23 May 2014

East Africa: Trade Among E. Africa Countries in Top Gear

THE East African Community (EAC) has said that intra-regional trade has increased slightly above two-fold in the last decade, expressing optimism that the potential to upscale it was enormous.

EAC Secretary General, Richard Sezibera, has further revealed that trade increased from less than 10 to 25 per cent among the five partner states of Kenya, Uganda, Tanzania, Rwanda and Burundi in the last ten years.

"This volume is expected to increase as regional integration is widening and deepening," Dr Sezibera told the ongoing African Development Bank (AfDB) conference in Kigali, Rwanda.

He attributed the trend to the reduction of trade barriers that he noted has consequently reduced the cost of doing business in the region Citing an example, Dr Sezibera said it would have previously cost 1,500 US dollars to ship a container from Japan to the Kenyan port of Mombasa and 4,500 dollars to move the same container to Kigali from the port. "Much of the cost was due to administrative hurdles.

The cost (from Mombasa to Kigali) has since gone down by 1,075 dollars," Dr Sezibera said on Tuesday. The EAC boss called for further removal of non-trade barriers, saying the move had proven to be an effective way to ease intraregional trade.

On intra-African trade, Dr Sezibera said that the EAC and the AfDB has put up an East African Payment System that enables fast movement of finances and business people across the borders to carry out transactions in their local currency. Participants called on African countries to avoid duplicating products, which was seen as one of the challenges that affect the growth of intra-Africa trade.

A majority of African producers and exporters tend to have similar products which reduce chances of trading between each other which means importing from markets outside Africa, according to traders. Rwanda's Minister for Trade and Commerce, Mr Francois Kanimba, said the structure of the production systems in African countries poses a challenge.

Many African countries' products for export, he said, are almost the similar if not the same. "There is need to diversify on our exports if we are to trade with each other," he stressed.

Mr Kanimba also cited the tendency by most African producers to design and produce exports with the developed markets in mind as well as a culture of discouraging emerging traders at border points, which was likely to positively impact on intra-African trade.

"There is a bad culture where you have permanent tendencies at African border points to discourage emerging traders who would like to take the opportunity to penetrate and embark on the regional market," the minister noted.

The Deputy Director of the World Trade Organisation (WTO), Mr Frederick Agah, said there was need to integrate regions to foster cooperation and trust between countries to develop intra-Africa trade. He called on African regions to emulate successful models of regions that have already integrated and boosted trade EAC.

The Chief Executive of Walvis Bay Corridor Group, Mr Johnny Smith, mentioned that it was necessary to develop infrastructure to create opportunities to trade with neighbouring countries.


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