase competitiveness, productivity and economic growth of the region.

What specifically happens during these meetings is that the business community is updated by the Secretary General on the status and progress of the EAC regional integration process while the business representatives present a list of key challenges and recommendations.

In Uganda, the private sector among others recommended for the re-instatement of the East African Harbors and Ports Authority so that the coastal facilities can benefit and owned by all the partner states.

Everest Kayondo, the chairman of Kampala City Traders Association (KACITA) said such an undertaking would curtail unilateral maneuvers like the recent cash bond slapped by Kenya Revenue Authority that caused animosity among the Ugandan business community.

The Chairman of Kenya Association of Manufacturers Jaswinder Bedi identified various priority interventions necessary for the implementation of a Customs Union including the formation of Single Customs Territory.

He said this will further entail shifting inter Partner States customs border controls to outer borders, collection of taxes at the first point of entry, free circulation of goods, harmonized domestic tax regime, formation of a strong EAC body to administer taxes and application of a common external tariff.

He recommended for the harmonization of ICT systems, a legal framework to removal of non trade barriers, address standardization, quality assurance, metrology and testing framework.

Mr. Rajesh Shar a partner at the PricewaterhouseCoopers Kenya noted the harmonization of the domestic tax regimes is critical for the free movement of goods, services, labor and capital in all the four stages of the EAC integration.

Mr. Gilbert Langat, the CEO of Kenya Shippers Council called for reducing the complexity and cost of trade transactions.

He recommended for single harmonized manifests-carnets that are used by country of origin and at border posts, harmonized transit bond and licensing regimes and proposed that customs authorities should have an information system that is real-time and harmonized, using single entry documents across the region.

In Dar es Salaam, Tanzania, the business executives held discussions on the implementation of the fully-fledged Customs Union, the harmonization of tax regimes, priorities in implementing the Common Market Protocol and lowering the cost of doing business through improved infrastructure.

Traders also complained of the unharmonised EAC, COMESA, SADC rules of origin, prevalence of non-tariff barriers and measures, poor trade facilitation including different export and import requirements.

They also mentioned lack of supportive infrastructure to manage a single customs territory including information, communication and technology (ICT) which they called for massive investment for effective implementation of the customs territory.

They also criticized the rigid mindset of the government facilitators, corruption, under-pricing and dumping across the partner states and private sector complicity in frustrating intra-EAC trade.

They reiterated the need for the expediting of the tripartite negotiations, harmonise and strengthen the ICT systems to allow for timely exchange of information, investment in infrastructure (ports, railways, one customs border ports.

The traders also recommended for public and private sector involvement in the EAC integration, the completion and implementation of the Framework for harmonisation of technical standards, in order to fully implement the EAC SQMT Act 2006.

With Rwanda being a land locked country, the NTBs were observed as one factor that pushes the cost of doing business even higher.

"There are too many roadblocks and these have become money minting machines in form of bribes demanded by those officials," says said Ephraim Turahirwa, the general manager of Rwanda Mountain Tea.

Besides roadblocks, members of the Rwanda private sector also reckon that some partner states have policies that deliberately limit trade from outside.

For example, RwandAir CEO John Mirenge said that the airline has been denied freedoms that are nonetheless granted to foreign airlines hence increasing the cost of doing business.

Trade Mark East Africa (TMEA) Director for Private Sector Lisa Karanja said the private sector plays a major role in expanding economic opportunities and remains the corner stone of development in the EAC region.

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