24 May 2017

Africa: Industrialists Fear Return of Protectionism in East Africa

Photo: East African
Bags of sugar (file photo).

The drive by some East Africa Community (EAC) member states to promote industries through domestic sales is raising fears of a return to protectionism.

While industry stakeholders contend the campaigns help local industries, there are concerns the drives could hinder the growth of the wider East Africa market by locking out products from neighbouring countries.

"In East Africa we still have national tendencies instead of regional. We need to yearn for something bigger than state protection," said Dr Mukhisa Kituyi, United Nations Conference on Trade and Development Secretary General.

Dr Kituyi spoke at the 2nd East African Manufacturing Business Summit in Kigali being held under the theme of 'harnessing the manufacturing potential for sustainable economic growth in East Africa'.

The region is struggling to spur growth in manufacturing which has been stagnant in recent years. However, individual countries have started campaigns to push consumption of local products.

Kampala and Kigali have launched the 'Made in Uganda' and 'Made in Rwanda' campaigns, respectively, that aim to sensitise citizens to consume locally produced goods. Kenya has been pushing the 'Buy Kenya, Build Kenya' brand since 2015 and has recently started allowing controlled sale of products from incentive parks - Export Processing Zones - to be sold in the local market.

According to François Kanimba, Rwanda Minister of Trade and Industry, the 'Made in Rwanda' policy is a cross-cutting competitiveness policy that seeks to remove remaining supply-side bottlenecks hindering the development of the country's industrial sector.

While the policy is helping Rwanda to shift mind-set and actions on improving quantity and quality production as well as local consumption and exports, it does not amount to protectionism, he said.

"The 'Made in Rwanda' policy has no intentions to resume protectionism or discriminate against EAC producers. The main intention is government to think on how to help make industries competitive," he said.

Fears that member states are locking out their markets comes at a time when the region reckons that the implementation of the EAC Customs Union and Common Market protocol is facing challenges, something that has impacted on the growth of the manufacturing sector.

Indeed there is consensus that one of the key instruments of the Customs union, the common external tariff, has not achieved the desired results.

"EAC partner states are not uniformly applying the common external tariff thus creating an unlevelled playing field and curtailing further industrialisation of the region," said Lilian Awinja, the East Africa Business Council executive director.

Already a process to review the common external tariff has started, with the key aim being to abolish the 'stay of application' clause that protects sensitive goods such as maize, rice, wheat, textiles and sugar.

The move is aimed at driving the growth of the manufacturing sector whose growth has stunted in recent years with its average contribution to the region's gross domestic product (GDP) stagnating at 10 per cent.

EAC hopes to spur growth of the sector to ensure its contribution to GDP increases to at least 25 per cent by 2032.

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