25 January 2014

East Africa: If EABC Gets its Way, East Africa Will Never be the Same Again


An important meeting that could hold the key to the region's stability and economic prosperity took place in Rwanda mid this month.

The East African Business Council (EABC), the apex organization of the business community in the region, held a strategic board retreat at which the decision was made to seek audience with all the individual heads of state in the region to press the business community's concerns.

EABC wants regional governments to expedite the use of national identity cards as a travel document in the entire region. Kenya, Uganda and Rwanda have already started allowing citizens of the three countries to use this card as a travel document. According to the Minister of EAC Affairs in Rwanda, a remarkable 8,000 people had crossed the Gatuna border post between Rwanda and Uganda using the national ID by mid-January.

Now, in a strange twist of events that brings some good out of the "coalition of the willing" rhetoric, EABC will be requesting Tanzania and Burundi to similarly accept the use of IDs to allow easy movement of traders and citizens across the region. If this is accepted by the two countries, it will be a coup for the whole East African citizenry.

So long as one has an ID of any East African country, for instance, it will be impossible to categorize any East African an illegal immigrant. Even if trouble arose in any of these countries, you cannot herd the citizens who have escaped to another member state into a refugee camp, since they will have the right to free movement as East Africans.

Another measure that will have tremendous impact and that EABC plans to take up has to do with reducing the cost of telecommunication services in the region to cut down the cost of doing business. Roaming telephone charges have been a major impediment to doing business, with charges for regional calls rising up to seven times more than that of calling the US or India. If integration at the grassroots is to be enhanced and medium-size businesses enabled to trade across borders, then EAC governments have to commit themselves to reducing the cost of telecommunications across the region.

Further, EABC is advocating for the reduction of the cost of air transport through reduced taxation on air travel to ensure easy movement of business people and citizens across the region so that intra-EAC trade can be increased and expanded. Unfortunately, the body did not come up with concrete proposals showing by what margin regional governments should cut down on taxation. Moreover, part of the cost is because of global fuel prices, over which our governments have no control.

One thing EAC governments can easily do, however, is to give air transport companies rights to fly in the entire region.

Another key issue affecting businesses in the region is double taxation. The EABC is asking the Partner States to set a specific date for the coming into force of the Agreement on Avoidance of Double Taxation. Only Rwanda has ratified this agreement, and the regional business body will have to lobby the other four governments to do the same.

The difficulties when it comes to taxes are obvious, since governments will tend to drag their feet where they feel there is revenue to be lost. In fact, when it comes to taxation, EABC shouldn't limit itself to double taxation; the issue of harmonizing the VAT regime in the region, for instance, is a priority that should not be forgotten.

Other items to which the regional business organization has committed itself include advocacy for the adoption of the EAC Single Tourist Visa and harmonization of visa requirements; improving the functionality of the ports of Mombasa and Dar es Salaam; and delinking the schedule of movement of workers from the schedule of movement of services under the Common Market Protocol.

Will political leaders listen to the concerns of the region's business community? Many of the issues being raised by EABC have been debated over the years, with little or no movement. The imperviousness of regional governments in these and similar issues is legendary. The board members of EABC should not be under any illusion that the task will be easy, and what is required is persistent lobbying using all available forums. The net effect of these proposals is far-reaching, and East Africa will never be the same again.

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