EAC losing billions in trade to Comesa, SADC

President Uhuru Kenyatta (second left) hosts presidents Salva Kiir of South Sudan (right), Yoweri Museveni of Uganda (second right), and Ethiopian Prime Minister Hailemariam Desalegn at State House, Nairobi for a consultative meeting on the Lamu Port-Southern Sudan-Ethiopia Transport (Lapsset) corridor project. PHOTO|PSCU 

 

By ADAM IHUCHA Special Correspondent

In Summary

• EAC partner states apply different external trade tariffs because of their membership to different trade blocs.
• Experts say the preferential treatment granted to third parties reduces the expanded market that the EAC is supposed to offer regional industries.

Membership to multiple, competing trade blocs cost EAC business firms trade opportunities of $22.7 billion between 2005 and 2012.

The EAC common market scorecard 2014 attributes the delay in implementation of the common external tariff (CET) to partner states’ dual memberships in other blocs.

EAC partner states apply different external trade tariffs because of their membership to different trade blocs.

Tanzania is a member of the Southern Africa Development Community (SADC) and subscribes to a different tariff structures.

Kenya, Rwanda and Uganda are members of the Common Market for Eastern and Southern Africa (Comesa), and Burundi belongs to both Comesa and the Economic Community of Central African States (Eccas).

Experts say the preferential treatment granted to third parties reduces the expanded market that the EAC is supposed to offer regional industries.

Data shows that the intra-EAC trade grew from $1.6 billion in 2005 to $5.5 billion in 2012, due to the launch of the common Customs Union. During that period, intra-EAC trade to total regional trade grew from 7.5 per cent in 2005 to 11.5 per cent in 2011.

“This is far from the true potential of the EAC market as $22.7 billion in inter-regional trade was lost to other regional trading blocs such as SADC, Comesa and Eccas between 2005 and 2012 due to delays in effecting the CET,” said Catherine Masinde of the International Finance Corporation.

In the period under review, Tanzania’s trade value with SADC was $10 billion, representing 13.5 per cent of its total external trade.

Kenya’s and Uganda’s trade with Comesa, valued at $8 billion and $3.4 billion respectively, was equivalent to seven per cent and 7.5 per cent respectively of their external trades.

Rwanda’s trade with Comesa was $452 million, representing 6.8 per cent of its total external trade; Burundi’s combined trade total with Eccas and Comesa was worth $224 million.

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