Investors tipped on how to exploit opportunities in EAC

Three leading regional organisations have teamed up to assist businesses keen on taking advantage of the expected opening up of the East African market.

The three — Strategy Centre Africa, a regional resource centre; the East African Business Council, a representative of the East African Community private sector; and Kenya Private Sector Alliance (Kepsa), a private sector lobby group — have teamed up to help businesses exploit opportunities and manage challenges.

And as a first step they are organising a two-day conference in Nairobi under the theme “Unlocking business opportunities through the East African Community Treaty.”

The conference will run between July 8 and 9 at the Nairobi’s Intercontinental Hotel.

“The principal aim is to bring a better understanding of the implications of the recently signed East Africa Community Customs Protocol to the East Africa Community Private Sector,” the organising committee says.

The protocol takes effect on Thursday, ushering in a common market that will be characterised by free movement of services, capital, labour and goods.

The conference will bring together participants from both the private sector and the government.

“We will seek to create an awareness of the new business climate and sensitise the business community on the Common Market in an easy to understand, business related and non-technical manner,” the committee said.

There are good reasons to this. With government officials remaining key negotiators of the union, the EAC private sector played a marginal role in the discussions setting up the EAC Common market protocol.

The private sector has remained with limited understanding of the various elements of the protocol and what the common market portends for their business.

The EAC Common Market was preceded by the EAC Customs Union, which came into force on January 1, 2005.

During the first stage of the Customs Union, goods from Kenya — considered the region’s dominant economy — entering Uganda and Tanzania attracted duties on a reducing basis.

Goods from Uganda and Tanzania — and now Rwanda and Burundi which joined the Customs Union in July 2008 — have been entering the Kenyan market duty-free.

The five-year transition period expired last December 31.

Consolidate gains

All goods trading across the region are now duty-free.

To consolidate the gains of the customs union, EAC member states signed the EAC Common Market Protocol last November as the second stage of the EAC integration process.

The protocol was signed by Presidents Paul Kagame (Rwanda), Mwai Kibaki (Kenya), Yoweri Museveni (Uganda), Pierre Nkurunziza (Burundi), Jakaya Kikwete (Tanzania) and Abeid Amani Karume (Zanzibar) at a ceremony in Arusha, Tanzania.

The common market is pursued on the basis that a market with a combined population of over 130 million people will be easier to sell as an investment, trade or travel destination instead of a constellation of five tiny and poor countries.

To achieve the full benefit of a common market, four freedoms have been enshrined in the protocol setting up the market.

The first is the freedom of movement of goods thanks to the elimination of all tariff and non-tariff barriers plus a common external tariff.

The second freedom is that of movement of labour (salaried and non-salaried workers), thanks to the elimination of all restrictions to their entrance and residence in other member states.

The third is the freedom of establishment of persons and companies in the territory of any member state and of the provision of services by them in the host country.

Then there is the freedom of capital movement for business or personal purposes, favouring professionals, as they will be free to open up new offices in other member countries without seeking additional approvals.

The July 8-9 conference will seek to distil how businesses can take advantage of the four freedoms to maximise on their return.