EAC launches tool to measure states commitment to integration

A new tool designed to monitor individual countries’ implementation of the East Africa Community (EAC) Common Market obligations was launched yesterday in Arusha, Tanzania. The East African Community Common Market Scorecard will track the level of commitment of the partner states towards the implementation of the Common Market protocol using qualitative and quantitative data. Speaking at the launch, EAC Secretary General, Amb. Richard Sezibera said the scorecard will go a long way in driving the integration process and growth goals. The tool will particularly measure member states’ legal compliance with their obligations to liberalise the cross-border movement of capital, services and goods. Acknowledging that full implementation of a common market protocol is a challenging task, Amb. Sezibera, however, said the new tool is nothing to worry about. “The scorecard is not about pointing fingers, or apportioning blame. It is about identifying areas where we are doing well and strengthening them. And also about identifying those areas where reforms are required to meet the expectations of deepened integration,” Amb. Sezibera said. The 106-page document is an analysis based on a review of 683 regulations relevant to the common market along with major legal notices, reports and trade statistics. The Common Market Protocol requires partner states to ensure free movement of capital, services and elimination of tariff and non-tariff barriers to trade by establishing a common external tariff, and harmonising and mutually recognising certain trade standards. However, information gathered in 2013 shows that countries still maintain various policies that contradict the spirit of the protocol. It cites Tanzanian regulations that refers to investors from the other partner states as foreigners and subjects them to various restrictions in doing business. Alfred Ombudo K’Ombudo, lead author of the report, highlighted a purchasing ceiling of 60 per cent of issued securities for foreign investors among other restrictions. Only Kenya has no restrictions on securities operations in the five-nation bloc. All countries have restrictions on inward direct investment in the bloc. In Uganda, under the investment code (Investment Code Act Cap 92), foreign investors cannot engage in crop or animal production. Amb. Sezibera said there are still areas of implementation lagging behind. Despite efforts to eliminate restrictions, he said, there is evidence that some partner states have introduced new rules in contradiction of their obligations under the common market protocol. The scorecard noted that there have been at least 10 restrictions on the movement of capital, freshly introduced since the protocol was signed in 2010. Dr. Catherine Masinde, the head of investment climate, eastern and southern Africa at the International Finance Corporation (IFC), said the region is integrating faster but such restrictions were its Archilles’ heel. Dr. Masinde said: “Just 10 years ago, the region operated distinct and separate markets in each partner state with little hope for integration. Today, we see cross-border listings, regional and international multinationals trading and so on. This scorecard will be a powerful monitoring tool and barometer for investors who wish to invest in our region.” Andrew Luzze, executive director of the East African Business Council (EABC), said ensuring a functioning common market is a collective responsibility for all players – governments, private sector, civil society, and development partners. Luzze said: “We need a significant reduction in variations we face in commercial laws, regulatory practices and standards across the five countries.” Since 2005, when the EAC Customs Union was launched, the bloc has seen considerable growth in intra-regional trade, rising more than double from $1.6 billion to $3.8 billion between 2006 and 2010. In the same period, intra-EAC trade to total EAC trade grew from 7.5 per cent in 2005 to 11.5 per cent in 2011. Yet Masinde said this is far below the potential of the EAC market. She said $22.7 billion in inter-regional trade was lost to other regional trading blocs between 2005 and 2012 because most measures agreed upon under the EAC common market protocol were ignored by member states. The new tool will be publicised in all EAC countries – starting with Rwanda today Wednesday.

National

EAC launches tool to measure states commitment to integration