10 January 2016

East Africa: EAC Deal With Itc Should Bear Fruits


Just before the December festive season got underway last year, East African Community (EAC) Secretary General, Amb. Richard Sezibera and Arancha González, the International Trade Centre Executive Director announced a joint project to boost intra-Africa trade.

Note that intra-Africa trade is less than 15% of overall African trade, which makes this project important and worthy of strong support.

Dr. Sezibera said the deal will contribute to improving the global competitiveness of the EAC region and to trigger sustainable economic growth.

Implementation of the five-year $8.5 million TRIP for EAC project is set to begin this month. The government of Finland has also pledged to provide initial funding.

According to the EAC Secretariat, the new initiative aims to strengthen existing efforts by East African countries for closer economic integration, including the East African Customs Union, and the 2010 establishment of the EAC Common Market.

ITC is the joint agency of the WTO and the United Nations. ITC assists small and medium-sized enterprises in developing and transition economies to become more competitive in global markets, thereby contributing to sustainable economic development within the frameworks of the Aid-for-Trade agenda and the UN Global Goals.

The TRIP for EAC project also sets out to support the African Union's Action Plan for Boosting Intra-African Trade and the recently agreed tripartite free-trade agreement among the Common Market for Eastern and Southern Africa (COMESA), the EAC and the Southern African Development Community (SADC).

ITC and the EAC will intervene at three levels to provide integrated solutions to problems of SME competitiveness. At the enterprise level, they will work to enhance the competitiveness of SMEs in selected sectors, with a strong focus on women entrepreneurs.

The EAC governments all agree that SMEs are critical in building the momentum that will carry this region economically forward. That SMEs are critical to inclusive growth has become axiomatic. SMEs employ a large share of workers in developing countries - the largest share in lower income countries - and create more jobs than larger firms. The growth and productivity of SMEs has far-reaching implications for quantity and quality of jobs, as well as income levels. Systemic reforms of factor and product markets can reduce the costs and risks that SMEs face, and also expand their opportunities. Targeted efforts that expand access to finance and enhance SME capabilities can also make a difference.

For the greater part of the past decade, the development community committed billions of US-dollars to support SMEs around the world. Over the 2006-2012 period, World Bank Group commitments totalled US$ 10.5 billion in IFC investments, $4.9 billion in World Bank investments, and $2.3 billion in gross exposure of MIGA guarantees. Other major financiers of SME programmes are the European Commission, multilateral development banks, and bilateral agencies. More recently, G20 countries have emphasized the role of SMEs post crisis in promoting economic recovery with jobs.

They are joined by the B20 coalition, which represents over 6.7 million businesses and advocates for coordinated efforts to promote competitiveness and jobs.

Fair competition is the stuff that inspires innovation and efficiency, not to mention sustained customer satisfaction. Regional SMEs need international exposure so as to weigh their ability to sell wider afield. The ITC has a proven track record in helping in this area.

Most SMEs owners do not want handouts. They want opportunities and a conducive environmental to prove their worth. Let the market decide whether they survive or perish. But regional governments must give every assistance within reasonable bounds to help SMEs grow. The EAC partnership with ITC is therefore a very good example.

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