africa-economy 2

Like EU, East Africa needs trading bloc

The vision by East African heads of state to ensure one trading bloc for the region is certainly welcome. Like the European Union, East Africa needs to come together to form a more formidable bargaining bloc on trade issues.

It would also improve the region’s economies. One bloc or territory will increase markets both regionally and internationally for export and import, which would lead to better living standards for citizens.

Whereas the mooting and reviving of the East African Community (EAC) began in earnest in mid-2005, the clamour to cover more ground has been most vigorous the last one year. Calling rates and travel documents have been harmonised, and we are on the road to creating a single visa for tourists.

In the customs department, East African countries are racing to achieve a single customs territory (SCT) and a customs union. This is where my concerns lie.

Imminent danger

The procedure to achieve the vision of a single customs territory as it is now may negatively affect our country’s economy; our security and goods control are in imminent danger.

Giving other member countries the express authority to enter goods through their systems, with their customs agents generating the documentation, is not only risky for the country, but also gives undue advantage to agents in the importing countries to take all business at will.

The immediate consequence of the roll out of this system is that more than 60 per cent of the business initially done by Kenyan agents has been taken over by agents in the importing countries, which is driving thousands of Kenyans out of employment.

Further, because of the imbalance in member economies, Kenya is already losing out on tax collection since most traders are opting to register companies in Uganda where they pay less taxes. They then send the same goods they import back to Kenya to fetch better profits. This is increasing Uganda’s revenue collections, but is driving local traders out of business.

We are also slowly compromising our quality standards to regional levels, which are way below what we are used to. A case in point is the importation of low-quality dry cells by our neighbours that find their way to Kenya, driving manufacturers of high-quality batteries out of business.

Slowing down

The fact that our customs officers have been reduced to observers in cargo control on goods transiting the country is a recipe for the dumping of contraband goods, which may pose a security risk to our country.

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