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The East African : March 10th 2014
The EastAfrican 44 DRC PRESIDENT TOOK BLOC LEADERSHIP ON FEBRUARY 26 Full intray awaits Kabila as Comesa head Tasks include foste≥ing peace, secu≥ity and getting inf≥ast≥uctu≥e funds By JULIUS BARIGABA The EastAfrican A tough job awaits the president of the Democratic Re- public of Congo Joseph Kabila, the new chairman of the Common Market for Eastern and Southern Africa (Comesa). Urgent tasks include fostering peace and security, and in turn attract investments to address the infrastructure deficit in the region in order to achieve a fully integrated market. Several member states of Afri- ca’s largest bloc are still smarting from governance issues and conflicts. President Kabila assumed chairmanship of Comesa on February 26, taking over from Uganda’s President Yoweri Museveni, whose tenure since November 2012 saw him seek and aggressively engage Brazil, Russia, India, China and South Africa (also known as the BRICS), the five countries that represent the major emerging economies from Eastern Europe, Asia and Africa. President Museveni urged the five countries to fund infrastructure projects in the Comesa region at the fifth summit of the BRICS held in Durban, South Africa in March last year. “During my term, we partici- pated in conferences in Yokohama, Dubai and Kampala. I used my visit to Russia to urge President Vladimir Putin to raise funds for bankable projects,” said President Museveni at the 17th Comesa summit in Kinshasa. According to World Bank es- Outgoing Comesa chairman Uganda’s President Yoweri Museveni hands over the mantle to DR Congo’s President Joseph Kabila. Picture: AFP timates, Africa needs $93 billion each year to cover funding gaps for infrastructure. Comesa, made up of 19 member states, has a population of 430 million people covering a land mass of 16.5 million square kilometres. Yet, it remains poorly connected in terms of infrastructure compared with regional economic blocs in southern, western and northern African. President Museveni hands I urged President Putin to raise funds for bankable projects,” Uganda’s President Museveni over to President Kabila the task of mobilising $53 billion for infrastructure in the Comesa region. Broken down, this figure is $28.4 billion for railways, airports, ports, roads and border posts; $31.4 billion for electricity. In addition, the bloc requires $630 million for ICT infrastructure. President Kabila will have the advantage of progressing with the multilateral infrastructure co-financing agreement for Africa — a key outcome of the Durban BRICS summit — that paves the way for funding of several Comesa projects. However, the region needs to guarantee stability. The bloc has been consumed by old and new conflicts. Eastern DR Congo, for instance, is still home to several negative forces and militia despite the most dominant, the M23 group, being defeated recently. Another member, Madagascar, has only just returned to democratic governance, recovering from political turmoil since 2008. The ongoing conflict in South Sudan — a non-Comesa country — since December 2013 has had a significant impact in the economies of Comesa member states such as Kenya, Uganda, Ethiopia, Sudan and DR Congo, which trade with it. According to the Interna- tional Monetary Fund, Comesa countries such as DR Congo, Rwanda, Ethiopia and Zambia are among the fastest growing economies in the world, in spite of poor infrastructure, political turmoil and conflict in some areas. Both president Kabila BUSINESS MARCH 8-14,2014 Relying solely on oil tax bad fo≥ economy By HALIMA ABDALLAH Special Correspondent ECONOMISTS in Uganda have asked the government to expand its tax base ahead of oil production, as the expected oil revenue is likely to cause a laxity in tax collection from other sectors. They advise that oil revenue FUNDS NEEDED FOR THE CONTINENT: According to World Bank estimates, Africa needs $93 billion each year to cover funding gaps for infrastructure. FOR COMESA REGION: About $53 billion is needed for infrastructure in the Comesa region. Broken down, this figure is $28.4 billion for railways, airports, ports, roads and border posts; $31.4 billion for electricity. In addition, the bloc requires $630 million for ICT infrastructure. and his Foreign Affairs Minister Raymond Tshibanda argue that trade, peace and development are interlinked; therefore stemming conflict is the first major step towards realising the full potential and benefits of an integrated market. Other countries like Angola, Mozambique and Tanzania despite not being Comesa members are also posting impressive growth figures, but happen to be major trade partners with the bloc under other regional groups, a scenario that augurs well for the planned merging of blocs like Comesa, the EAC and SADC. Tanzania chambe≥ of comme≥ce faults EAC sco≥eca≥d By RAY NALUYAGA The East African THE TANZANIA Chamber of Commerce, Industry and Agriculture (TCCIA) has faulted the recently launched East African Common Market Score Card 2014 report over its rating of the country’s performance in complying with issuance of certificates of origin. According to the report, Tanzania and Uganda have not complied with a 2006 recommendation by the EAC Council of Ministers that Customs authorities issue the certificates. As a result, EAC certificates of origin are not recognised at borders and issues related to rules of origin accounted for nearly a quarter of nontariff barriers (NTBs) reported between June 2008 and June 2013. “Tanzania accounted for 50 per cent of the reported problems related to recognition of EAC certificates at borders, Uganda 30, while Kenya and Rwanda 10 per cent each,” says the score card. On compliance with EAC Council recommendation Tanzania scored a zero because it issues its certificates through TCCIA making it non-compliant towards overall legal requirements. However, Elibariki Shammy, TC- CIA’s NTBs project coordinator, told The EastAfrican that the Council’s recommendation contradicts the Customs Union Protocol of 2005 where it states that the certificate can be issued by any institution recognised by a partner state. “By issuing the certificates through TCCIA the government is adhering to the Kyoto and Customs Union Protocol,” he said. Recently TCCIA with the help of Trade Mark East Africa launched an online system to improve efficiency and reduce the time taken to apply for certificates of origin to facilitate export trade. Mr Shammy said the system will enable exporters as well as clearing and forwarding agents to process Certificates of Origin electronically. The East African Common Mar- ket Scorecard tracks the progress of partner states in fulfilling their commitments. The scorecard examines selected commitments made by partner states, outlines progress made in removing legislative and regulatory restrictions to the protocol and recommends reform measures. should be seen as a temporary stream of resource which can be used as a springboard for economic reforms that will eventually become the basis for creating permanent wealth. “We may fail to collect taxes from other sectors in favour of those accruing from oil and gas sector. That is why we are putting in place policies that will help transform the economy gradually,” said deputy secretary to the Treasury Patrick Ocailap. The government has listed infrastructure development, ICT, science and technology as top priority areas where the oil money should be invested to spur economic growth. “The funds should go to- wards growing productive sectors to avoid moving resources away to non-productive sectors. Poverty will increase if productive sectors are ignored,” said Lawrence Bategeka, former principal researcher at Economic Policy Research Centre (EPRC). Sectors to invest in Economists suggest that the government should invest oil revenue in tradable sectors of the economy like agriculture and in the tourism and manufacturing sectors. “Oil is a finite resource and the revenues are volatile. For these reasons the government should focus on improving tax administration and widening the tax base with a view to improving non-oil tax revenues,” said Mr Bategeka. Uganda’s tax collection has stagnated between 10-13 per cent of GDP over the past decade. Despite a narrow tax base, the government still gives tax exemptions to investors as a way of attracting foreign direct investments. Africa Development Bank estimates that Uganda loses two per cent of GDP to tax exemptions and incentives. A report by EPRC on Accel- Namanga border crossing. Tanzania was rated poorly in complying with issuance of certificates of origin. Pic:File erating Growth and Maintaining Intergenerational Equity using oil resources in Uganda shows that a conducive environment that guarantees growth and business competitiveness will drive more foreign direct investments more than tax incentives.
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