For Online E-newspaper
Daily Nation : February 25th 2014
6 smart company market intelligence Tuesday February 25, 2014 DAILY NATION PARTNERSHIP » PRESIDENTS UHURU KENYATTA, YOWERI MUSEVENI AND PAUL KAGAME FORMED THE SUMMIT LAST YEAR Tanzania, Burundi to join ‘coalition After expressing reservations for a while, vice-presidents of the two countries attended a meeting in Kampala last week where their countries were invited to express interest in specific projects BY MUTHOKI MUMO email@example.com thaw within the East African Community following a meeting in Kampala last week during which member states on the two sides of a rift made conciliatory moves towards each other. For the first time, Tanzania at- T tended the series of infrastructure talks launched by Kenya, Uganda and Rwanda last year. Burundi, which last partici- pated in the summit in August 2013, expressed interest in joining all regional initiatives. Kenya, Uganda and Rwanda formed the Summit, informally known as the Coalition of the Willing, in June last year to accelerate implementation of projects related to regional integration. These meetings raised the ire of Tanzania which, along with Burundi, had initially been excluded. Tanzania criticised the Sum- mit and its agenda, saying they contravened the spirit of the EAC Treaty by independently pursuing such initiatives as fast-tracking political federation. Geopolitics Vice-presidents of Burundi and Tanzania attended the Kampala meeting as observers. They were invited to express interest in specific projects. Burundi sought to become a partner state within the Summit but Tanzania apparently decided to keep the coalition at arm’s length. “The Heads of State welcomed the interest of the Republic of Burundi to participate in all projects and directed the ministers of Foreign Affairs to coordinate its interest and invite ministers of Burundi and Tanzania to the next technical and ministerial meeting,” read part of a communiqué issued last week. East Africa’s geopolitics seem to inform the positions taken by Burundi and Tanzania. Landlocked and relatively underdeveloped, Burundi can ill- 6bn afford a combative relationship with the other EAC members. Tanzania, on the other hand, has vast mineral resources and a long coastline. South Sudan, which has a pending application to the East African Community (EAC), was also asked to present its areas of interest to formally join the standard gauge railway initiative. It is also telling that the coali- ensions are beginning to tion has decided to officially rechristen itself. Last year, official communication from the three countries made reference to the Tripartite Infrastructure Summit. This has since changed to the Northern Corridor Integration Projects Summit, implying that Kenya, Uganda and Rwanda are trying to be more inclusive of other countries in the region. Single tourist visa President Uhuru Kenyatta, in a speech at the Kampala meeting, said the region would soon launch a similar Central Corridor Integration Project Summit in which Tanzania and Burundi would play important roles. “The new central corridor will link waterways and power initiatives in the region,” said Mr Kenyatta. During the Kampala summit, the countries launched the East Africa single tourist visa. The travel document, which will operate in the same manner as the European Union’s Schengen visa, is expected to boost trade in the region by lowering fees and giving tourists access to multiple countries. Although Rwanda had initially been tasked with spearheading the project, Kenya has been directed to develop within two weeks a sample application form which will be shared with partner states. Further, citizens from the three countries can now use national and student identity cards as travel documents. Ministers are to provide harmonised standards for student IDs before the next meeting. Standard gauge railway In sourcing funds for the con- struction of the standard gauge railway (SGR), Uganda and Rwanda agreed to adopt a financing mechanism similar to the one being used by Kenya. The Kenya government is sourcing about 85 per cent of the money needed for its portion of the SGR from the China Exim Bank in a controversial deal. Beyond that, ministers of Finance have been directed to take Amount in shillings that Kenya has committed to invest in a Uganda refinery project in return for a three per cent stake From left: Presidents Uhuru Kenyatta (Kenya), Paul Kagame (Rwanda) and Yoweri Museveni (Uganda) during an EAC summit. PHOTO| FILE advantage of the African Development Bank’s Africa50 investment vehicle to mobilise infrastructure funds. In energy, member states that are yet to respond to an offer by Uganda to invest in its Sh213 billion refinery have been given a deadline of next month. Kenya has already committed to invest Sh6.38 billion in the refinery in return for a three per cent stake. It is not clear whether Rwanda has made a similar offer. Technology became part of the coalition’s agenda soon after infrastructure and freedom of movement issues. Last week, the coalition agreed to harmonise taxation in the mobile phone business in the face of rising costs of making calls in the region. But even as the coalition ac- celerates integration, the region was last week jolted into reality as a report published by the World Bank Group revealed that the bloc is performing poorly in implementing the Common Market Protocol. The East African Common Market scorecard notes that old regulations restricting movement of goods, capital and people are still in the law books while fresh restrictions have been enacted through legislation or in administration. “Laws and regulations of the EAC partner states, however, still present barriers to increased cross-border trade and foreign direct investment in the region,” notes the report. Although the region began ad- dressing the movement of goods well before the Common Market Protocol was adopted in 2010, there are many issues that are yet to be dealt with. In addition to failure to elimi- nate non-tariff barriers (NTBs), countries are frustrating implementation of the common external tariff by repeatedly seeking exemptions to the law. Some of these exemptions are occasioned by the fact that each member state is also a member of another African economic bloc. For instance, Tanzania is part of the South African Development Community while Kenya, Uganda, Rwanda and Burundi are members of the Common Market for East and South Africa. Free movement Goods imported by countries in the EAC from the other blocs in which they are members are not subject to the Common External Tariff (CET). The report estimates that between 2005 and 2012, goods worth Sh1.9 trillion ($22.7 billion) came into the community without being subjected to CET. “They (partner states) are all members of multiple free trade areas. This means that the Partner States apply different tariffs to extra-regional trade partners. These Hurdles stifling movement of goods in region 1 Member countries are frustrating the implementation of the common external tariff by repeatedly seeking exemptions to the law. 2 Partner states are seeking exemptions occasioned by the fact that each EAC member state is a member of another African economic bloc. For instance, Tanzania is a part of the South African Development Community while Kenya, Uganda, Rwanda and Burundi are members of the Common Market for East and South Africa . 3 Goods imported by countries in the community from other economic blocs in which they are members are not subject to the Common External Tariff (CET). 4 5 The World Bank report estimates that between 2005 and 2012, goods worth about Sh1.9 trillion ($22.7 billion) came into the community without being subjected to CET. Non tarrif barriers (NTB) to trade: Rwanda has elimi- nated 94.1 per cent of all NTBs, Kenya 85.4 per cent while Tanzania has only managed to bring down 66 per cent of these hurdles.
February 24th 2014
February 26th 2014