Finally, region is officially a Common Market

Kenya, Uganda and Tanzania currencies. The Common Market Protocol paves the way for exchange of labour and services among the EAC partners. PHOTO | FILE 

By CHRISTABEL LIGAMI

In Summary

• A recent study by the East African Legislative Assembly indicated that in terms of movement of capital, only two — external borrowing and repatriation of proceeds from sale of assets — out of 20 capital operations are free of restrictions in all the partner states.
• Kenya Private Sector Alliance chairman Vimal Shah said that the big stumbling block is the disparity in infrastructure in the member states, which increases transportation costs between the countries.

The East African Community will formally become a Common Market on July 1 despite the aspirations of free movement of goods, services and labour being far from being achieved.

The Common Market Protocol, ratified in 2010, had a five-year transition period, which the business community says focused more on regulatory reforms as non-tariff barriers and national considerations that are frustrating efforts that would bring home the benefits of integration to the citizens of the five member states.

East African Business Council chairman Denis Karera said administrative barriers across the region have held back progress on the exchange of services and labour.

“Very little has been achieved since the protocol came into effect five years ago. The bigger challenge is that not all the partner states are committed to fully implementing it,” said Mr Karera.

A recent study by the East African Legislative Assembly indicated that in terms of movement of capital, only two — external borrowing and repatriation of proceeds from sale of assets — out of 20 capital operations are free of restrictions in all the partner states.

The EALA study further showed that partner states are implementing the protocol at a slow pace, especially in harmonising their national laws to conform with it.

But the major challenge has been the lack of a provision for sanctions for non-compliance.

The pending issues noted in the report revolve around linking and delinking of the schedules on free movement of workers and services. The EALA report noted 43 non-conformity issues, out of which 17 were attributed to Tanzania, 16 to Kenya, nine to Burundi, and one to Rwanda.

Under the key obligations on the free movement of goods, most partner states were found compliant, though non-tariff barriers remain a challenge.

“None of the partner states has moved to establish statutory regulatory bodies to handle issues related to professional services,” said Mr Karera.

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Peter Mathuki, a Kenyan member of EALA and chair of the Committee on Legal, Rules and Privileges, said that the states do not co-operate on harmonising policies and sharing information on markets regulation.

Kenya Private Sector Alliance chairman Vimal Shah said that the big stumbling block is the disparity in infrastructure in the member states, which increases transportation costs between the countries.

“The success and appeal of the internal market will be determined by freedom and ease of movement of goods and people across the region. East Africa needs to channel more resources and more investments towards infrastructural development in order to ensure all countries are at par,” said Mr Shah.