KIRUKU: We are reaping bitter fruits of obstructive trade

The declining intra-EAC trade which is being felt across the region will continue to be a thorn in the flesh if the EAC partner states will not act with urgency to arrest the biting situation which is threatening local businesses.

The concern which has previously been raised by regional traders and recently by the Kenyan government through its East African Affairs Principal Secretary, Betty Maina, is not only affecting Kenyan businesses. All the EAC partner states are feeling the heat of dwindling intra-EAC trade.

There has been a declining trend in the share of intra-EAC trade to the total trade over the past few years. For example, the share declined to 10.1 per cent in 2014 from 11.1 per cent in 2013.

It is not surprising that though Uganda is a major market for Kenya’s exports, the value of the goods exported to Uganda from Kenya dropped by 30 per cent in 2015 while exports to Tanzania stagnated at $70 million.

The intra-EAC trade which is mostly dominated by agricultural products has for a long time suffered setbacks due to Non-Tariff Barriers(NTBs) and double taxation of companies operating in two or more member countries. It is therefore not a wonder that South Africa continue to dominate local market with imports coming from there totalling to over $3.2 billion.

It is unfortunate that the region has allowed flooding of Chinese and Indian products into the market largely due to unnecessary restrictions and barriers that the partners states put on each other.

And if the trade barriers such as unfavourable taxation measures which especially make Kenyan manufactured good five times more expensive than the rest of the COMESA region, are not removed, other nations will continue to export goods to the region despite their local availability.

Countries like Kenya must now re-strategise and make critical decisions regarding taxations such as value added tax, industrial development fee and railway development fund which make locally manufactured goods more expensive than imports from COMESA and SADC.

Though some efforts are being made in upgrading of the road and railway network across the region, it is a fact that the poor physical infrastructural network has largely contributed to increased cost of goods due to high transporting costs. Improving the quality, maintenance and connectivity of the infrastructural network must therefore be speeded so as to reduce cost of transportation as well as facilitate the free flow of trade within the region.

Lack of political commitment to eliminating tariff and non-tariff barriers has been a major impediment to trade within the region.

It is sad that there has been slow implementation of the members’ commitment to eliminating the current tariff barriers on products which are highly sensitive to competition from other countries.

Products such as agricultural produce and some manufactured goods were granted asymmetrical tariff liberalisation among EAC Partner states. Unfortunately, the said goods are still being subjected to costly tariff barriers. Lack of implementation of such a crucial agreement has hampered trade within the region.

Businesses from across the region have been crying foul over current and emerging NTBs. It is now a well-known fact that one of the greatest challenges to regional businesses are the NTBs which keep re-emerging and evolving.

Major impediments of cumbersome customs documentation and clearance procedures, border controls, transportation and transit traffic regulations and rampant corruption along our roads are some of the gruesome NTBs which have kept evolving to the detriment of local businesses.

Truck drivers have persistently raised their voice over increased interference with transportation especially cross-border transportation which is characterised by arduous customs and roadblocks checks. Last year, truck drivers staged demonstrations in Kenya over increased insecurity along the highways and unending police harassment.

Only recently, oil truckers staged a go-slow in Kenya over a new law compelling them to operate between 6:30 am and 6:30 pm, a directive that would have affected their operations and exposed them to increased police harassment.

Our leaders must now stop signing trade agreements for public relations but they should show commitment and political goodwill in implementing agreements to eliminate tariff and non-tariff barriers which hinder free flow of goods, services and persons.

The regional leaders must appreciate that our economies are wholly intertwined and interdependent. Putting roadblocks on one another only end up hurting the overall economic growth of the whole region.

All the EAC partner states must therefore work together in eliminating red-tapes and unnecessary roadblocks to trade so as to ensure the full benefits of regional integration are felt.