The value of trade between East African Community (EAC) member states remained low at 15 per cent in 2023, the latest East Africa Trade and Investment report shows. The 2023 report, which analyses the trade and investment trends in the region, attributed the flat growth to the imposition of non-tariff barriers (NTBs) by member states. John Bosco Kalisa, the Executive Chairman of the East Africa Business and Investment Advisory Council, a business advisory firm based in Rwanda, cited a number of NTBs which he says stagnate the region. This includes sanitary and phytosanitary measures (SPS), lack of interface among customs agencies, transaction costs related to currency convertibility, cumbersome border procedures and numerous border institutions that don't talk to each other, as well as corruption at the weigh bridges. All these, Kalisa said, hinder intra-EAC trade from reaching the desired 40 per cent mark. The situation is complicated by lack of policy harmonisation, unpredictable and inconsistent trade policies and laws across the region, and the absence of a mechanism to effectively resolve emerging trade disputes. ALSO READ:NTBs cost region over Rwf20 billion, threatening intra-EAC trade According to Adrian Raphael Njau, the Acting Executive Director of the East Africa Business Council (EABC), countries in the region have a tendency to protect their own markets in cases where similar goods are produced. NTBs still exist, especially for those products which have a comparative advantage. If two or more countries are producing the same dairy products, then they prevent the competitive products from entering their countries by mostly delaying permits, he noted. Njau cited the stringent Rules of Origin in the EAC region as a major barrier. “We have challenges regarding the rules of origin in the EAC especially for some products like edible oils. The EAC rules of origin are more stringent compared to those of the EAC-COMESA-SADC Tripartite and even the African continental free trade area (AfCFTA), he said, calling for more flexible and friendly rules of origin in the region. Njau said that the EABC is urging partner states to refrain from imposing new NTBs in line with their commitment under the EAC Customs Union Protocol and to finalise the amendment of the NTB Act, so as to effectively deal with NTBs in the region. ALSO READ: EAC leaders call for tougher stance on non-tariff barriers Rwanda's trade outlook According to the report, Rwanda’s total exports to EAC partner states increased by 4.5 per cent to $0.88 billion in 2023 from $0.84 billion in 2022. The country's leading export destination was the Democratic Republic of Congo (DRC). Exports to DRC increased slightly to $0.78 billion in 2023 from $0.77 billion in 2022. Uganda was Rwanda's second largest export destination in the same period with an export value of $0.04 billion in 2023 from $0.02 billion in 2022. Rwanda’s major export products include tea, coffee, maize, beans, cassava flour, maize flour, live animals, edible oil, and vegetables. The report indicates that Rwanda’s imports from EAC partner states also increased by 31.7 percent to $2 billion in 2023 from $ 1.2 billion in 2022, with Tanzania and Kenya as the major import sources. Foreign direct investment Foreign direct investment (FDI) into East Africa accounted for 19.4 percent of total FDI into Africa in 2023. Rwanda recorded $ 2.4 billion in new investment registrations in 2023, a 50 per cent increase from investment registrations in 2022. The country prioritised investments in key sectors in 2023, including the green economy, infrastructure, ICT, health and conservation. ALSO READ: Foreign direct investment into Rwanda up 63% in first half of 2024 Some of the notable projects established in Rwanda include BioNtech mRNA vaccine manufacturing facility, IRCAD Africa, Zaria court, Gabiro Agribusiness Hub and the Rwanda Global Business Services (GBS) Initiative. According to the report, intra-EAC investment projects registered in Rwanda in 2023 were worth $55.2 million, compared to $47 million in 2022, with Kenya as the largest source of the investments at $25 million, followed by Uganda at $18 million. 2024 Outlook The EAC Secretariat projects continued economic growth in the region driven by an anticipated strong performance of the Partner States. According to the report, East Africa is set to continue to lead Africa’s growth pulse, with growth projected to rise to 5.1 per cent in 2024 and 5.7 per cent in 2025. The projected growth acceleration of 1.6 percentage points in 2024 reflects the anticipated strong economic performance of countries in the region, with seven economies projected to grow 5 per cent or more in 2024.
