Wednesday, March 14, 2012
Private sector keen on EAC trade
Workers prepare to load a cargo container on a ferry at Port Bell in Luzira. EAC recently launched a border management project to cut the cost of doing business in the region
By David Ssempijja
WITH the current hindrances to the flow of trade within the East African Community (EAC), there is a need to strengthen partnerships between private and public sectors to improve the region’s investment climate, a regional forum has observed.
A two-day investment forum held last week at Silver Springs Hotel in Kampala to define a regional framework for investment incentives for the EAC, attributed the persistent barriers to trade to the absence of a strong public-private partnership in trade promotion initiatives.
The chairman of the Uganda Allied Chamber of Commerce, Industry and Agriculture (UACCIA), Chris Kyereere, told a press conference that the forum resolved to lobby EAC governments to promote the presence of the private sector arm in dealing with issues of trade facilitation.
Facilitating trade is about streamlining and simplifying international trade procedures to allow easier flow of goods national and international levels.
The private sector contends that there are overwhelming trade related tasks that the EAC governments cannot effectively handle in isolation of the private sector.
“We need to see governments getting more involved in giving fair contracts to private companies, ensuring that firms born within the EAC are prioritised over those from overseas to build the capacity of those locally established,” Kyereere said.
Amos Tindyebwa, an international consultant working with the Trade and Business Development Centre, noted that the private sector development strategy adopted in 2006 by the EAC had not adequately taken the public- private partnership approach into account to improve the region’s investment climate.
The slow trade growth amongst the EAC member states is attributed to inefficiency at weighbridges, roadblocks and lengthy inspection procedures, which together with poor state of roads, railways and energy supply, reduce the region’s productivity by 40%.
John Kyaruzi from the Tanzania Chamber of Commerce Industry and Agriculture was pessimistic that in face of all the trade and investment constraints, EAC was bound to suffer slowed growth in investment flows within the region and may lose confidence from other global trade blocks.
Overall investment inflow into the EAC region increased by 8.5% from $8,333m in 2007 to $9.040m in 2008.
However, there was a 33% decrease in the number of approved projects from 996 in 2007, to 666 in 2008, according to the 2010 World Bank Report on EAC Investure Management.
The recent World Bank global ranking on the ease of doing business positions Uganda in the 122 position on the world scale and third in East Africa.
Rwanda is number one in the region and 58 globally. Tanzania is number four in the region and 128 at world level, while Burundi is the fifth in EAC and 181 globally.
Total investment inflows from EAC partner states to Tanzania increased from $50.88m in 2007, to $370.18m in 2008.
Investment from Kenya rose from $ 45.8m in 2007, to $366.3m in 2008, while the combined value of approved investments from Kenya and Tanzania to Uganda more than tripled from $34.9m in 2007, to $142.5m in 2008.
The East African Community launched a $300m infrastructure and border management project that seeks to cut the cost of doing business in the region by 40%.
The project involves automating ports, weigh bridges, customs department and all other national agencies that manage the region’s key transport corridors and border points, increasing efficiency of transactions.
The initiative is expected to raise exports and promote trade amongst the EAC member states.
It will also establish common road networks linking markets in the region to those in the Common Market for Eastern Africa and Southern Africa Development Community countries.
Experts believe that if all these initiatives are undertaken in a well-structured public private partnership framework, the results will put the region’s trade at better magnitudes.