Non-tariff barriers ‘block EAC’s potential’

East African Community (EAC) member states need to remove all non tariff barriers so that deeper economic integration can yield to sustainable economic growth, a report published by the African Development Bank (AfDB) revealed on Thursday.AfDB macroeconomist, Walter Odero, told journalists in Nairobi that the five nations will reap heavily if there is free movement of capital, labour and goods within the economic bloc. “As one of the fastest growing regions in the world, the east African countries should encourage intra-regional trade in order to tap into its growing middle class,” Odero said during the launch of the 2012/2013 African Economic Outlook (AEO) which provides the latest data on national economic performance across Africa.The report, which was written by the Pan Africa Bank with assistance of UN agencies and the Organization of Economic Cooperation and Development (OECD), forecast Africa’s economic growth rate in 2012 will reach 4.5 per cent and 4.8 percent in 2013.EAC comprises of Kenya, Uganda, Tanzania, Rwanda and Burundi. The AfDB official said if obstacles to full integration are removed, the region will be able to tackle infrastructure and energy gaps. “As a region, they will be able to attract both domestic and international funds to construct the big infrastructure projects,” Odero added. He noted that already the countries’ economies are closely linked. “The Gross Domestic Product (GDP)’s expansion trends for Kenya mirror that of its EAC neighbors,” he said. AfDB Chief Economist, Peter Ondiege, said the region is the second fastest growing in Africa after West Africa.“Rwanda and Tanzania have the highest growth rates while Kenya and Burundi are closely following,” he said, adding Kenya’s economy could benefit from the EAC.“The country’s mainstay, which is agriculture, is frequently affected by drought while its information communications technology (ICT) sector is growing fast,” he said. “Kenya can harness its huge skilled labour to become a hub of ICT in the region while Tanzanian and Ugandan agricultural products could find a ready market in Kenya,” said Ondiege.“Brazil, Russia, India and China are some of the few economic bright spots in the world and region could tap into these markets by diversifying exports from traditional exports zones especially considering the economic slowdown in the United States and Europe, “ Ondiege added. Kenya’s Minister of Planning, Wycliffe Oparanya ,said the EAC can plan with data on a wider basis of demand for consumer goods than before when they relied on domestic markets.According to AfDB, the size of the African middle class has tripled in the last 30 years and stands at 34 percent of population or 360 million while the Kenya’s Ministry of Planning estimated the number of those in the EAC stands at 34 million which is equivalent to those of the new industrialized Asian tigers.“There are also 200 million African youth in the 15 to 24 age bracket and the figure is set to double by the year 2025,” the minister added. Oparanya said the recovery of North African economies is good for Kenya. “Some of the nations such as Libya and Egypt are members of Common Market for Eastern and Southern Africa (COMESA) which is Kenya’s largest trading partner,” he said.UNDP Economic Advisor, Fatou Leigh, said the continent has showed a lot of resilience even as some parts of the world face economic recession. “African nations should expand links inside the continent as they still have more space to grow,” Leigh said. Institute of Economic Affairs Chief Executive Officer, Kwame Owino, said foreign direct investment is one of the solutions for the EAC as it is associated with technology transfer. “Additionally, Kenya’s exports destined for the African markets have more value addition compared to those destined to the developed world,” he said.

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Non-tariff barriers ‘block EAC’s potential’