OPINION: Kenyas big opportunity as it takes up EAC leadership mantle

By Chris Diaz

This past month has seen Kenya effectively take up the mantle of leading the integration of the East African Community (EAC).

This with both the apex of the custom union’s leadership being taken up by Kenyans with President Uhuru Kenyatta being named as the new EAC Chairman at the first virtual Head of States Summit and Peter Mathuki as Secretary-General.

With the pair and the country being perhaps the largest supporters of regional integration, a lot will be expected of Kenya’s Capital Nairobi.

Nevertheless, Kenya may require to have huge shoes to fit given the recent run of intra-EAC relations.

Lethargic term

Save for unprecedented challenges in recent years such as the Covid-19 pandemic, EAC has made certain impact, however far from the oppurtunities available for a robust integration dream.

Perhaps one would argue the EAC has undergone its most strain in recent years and the momentum built can only be grown by further executions to bolster trade , tourism , investments and free flow of goods and people movements seamlessly . It’s continuity being put under sharp focus since its re-birth two decades ago.

EAC’s greatest all-time peril remains its temporary dissolution in 1977 but new challenges caused by certain policies and member states seems to slow the regions integration executions .

For instance, members of the EAC have slowly drifted part with fractions emerging-one pro-integration and the other not so.

Burundi which held the five-year rotational Secretary-General previously, persistently missed key summits after an attempted coup in the country while the now deceased Pierre Nkurunziza was attending a summit in Tanzania.

NTBs

EAC’s greatest threat has nevertheless been illegal trade restrictions commonly tagged as non-tariff barriers as members seek to protect their domestic markets at the expense of regional co-operation. The counterfeit wars may to some extent, continue through and due to the “panya” routes , in some areas of the region .

Trade wars have been all too common with bans and counter-bans being effected on products including sugar, pharmaceuticals, food products, various raw materials, Confectionary, fruit juices, milk, maize and poultry.

Kenya and Tanzania have perhaps faced off the most with the pair needing to reconcile trade issues diplomatically, and move away from claims of effecting NTBs to really focusing on much needed attractions, such as more investors and creating new employment.

In 2017 for instance, Tanzania escalated a tiff with Kenya by disposing of its exports of days-old chicks in retaliation of Kenya’s ban on Liquefied Petroleum Gas (LPG).

The NTBs faceoff could well be on the periphery again with Kenya banning the import of maize from Kenya and Uganda at the start of March over concerns on aflatoxins poisoning.

Moreover, Kenya has come under focus from peers in the EAC over trade growth tactics having recently completed a new trade pact with the United Kingdom even as it has another important deal in the pipeline with the United States.

The developments for Kenya has come at a time when the Head of States in the region have expressed certain challenges in implementing the EAC-EU economic partnership agreement (EPA) under the variable geometry principle.

Tanzania has for instance asked for more time to study the deal’s impact on its economy and local industry while Burundi has reviewed the deal over its recent spat with Europe.

The region’s membership to the Africa free Continental Trade Area (AfCTA) presents another pressure but also great oppurtunities, with mainly Kenya and Rwanda among other nations, being strong driving parties to the new pact.

Covid-19

EAC current challenges appear to have been exacerbated further by the current pandemic with Covid-19 stretching relations. The world is going through a recession. Millions of people in the region have lost jobs. Life is a real challenge or if not the end for certain types of business, heavy investors , SMEs and citizens in general are facing very uncertain times.

The government’s and regional bodies must find more new joint stimulus packages and regional incentives.

For starters, the region has failed to deploy a common approach of keeping the virus at bay with the pandemic being mixed up in politicking, denials and certain misinformation.

The truth is the health protocols must be consistently followed and if not, will effect many lives, and recovery of the economies plus in my humble view, private sector drives the regional growth and needs much support including business incentives, to maintain employment, entrepreneurship programs and innovation.

Tanzania and Burundi have taken a different path effecting little to no restrictions to combat infections in their jurisdiction.

This has left the pair at loggerheads with peers who have on the reverse left no measure on the table to protect their own citizens and movements of goods, services and people.

Kenya’s exemption of Tanzanian’s from its safe flights list in August last year was for instance met by anger across the border with Tanzania blocking its airspace to Kenyan carriers. However we pray, the nation’s will continuously implement more than talk, the famous phrase “Together we are strong” because the strength through Intra Africa business is our greatest survival in tough times.

While bickering over the handling of the pandemic, Covid-19 has struck at the heart of EAC commerce affecting partners in equal measure.

The pandemic has for instance caused congestions along with border crossings, lengthened transit times and increased the cost of doing business across borders and made raw materials prices escalate to make for finished products non competitive.

We would support more towards investment and incentives so as to grow the much needed, industrialization and stimulate East Africans to be employed or becoming regional entrepreneurs.

The region has similarly recorded declining imports, a reflection of adverse-trade performance and made worst by pandemic challenges.

According to a report by TradeMark East Africa (TMEA), there has been a sharp increase in ship dwelling time at the Port of Mombasa by 48 per cent.

Equally, transit times between the port and Malaba increased from seven to 11 days. This is after EAC States deployed hard-line stances to keep the virus at bay to include a lengthy and costly testing affair for truckers immediately after the onset of the pandemic.

Rapid testing kits has helped to some extent but look at the lines of trucks at the borders as a measure perhaps of continued growth or certain frustrations?

Patch up

Kenya’s first challenge will perhaps be the mending of cross-border ties as the pandemic continues to ravage the region.

The country’s representatives at the EAC must continue pushing for open border policies to keep trade flowing and uninterrupted.

Secondly, Kenya must assure its neighbours of free flow of innovation and maintain it’s integrity as per the ongoing trade negotiations, fighting off misinformation and unfounded fears among its partners. Kenya has the real capability to lead a change to bring growth and create new oppurtunities especially in the digital industries, manufacturing and integrate growth of regional SMEs into larger business.

The most pressing matters will however be covered in the review of the EAC Common Export Tariffs (CET) whose rectification will likely resolve current non-trade barriers among other challenges .

EAC members have latched on the expected review to protect their respective nascent industries and promote value addition and promote manufacturing . “Additionally, my thoughts are to grow the regional integration actions , so as to making our products more affordable , innovative and competitive , by reducing costs , wastage and red tape for investors.”

Further, Kenya should set its sights on ending sporadic import bans and resolve rules of origin disputes to boost intra-EAC trade. Raw materials should be cleared through at correct tarrifs instead of long disputes that need to be reduced , to enhance growth and investments .

The growth of the intra-EAC trade will be integral to greater integration as members realize the potential from collaboration.

Currently available data covering the year 2018 only puts the value of intra-EAC imports at just 22.4 per cent or less than one-third of the region’s total exports.

Other pertinent matters cover the admission of new countries to the union including the Democratic Republic of Congo (DRC) which has been backed to hand partners with more markets for goods especially to small and medium enterprises (SMEs).

While the cup of responsibilities overflows, Kenya has strong and valuable leadership under President Kenyatta and my colleague, Hon. Peter Mathuki.

As for President Kenyatta, he has been among the top advocates for regional integration sitting as pars with regional visionaries such as Uganda’s Yoweri Museveni and Rwanda’s Paul Kagame.

In my humble opinion, we all must support the vision and growth will happen with the private sector driving the business agenda .

Meanwhile, Peter Mathuki who was the immediate Executive Director to the East African Business Council (EABC) – the region’s body made up of private sector associations and corporates carries the right resume for the job.

We would all support more private, public and international partnerships to grow tourism, infrastructure and market development.

Mathuki has for instance vehemently pushed for greater private sector representation in his term with the EABC rediscovering the role of the sector in lobbying.

At the same time, Mathuki is well experienced having represented Kenya in the East African Legislative Assembly (EALA) between 2012 and 2017.

The private sector has a big oppurtunity in Africa’s growth of business and will drive global trade, my or your thougts are the same perhaps – that is, will all the nations play the ball together? The answer is obvious!

Chris Diaz is the Director EABC and trustee Brand Africa