Economic Windfalls and undesirable outcomes

In his budget address to the East African Legislative Assembly, the chairperson of the council of ministers in the region recognized both progress and challenges being experienced in the region. The address recognized unfavorable global financial conditions, negative spill-overs, and geo-political conflicts impacting partner states’ economic performance. This is in contrast to recorded GDP growths in the region ranging from 2.8% to 8.1%, with expectations of higher performances than the global and Sub-Saharan Africa in 2024.

In contrast, the EAC priorities for 2022 to 2026 recognize an urgent need for the community to implement its Single Customs Territory fully, enhance the domestication and implementation of regional commitments in line with the EAC common market protocol, and attain a Single currency. With the 2026 deadline fast approaching, concerns still emerge about the community’s commitment to achieving these goals, especially under the stewardship of the new secretary general, Ms Veronica Nduva.

Taking Stock

In its efforts towards strengthening its common market, the 2023/24 financial year saw the community launch the EAC e-Tariff platform designed to digitalize the Common External Tariff. This has been a welcome way to improve the participation of the private sector in trade while enhancing their access to trade information. The platform was verified by solving market access issues related to trade between Uganda and South Sudan, with more verification missions in the works. This can, therefore, enhance the seamless administration of duty-free import of inputs schemes, the management of preferential tariff treatment on goods, and offer more accessible searchable functionalities of tariff for EAC traders.

East African Legislative Assembly (EALA) in session.

The EAC treaty and protocols mandate that the Community implements measures to improve trade across the region while enhancing access for exports and trade with other third-party countries and trade partners. This commitment saw the region resolve 6 of the reported 16 Non-Tariff Barriers. However, more efforts are required to eliminate inhibitors to trade, considering that they cost the region an estimated $ 16 million in trade. With the expected operationalization of the EAC NTBs mobile applications, the community is on the right path to easing the reporting, monitoring, and elimination of barriers to further enhance trade.

Notably, the collaboration between the EAC and the African Continental Free Trade Area (AfCFTA) is a welcome move for the community in easing access to regional markets and opening the area to trade with the rest of Africa. Implemented effectively, the EAC remains a gateway to AfCFTA’s success in creating a common African market through policy advocacy and national strategy development. In 2024/2025, the onus is on the EAC secretariat to effectively define how best two entities can strategically capture the African market, define the markets to concentrate on, products to add value to, and how to source raw materials to improve the region’s cross-border trade competitiveness.

Eyes on 2024/2025

With the success of the 23rd EAC Micro, Small, and Medium Enterprises Trade Fair that brought over 1,000 exhibitors into Bujumbura, the EAC secretariat faces a critical period for continued implementation of comprehensive awareness and capacity-building programs. With the region facing external and internal economic performance pressures, there is an urgent need for enhanced efforts to facilitate access to opportunities emerging across the region for SMEs, especially those owned by women and youth. With the Mutual Recognition Arrangement of the Authorized Economic Operator Programme, for instance, the secretariat can enhance capacity building for trade among small cross-border traders. This not only strengthens and assists traders with end-to-end supply chain security but also multiplies their benefits with recognition of customer administration from either partner state as bidding.

“While the community has been keen on improving the regional investment environment with targeted investments and attracting foreign direct investment, more could be done to open up trade opportunities for member states.”

Notably, the role of the secretariat in collaboration with AfCFTA counterparts ought to focus on facilitating approvals for trade opportunities with global nations away from Africa. This can further enhance access to trade opportunities for EAC traders, cementing the entities’ role in defining access to wider markets for increased trade and investment. The implementation of the EAC strategy on AfCFTA harmonization of legislation on cross-border e-commerce, free trade area agreement negotiations with select third-party nations, and the operationalization of the region’s trade promotions network ought to take precedence.

The Single Customer Territory framework for the region faces challenges from underdeveloped infrastructure, the economic dominance of some member states, and setbacks in regional integration efforts. In enhancing seamless cross-border trade, the secretariat must focus on better consolidation and updating the SCT framework. The EAC Common Bond covers risks on goods in transit and warehousing, and the integration of the Northern and Central Corridor Electronic Cargo Tracking Systems (ECTSs) ought to take precedence to improve the cross-border movement of goods.

While the community has been keen on improving the regional investment environment with targeted investments and attracting foreign direct investment, more could be done to open up trade opportunities for member states. The secretariat could, therefore, consider fast-tracking the EAC investment Strategy finalization and updating the EAC investment guide for ease of business interaction across the region. Moreover, if it’s in the interest of the EAC to enhance ease of business registration in a regional capacity, the proposed EAC e-Business Registry ought to be actualized to improve automation and reduce bureaucratic hurdles.

Visibility of the Community

Sitting in Arusha on June 30th, the East Africa Legislative Assembly adopted budget estimates for revenue expenditure for the financial year 2024/25. With a proposed budget of US$810,000, the sensitization of the regional and global partners to the community’s visibility will depend on efforts towards enhancing EAC cross-border trade and commitments. The community has had a long history of unmet promises that the secretariat and other organs ought to collaborate on to enhance the promise of the regional market. With the FY 2024/2025 focusing on strengthening intra-regional trade and investment of the EAC through an improved business environment, success will stem from facilitating better access to opportunities, within and beyond, for East African Traders.