Opinion and Analysis
Remove barriers that hamper common market
Posted Thursday, July 19 2012 at 20:40
The launch of the East Africa common market in July 2010 was hailed as a game- changer for the regional economies that for decades looked unattractive to foreign investors balking at smaller fragmented markets.
The World Bank estimated that East Africa would receive new investments in excess of $25 billion (Sh1.8 trillion) in the next five years to 2015.
And Nairobi, the biggest economy in East Africa and its record for superior human talent, was seemingly the favourite destination of this sought-after foreign capital flow, beating Dar and Kampala to the prize. But two years down the line the benefits of the much hyped common market is becoming a pipe dream.
Administrative barriers are still holding back exchange of goods in the 130 million-people market, seven years since the customs union protocol came into force.
The common market protocol launched in 2010 to ease movement of people, capital and professional services has not been implemented.
Although East African economies are growing faster than others on the continent, border delays and the harassment of small traders by police have drawn criticism and held back further economic growth.
Already, foreign investors led by US are seeking clarity on the status of the common market, arguing that they are being discouraged from setting shop due to the sluggishness in opening up the trading block.
This is unacceptable for a region that suffers chronic unemployment as the level of new investments fails to keep pace with rapid population growth.
As a result, the economic growth witnessed in the five EAC countries has not been enough to lift tens of thousands from poverty, even as the super wealthy individuals tighten their grip on the region’s resources.
The UN, for instance, suggests that a tenth of Kenya’s citizens are holding 38 per cent of the country’s total wealth.
This implies that over 90 per cent of the country’s population is left to scramble for scraps, offering fertile ground for a social strife at a time when the wounds of the post -election violence--which left 1,300 people dead and hundreds of thousands others displaced—are still fresh.
Global corporate behemoths have chosen to base their African operations in Nairobi and take advantage of the common market, but an open trading bloc is a catalyst to more companies setting shop in the region.
With this background, it is critical for member nations to speed up the review of their domestic laws to allow for free movement of products as well as factors of production.
This should form the top agenda at the heads of state summit set for November to review progress in regional integration.