he East African Business Council (EABC) is betting on the removal of non-tariff barriers to spur intra-trade among the East Africa countries to 30 percent.
He said this recently when the council in partnership with the Federation of German Industries (BDI) convened a trade and policy experts virtual meeting from the region to chart out a joint regional policy advocacy agenda towards this goal.
COVID-19 pandemic has disrupted regional and global supply chains leading to contraction of intra-EAC trade leading to output losses of between USD37billion to USD79 billion, according to EABC.
“The COVID-19 pandemic has compelled EABC to refocus and repurpose policy advocacy initiatives towards economic resilience and rebound including stimulus packages to support business continuity,” said Dr. Peter Mutuku Mathuki, EABC CEO.
One of the main measures taken by the EAC Partner States to reduce risk of the virus spread was curtailing cross-border movements. Initially, only truck drivers delivering essential items could move across the region, which significantly affected cross border trade.
For instance, Rwanda’s informal cross-border trade is dominated by local agricultural produce and livestock, with D.R. Congo being the leading trading partner. Before the pandemic struck, more than 40 thousand small scale traders would cross the Petite-Barriere border crossing between Rwanda and D.R. Congo in a day, according to a World Bank report done last year.
The closure of borders by both countries affected the border communities’ livelihoods causing fears of food insecurities in D.R. Congo’s North Kivu.
In Uganda, informal cross border trade declined from an estimated USD 44 million in the first quarter of 2020 to just USD 1 million by April 2020.
Even the re-opening of Uganda’s borders in September 2020 did not revive informal cross border trade, according to a recent report assessing Covid 19 impact on regional trade done with the support of TradeMark East Africa (TMEA); the United Nations Economic Commission for Africa; Sub-Regional Office of Eastern Africa (UNECA SRO-EA) and the African Economic Research Consortium (AERC) observed that despite this recovery, the pandemic has had some significant negative impacts on other aspects of regional trade.
“Speaking in one voice as the business community reinforces our advocacy efforts towards mitigating the impact of the pandemic on businesses and spur intra-EAC trade to 30%,” Mathuki said.
The EAC Trade and Investment Report shows that the value of intra-regional trade increased 9.4 percent to $5.98 billion in 2018 from $5.46 billion in 2017.
Elimination of persistent Non-Tariff Barriers (NTBs), implementation of trade dispute settlement mechanism; harmonized product standards and work permit regimes; liberalization of trade in services, free movement of capital, harmonization of domestic taxes in the region are top of the EABC Policy Agenda 2021/22 geared to boost intra-EAC trade and investment in the region.
“Concerted advocacy efforts are needed to fast track the finalization of the comprehensive review of the EAC Common External Tariff to boost industrialization and regional value chains,” Mathuki added.
The Federation of German Industries (BDI) as the umbrella association of German industries sees the vast potential of African and German private sector cooperation.
“Strengthening regional integration translates into large markets of opportunity. The African Free Trade Area (AfCFTA) has the potential to become a game-changer and significantly boost intra-African trade. In the long run, it can also foster investments and trade between Africa and Europe. The implementation will be crucial.” said Mr. Matthias Wachter, Head of the Department for International Cooperation, Security, Raw Materials and Space at the Federation of German Industries (BDI).
He added: “COVID-19 enforced the need for economic reforms, a harmonized response and policy approach.”
Enhancing collaboration and creating synergies among the East African Business Council, National Apex Business Associations and Chambers of Commerce in the region is important towards informing and harmonizing policy advocacy initiatives that reflect business challenges experienced at the national level.
Dr. Mathuki urged the experts to reposition the East African business community to be at the center of the negotiation of emerging opportunities such as the African Continental Free Trade Area (AFCFTA), EAC-UK partnership agreement and EAC-US Trade and Investment Partnership
The regional policy advocacy agenda aims to harness the economic potential of the EAC by analyzing trade and investment barriers, blocking businesses to take full advantage of the EAC Customs Union and Common Market.