By ADAM IHUCHA,
Trade between the five East African Community––intra-EAC
trade––withered a myriad of non-tariff-barriers to grow by 22 per cent in 2012,
new data show.
The data from the EAC secretariat shows that the volume of
intra-EAC trade grew to $5.5 billion in 2012, up from $4.5 billion recorded in
2011 even as the five countries––Kenya, Uganda, Rwanda, Tanzania and
Burundi––dithered in the elimination of NTBs.
The number is expected to shoot
up this year with elimination of a number of barriers across the region.
These figures do not include informal cross border trade,
which has been estimated to be as much as 40 per cent of formal trade.
The EAC statistics indicate that the development was driven
by the increase of both imports and exports that went up by 20.7 percent and 23
per cent, respectively.
This intra regional trade is made up mainly of manufactured
products and services.
For example, the fast moving goods or products behind this
growth comprised oil cake and other solid residues of sunflower seeds.
Others were maize, oranges, Portland cement, Carboys,
bottles, flasks, jars, pots, phials and ampoules, thermometers/pyrometrs, black
tea fermented, flavoured or not, Mosquito nets, Liquefied Natural gas, groats
and maize meal (corn) Potatoes seed, maize seed and Salt.
In the list there were unbleached kraft liner, Petroleum
jelly, mineral or chemical fertilizers, sacks and bags, Petroleum gases and
other gaseous hydrocarbons, cane or beet sugar, unbleached sack kraft paper.
Others were solid residues of coconut, crocheted rubberized
textile fabrics, seamless iron, or steel casing used in oil/gas drilling.
Tanzania and Rwanda recorded increases in their shares to
total intra EAC trade while that of Kenya, Uganda, and Burundi declined.
Despite the decline of the share, Kenya continued to
dominate, accounting for nearly 36 percent of total intra-EAC trade.
In real value, Kenya’s sales to EAC members amounted to $1.3
billion in 2012.
Central Bank of Kenya (CBK) data shows that Kenya’s main
destination of exports in the region was Uganda and Tanzania, where it exported
goods worth $675 million to Uganda and to Tanzania $472 million.
“Kenya’s exports in EAC were mainly to Uganda 12.9 per cent
and Tanzania 8.9 per cent,” the CBK said in its latest Monthly Economic Review.
The EAC’s total intra-regional trade increased from a total
of $4.6 billion in 2011 to $5.8 billion in 2012, an increase of 26 percent,
while the total intra-regional exports increased from $2.6 billion to $3.2
billion during the same period, an increase of 23 per cent.
Kenya and Uganda accounted for an average of 37 and 24 per
cent of the total intra-regional trade during 2011 and 2012.
During the same period, Tanzania, Rwanda, and Burundi
accounted for an average of 20, 12, and 8 percent, respectively.
For instance, data shows that the total exports from
Tanzania in 2011 and 2012 amounted to $411 and $614 million respectively, while
the total imports from the region for the same period hit to $376 and $678
million respectively.
The intra-EAC trade has been rising since 2002 defeating the
fears that some weaker member states would be swamped in.
“Since launch of the Customs Union, and subsequently the
Common Market, intra-EAC trade has increased from about $2 billion in 2005 to
$5.5 billion in 2012” reads the EAC document.
The total intra-regional exports increased from around $500
million in 2000 to $3.2 billion in 2012, an increase of over 600 percent.
Analysts say that although intra-EAC trade is in favour of
Kenya, but there are promising signs that all partners are gaining from
integration.
But despite the intra-EAC-trade robust performance, there
have always been some hindrances.
The EAC director-general in charge of customs and trade, Mr
Peter Kiguta, says the intra-EAC-trade was subdued by the imposition of NTBs by
member states against one another.
For instance, the partner states rather than do away with
NTBs by December 2012 in accordance with the EAC plans; they were reported to
have imposed fresh ones — about 10 — while 35 remained unresolved, crippling
intra-EAC-trade. Only 36 NTBs have been resolved.
Business executives say that NTBs were hurting trade among
EAC countries, a situation that has, for example, contributed to the decline in
Kenya’s export trade in the region.
Kenya’s exports to EAC member states shrank by 1.8 per cent
in 2012 from 2011, according to the Economic Survey 2013.
The East African Business Council expert, Mr Michael
Baingana says that the challenge is rather that trade between EAC member states
is not facilitated, as it should be.
For instance, he says, the issues of standard recognition,
certification of product marks, are the problem, because each standard
regulatory body operates independently.
“But the positive side is, EAC is currently working on
regulatory framework for the region. Product Standards, about 1600 are already
considered EAC Standards…meaning they can trade without being subjected to
national standard regulations,” Mr Baingana noted.
However, critics warn that the EAC is too dependent to trade
with outside world mainly, the US Asia and Europe in particular, to drive its
growth.
The EABC Executive Director, Andrew Luzze, says that the
EAC-intra-trade at the moment stands at 13 percent of the total trade volume,
against the 87 percent of the business quantity that offers the outside world.
“This is unhealthy trend. We are exporting thousands of jobs
to the outside world while our own people are jobless. We are ought to change
the trend” Mr Luzze said.
Available records show in the European Union, intra trade
accounts for 60 per cent of its total trade, while trade within the North
America Free Trade Area accounts for 48 per cent of the total trade of its
member states.
Tanzanian economist, Johansein Rutaihwa said that low flow
of intra –regional trade in EAC countries is also driven by cultural
perspective among their citizen, thus more public education is required on the
importance of intra-trade.
“This goes in hand with having a mechanism of changing
members’ mentality to praise what EAC countries produce” Mr Rutaihwa explained.
Policy makers also need to understand the importance of
having good infrastructure and maintaining them, for intra-trade to grow at the
expected level.
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