Border Delays, Disputes Stall Trade
Border delays and the absence of enforceable means to settle disputes are hindering the opening of trade in East Africa a year after inception of the Common Market. Southern and Eastern Africa Trade Institute’s Oduor Ong’wen said that citizens complain that they cannot move to neighbouring states and seek employment or start a business freely, while exporters complain of duplicate checks at border points as well as disparate quality and safety standards
Time Lines for Mega Economic Bloc
So, will Africa’s biggest trade bloc finally take off? This is the question analysts are asking after Heads of State from the Common Market for Eastern and Southern Africa (COMESA), EAC and the Southern African Development Community (SADC) met in South Africa to thrash out issues ahead of the planned integration. The three African trading blocs, made up of 26 countries, with a market of close to 600 million people and with an estimated gross domestic product of US$624bn, are pushing for a Free Trade Area.
The three blocs agreed on a three-phase road map, including a preparatory phase of between six months to one year from June 13, 2011. The EAC, however, agreed that as much as the greater bloc offered a larger market for its goods, it was a threat for its members to belong to more than one bloc and had to agree to the terms of the two blocs for the achievement of the final bloc
Goods at Border Hurts EAC Trade
The slow pace of clearing goods at the border points is hurting economic growth of the EAC Partner states. The problem has arisen from the manner in which the agencies concerned in the clearance process at border points work independently. EAC has already come up with a legislation seeking to establish a one-stop border check point that will see neighbouring partners working as a team. Should it be adopted by partner states, the legislation will go a long way to solving the delays that cause long queues of trucks at the borders, which at times extend up to three kilometres
Rwanda East Africa’s Top Business Performer
Rwanda continues to lead other African states in enhancing business-friendly regulations, as the region drops marginally in the ‘doing business in EAC 2011’ rankings by the World Bank Group. Kenya is the region’s strongest economy, which came second, but Tanzania’s unimpressive fourth position in the study put on spotlight the country’s competitiveness as favoured destination for investors. Until recently, it was seen as a reliable partner in the regional and global trade. According to the report released in Arusha, the regional block had an average global ranking of 117, one point short of the previous year’s average of 116.
Tanzania Exports Rise & Imports Drop
Tanzania’s export to the EAC rose by 71 percent, from US$263mn in 2009 to US$450mn in 2010. However, imports from the EAC market dropped from US$310mn in 2009 to US$285mn in 2010. The exports were mainly mosquito nets, domestic utensils and transformers. Others include mattresses, rice, cement, plastic products, edible oil, bottles and bottle caps, utensils, salt, spare parts and vehicles.
The implementation of the EAC Customs Union made Tanzania an investment destination, citing 33 projects, valued at US$74mn that was set up in the country in 2010 alone. According to the government, the investment had created employment opportunities for 4,328 Tanzanians in 2010, up from 1,575 in 2009.
Informal Trade to Increase Exports
Rwanda is developing informal trade along its borders to tap into growing revenues from the sector, as it seeks to cut back the rising trade deficit. While the country’s trade deficit increased in the first-half of 2011 to US$587mn, compared with US$543.7mn in June 2010, informal trade balance recorded a surplus, statistics from the Central Bank indicate.
Rwanda’s informal cross-border trade hit US$9.33mn between April-June 2011, dominated by DR Congo on the export side and Uganda on the import side. Currently, informal cross border trade accounts for 20 percent of the total exports. The study was conducted at 53 big and small posts, including unofficial border posts, to determine the magnitude (in terms of value and volume) of informal cross-border flows.