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Effective logistics key to a more connected, diverse EAC market

trucks

Trucks on the Mombasa-Nairobi highway. PHOTO | WACHIRA MWANGI | NMG

On March 29, 2022, the Democratic Republic of Congo, sub-Sahara's largest country, officially joined the East African Community (EAC), making it the 7th member after Kenya, Uganda, Rwanda, Tanzania, Burundi, and South Sudan.

This move was welcomed in the region and is a testament to the increasing maturity of the EAC.

Over the years, the EAC has made tremendous progress in terms of investments in trade-related infrastructure.

The development and operationalisation of railway networks, oil pipelines, removal of persistent non-tariff barriers, and improved movement of people and goods, among others.

As the DRC becomes integrated into EAC's trade infrastructure, manufacturers within the partner states stand to benefit greatly from economies of scale, making them increasingly efficient and competitive.

For one, DRC's entry into the EAC offers a new market with a combined GDP of approximately $275 billion and an economy of over 285 million people (World Bank report, 2020).

This integration has extended the EAC trading bloc from the Atlantic in the west to the Indian Ocean in the East, which opens up trade opportunities with the Atlantic Trade Corridor and links the East African region to Central Africa, North Africa, and other continental sub-regions.

The opening up of these trade routes means that more cargo will traverse these African blocs, and regional business owners and investors can participate in a robust value chain that stimulates business growth, cooperation, and unlimited investment opportunities.

These vast opportunities are in the mining, energy, and infrastructure sectors.

DRC is one of the richest countries in the world in terms of mineral resources with large deposits of gold, diamond, copper, cobalt, tin, tantalum, and lithium, most of which remain untapped reserves.

READ: Congo's entry into EAC doubles regional market

These minerals are instrumental in almost all manufacturing sectors, including the automotive, electronic, and coating and paints industries.

In the energy sector, the DRC holds the largest hydropower potential in Africa, with a feasible potential of 100,000 MW, of which only 3 per cent has been exploited.

The Grand Inga project, for instance, which has a capacity of 40,000 MW, coupled with other additional investments in hydropower generation, can adequately produce enough electricity in the region and open the EAC bloc for energy-intensive plants.

Such new plants will boost the EAC's industrialization agenda by reducing the transactional costs for labour from low to high-productivity activities.

Companies venturing into the DRC region will contribute significantly to the country's economy by creating countless jobs for Africa’s increasing population of young people and helping alleviate poverty and delivering shared prosperity across the region.

And as these new companies move to transform lives across the EAC bloc, there will be a boom in new infrastructural developments which will demand a tonne of resources ranging from rock, sand, water, soil, paint, Cement and steel, to name a few.

This means a broader market and better opportunities for manufacturers producing them.

The DRC/EAC integration also brought forth renewed commitments such as the Regional Bio-economy Strategy 2021-22/2031-32.

This EAC plan seeks to accelerate the transformation of economies that focus more on innovation and the production of bio-based products and processes with a bio-based circular economy as the organising framework.

Of relevance today is an environmentally friendly, sustainable economy. Amid the demand and regulatory pressures, manufacturers today have been pushed to make their processes environmentally friendly and as sustainable as possible.

This has consequently seen a great shift in the use of resources for manufacturing from petroleum-based products to renewable bio-based options, which are considered more sustainable and attractive.

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And as this remains the objective of many governments worldwide, this renewed focus in the EAC region will help companies focusing on sustainable products find new markets in the region.

Some of the industries set to benefit from this focus, for instance, include the paintings and coatings industry, which has experienced a gradual surge in demand for high-performance clean coatings over the past few years.

Plus, the architectural renovations, industrial piping, tank exteriors, real estate and more anticipated developments in the EAC region will further make the sector successful.

Overall, many more industries and sectors are set to benefit from the DRC's entry into the EAC bloc.

The move was hands down a significant milestone in transforming the bloc into Africa's most attractive trade and investment destination.

For trade to thrive, it must be supported against a backdrop of peaceful coexistence within the communities it operates.

Global trade is known to enhance peace within trading countries, and I, therefore, laud the great efforts being put in by the leadership of the East Africa Communities (EAC) to ensure that peace within the Democratic Republic of Congo (DRC) is secured and protected for its people and the African community at large.

Mr Kipturgo is the CEO, Siginon Group.

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