East African chief executives have criticised the pace at which regional countries are eliminating trade barriers. This means the benefits of the Common Market Protocol which came into force in 2010, are yet to be fully realised.

The officers were speaking last week when they met EAC secretary general Richard Sezibera in Nairobi at an SG-CEO forum — the first of its kind.

Jaswinder Bedi, the chairman of Kenya Association of Manufacturers, said these challenges have seen EAC member countries import more from the rest of Africa and Comesa compared with the regional bloc.

In 2010 for example, only 17.7 per cent of Kenya’s imports came from the region.

“Unless members come up with a common legal and institutional framework plus commit to abolishing rules of origin, businesses across EAC will continue to lag behind,” said Mr Bedi.

Transport sector representatives said they lacked centralised co-ordinating mechanisms and that trade facilitation agencies did not share information.
“Such fragmented procedures have raised the cost of doing business,” said Gilbert Langat, chief executive of the Kenya Shippers Council.
This comes even as the World Bank’s Doing Business 2012 report rates EAC among the fastest reforming regions in the world, with Rwanda in the lead, followed by Kenya, Uganda, Tanzania and Burundi respectively.

However, it is ironical that cross-border barriers have seen outsiders reap the benefits of trading with the region through increased foreign investments. Last year, as EAC countries sustained an average five per cent GDP growth against the world’s average of three per cent, FDI inflows increased to $1.7 billion from $683 million in 2005.

Most reforms in East Africa over the five years focused on simplifying business and property registration procedures.

Reforms in business registration especially, reduced the average time required to start a business in East Africa from 37 days in 2005 to 24 days in 2010.
“This same pace of reforms shows signs of slackening. We as a community count on you to jointly address any challenges and exchange the best practices at the regional level that will lead to a better rating in years to come and boost confidence,” said Mr Sezibera, while addressing the over 80 chief executives who attended the forum.
The meeting recommended among other things that taxes be collected at the first point of entry into the EAC region, goods be circulated freely in the region, domestic tax regimes be harmonised and a body to administer taxes in the region be formed.
The meeting also decided that the EAC and private sector develop a common policy on trade and investment as well as create an EAC Competition Authority and harmonise tax regimes in line with international best practices. The member countries also agreed to adopt a protocol by August that will provide legal mechanisms to eliminate all non-tariff barriers by December 2012.
Also, that TradeMark East Africa and the East African Business Council support EAC and the private sector to achieve a common market policy by 2015.

“The views of the business community must be reflected in emerging EAC policy development,” said Lisa Karanja, the director of Private Sector and Civil Society at TMEA. “Their technical inputs and bottom line focus will make a key difference in ensuring that we have an enabling business environment for investment and economic growth.”

To seal the loopholes in the Secretariat’s running it was suggested that it should be transformed into a Commission to provide the EAC with powers for monitoring and sanction.

It is envisaged that the Common Market Protocol that was entered into force on July 1 2010 will be fully implemented by year 2015.