African trade value chains will benefit EAC integration

Posted on January 4, 2014 12:05 am

East African countries exporters well known for their Tea and Coffee exports should be encouraged to sustain their participation in Africa’s value chains and production networks in order to reap the bounties of the pan African trading and East African Community’s fledging integration. There is need for the five countries to strengthen regulatory frameworks to support competition and competitiveness, as well as prioritize measures related to investment promotion and trade and transport facilitation. Developing complementary initiatives that support EAC’s African production network is imperative and as much as the Kenya, Rwanda and Uganda has started issuing single VISA for those touring the three countries that would unleash the tourism potential the integration process and the future free trade agreements among the regional countries will only be beneficial if all countries work together to put their houses in order. I do think exporters should improve their overall competitiveness and growth especially in identified African trade priority sectors and also ensure the regional manufacturers can export in other African region. Ugandans would not mind finding their famous coffee selling in Cape Town while Tanzanians will be glad to see their famed Kilimanjaro tea selling in Lagos.

To borrow the words of Tanzanian President Jakaya Kikwete in his speech to the country’s parliament last year, it is not really about developing the market alone, the capabilities and developing the regional financial capabilities starting with monetary union signed late last year, the sense of readiness among the population through awareness as well as developing the channel of distribution that will help develop the small and micro enterprises firms in the region. Whether they like it or not, exporters in East Africa must first focus on the region because seizing markets in other parts of Africa is difficult especially in main markets of Nigeria and South Africa where there local brands are well developed and have robust infrastructure to compete with any foreign firms. Therefore, exporters in the region need to take into account countries of destinations for their products, how to operate, the margin of profit and whether they will increase market penetration. There is also need for the governments to play a key role, as exporters in the region cannot be expected to develop the markets by themselves, a bit of involvement from the EAC bloc’s member states is very much important to further develop the industries across the region.

Overall the East African region can compete under the integrated  African trading regime although some domestic manufacturers and sectors like fishing, agriculture, may lose out to competitors especially from South Africa and Nigeria as well as Egypt.As I had argued on this blog before, boosting manufacturing in the region will significantly develop the region’s economies. Farmers in East Africa have aired serious concern over the region’s competitiveness when time comes for the expiry of Economic Partnership Agreement (EPA) with European Union because goods produced in the Europe are competing against similar products of other East African countries.Majority of them are still using rudimentary methods of farming. Few sectors will take a hit when EPA trade takes effect with industries like agriculture expected to lose its tariff protection with Kenya’s horticultural industry being the worse affected. The share of EAC region in terms of the trade has been increasing significantly and with the recent developments, the economic bloc’s will see a significant growth with African trade participation

Contador Harrison