Corporate News

Kenya fetes EAC Common Market with work permit fee waiver

From left: Presidents Karume, Kibaki, Kagame and Uganda’s deputy Prime Minister Eriya Kategaya during the East African Community Investment Conference in July 2009. Photo/FILE
From left: Presidents Karume, Kibaki, Kagame and Uganda’s deputy Prime Minister Eriya Kategaya during the East African Community Investment Conference in July 2009. Photo/FILE 

Kenyans will take at least two months before they can enjoy the freedom of movement envisaged under the East African Common Market protocol that comes into force on Thursday as the attorney-general’s office burns the midnight oil to align the country’s laws with the demands of the trading bloc.

President Kibaki last evening ordered Attorney-General Amos Wako to draft and present to Parliament a miscellaneous amendment Bill that would effectively accord East Africans the benefits enjoyed by Kenyans, especially in terms of immigration, labour, customs, and education.

The President also directed the Immigration ministry to waive work permit fees charged on the citizens of Uganda, Burundi and Tanzania, saying it was a barrier to enjoyment of freedom of movement of workers.

Rwanda and Kenya had earlier signed bilateral arrangements to waive the work permit fees.

“It is my expectation that public servants charged with executing the Common Market especially those responsible for immigration, labour, customs and education, will facilitate the process rather than adopt a control attitude,” the president said during the official launch of the protocol at the Kenyatta International Conference Centre last evening.

A survey conducted by the East African Business Council two weeks ago indicated that Tanzania still charges work permit fees of $50 for business people who hold national passports and $100 for holders of East African Passports.

The action by the president moves to resolve two issues — work permits and conflicting legislative regimes — that the private sector had identified as potential banana skins in implementing the protocol.

Businesses had called on the government to speed up regulatory and institutional reforms to make Kenyan products competitive in the region as a task force meant to recommend legal changes that would align national laws to the spirit of the protocol lagged behind schedule.

Under the protocol, member states have up to the end of August to ratify laws that give effect to the common market and the presidential directive is expected to hurry the ratification.

Unlike amendments to each specific Act, a miscellaneous bill allows various laws to be amended under the same motion, quickening the approval process substantially.

Mr Peter Munyiri, KCB’s Deputy CEO in charge of group investments, said the implementation of the protocol would end the period of groping in the dark for firms doing business across the region.

“The legal instrument will act as a catalyst to investment, encouraging investors to hunt for mega deals because we now have a clear dispute resolution mechanism,” said Mr Munyiri.

The business community wants governments to speed up harmonisation of national laws to smoothen the flow of goods and services.

Kenya’s EAC minister Amason Kingi, however, says it could take longer for the conflicting national laws to be harmonised to allow free movement of goods and services.

“Implementing EAC’s common market is a process that will take some time to be felt across the region,” Mr Kingi said.

EAC Secretary- General Juma Mwapachu had said in Nairobi last week that a lot of reforms will be required before the regional citizens begin to enjoy all the rights envisaged under the EAC treaty.

“This will be a step by step process of implementing all the legal reforms that will back rights that citizens and firms are already enjoying at various levels,” said Mr Mwapachu.

The private sector says arbitrary application of rules of origins, conflicting quality standards and different immigration rules will slow down the exchange of goods, services and factors of production at border points with negative impacts on their operations.

“Even as we prepare to launch the common market in the region, Uganda is yet to release our goods which they have been detaining over the last two weeks for not meeting Uganda’s Bureau of Standard’s quality specifications,” Kenya Association of Manufacturers chief executive Betty Maina told an exporters’ forum in Nairobi on Tuesday.

Of late the dairy producers in Kenya have accused the Uganda Dairy Board of imposing stringent certification procedures on their milk exports, causing them to lose a potential market worth Sh80 million.

KAM says the sale of Kenyan merchandise has become very difficult because Uganda Revenue Authority does not recognise the certificates of origin issued to Kenyan exporters by KRA, levying charges on goods that have been cleared by Kenya to trade across the region at zero tariffs.

That may explain why in spite of the gradual elimination of tariffs on Kenyan goods, official statistics indicate that exports to Uganda grew at a modest 9 per cent from 2008 to Sh46bn last year.

“But as a country, we lack the moral authority to complain because as far as non tariff barriers in the region go, Kenya Government is the worst,” said Ms Maina.

Traders in the region have also complained that Kenya still levies Sh500 for plant import permit (PIP) at Malaba on Ugandan tea destined for auction at Mombasa with traders being asked to pay $ 15 for each consignment reaching the auction.

The Kenya Plant Health Inspectorate Service has also failed to recognise SPS certificates issued by Uganda for tea destined for Mombasa auction, subjecting each consignment to time consuming inspection at the ports.

Despite these challenges, president Kibaki said the coming together of the five territories covering an area of 1.85 million square kilometers, a population of 126 million people and a combined GDP of $75 billion (Sh6 trillion) offered a vast potential for business and social networking.

He said the revival of the East African Community had led to increased trade, cross border investment and revenues among the partner states.

“Increased cross-border investment within the region is being realized and firms are now increasingly basing their business plans on the regional market, rather than the national,” he said.

Kenya is among the top 10 sources of foreign direct investment to Uganda with 27 licensed investment projects worth $158 million (Sh13 billion).

In Tanzania, Kenya is the second biggest investor with 270 companies operating there providing jobs for more than 100,000 people.