EAC Common Market will unlock region’s trade potential- experts

The East African Community (EAC) Common Market Protocol was adopted in 2010 as the integration of the Customs Union, aimed at creating a robust market that fulfils the trading aspirations of the East African people in the region.

The Common Market is the second regional integration milestone of the East African Community (EAC) put into effect since 2010, and is aligned with the provisions of the EAC Treaty, though it is still in its initial stages.

South Sudan is part of the community and is expected to benefit from the initiative once it is fully operationalised. 

Mukulia Kennedy Ayason, South Sudan lawmaker at the East African Legislative Assembly (EALA), revealed the initiative is projected to relieve dealers from trade-related burdens along the borderlines across EAC countries.

In an interview on EAC affairs with City Review this month, he said, “Partner states agreed to have goods produced within the region at a zero tariff and to have a common external tariff for the goods that are produced outside the region.”

“So, the aim is to create a robust market—a market that can fulfil the aspirations of the East African people; encourage local production and inspire value addition, and to make sure that trading within the region is common, and it is free,” he added.

The protocol is based on the four fundamental freedoms and two rights. These include the freedom of movement of goods; services, the movement of capital, labour/workers, and the right of establishment and residence.

According to the EAC secretariat, it is a first pillar of the integration processes adopted on trade related issues.

Meeting obligations

The protocol requires member countries to meet a GDP to debt ratio of about 5%. Each country is supposed to have a reserve ratio that lasts for 4.5 months for a  period of two (2) years.

The convergence ratio is then expected to be harmonised within the member states. It also demands a number of requirements to be met by the countries, including allegiance and the introduction of a single currency for the region.

“And once people are able to have one currency. Once people are able to achieve free movement of goods and services, then there is a sort of confederal state of East Africa where we shall be run by one government, “Mukulia disclosed.

According to the lawmaker, certain sovereign powers should be adopted to make the countries run effectively at the EAC level as an idea of political federation.

Current Stage

So far, the consultations on political federation have already commenced across the EAC countries. Burundi has had its consultation, as has the Republic of Tanzania.

Kenya is also in the lane to follow, as other countries within the region follow later.

Lawmaker Mukulia said the EAC was determined to achieve its single common currency by the next two years.

“By the year 2024, we would have a common currency to facilitate trading within the region. However, the Monetary Union has lagged behind by almost 10 years, “he said.

However, the implementation part of the monetary union has started with the establishment of the East African Monetary Institute.

The Institute is gestured the willingness of the member states to do more in a bid to deepen regional economic integration.

Commentary

Gabriel Jama, a trader in Nimule, hopes the trade agreement may help the traders get rid of heavy taxes along the borderlines.

“We are suffering because of the heavy taxes. But, if this is going to go into effect, then it will help us a lot, “he stated.

Akol Nyok Akol, a Juba-based economic analyst, said the initiative would only facilitate cheaper importations for South Sudan, especially for goods coming in from EAC countries since the country has nothing to export.

“Free trade is beneficial, but the problem in South Sudan is that we are not exporting to the EAC. What do we export to East Africa?’’ he asked.

“So, it can be of maximum benefit if South Sudan began to export goods. For instance, if South Sudan begins to develop its agricultural sector and tries to export the ‘produce’ to the EAC market, then that would be of benefit because there’s a potential market,” Akol underscored.

According to the economic analyst, it will be more beneficial to other EAC countries, which are massively engaged in trade, than South Sudan.

In April this year, the EAC is set to embark on sensitization exercises, where it will enlighten the countries on what the common market is about and its benefits.

Underlying the EAC Common Market are the operational principles of the community. These include non-discrimination of nationals of other partner states on grounds of nationality, equal treatment, as well as ensuring transparency in member state-related matters and sharing information for smooth implementation of the Protocol.

Challenges

The community is faced with an inadequate legal and regulatory framework, inadequate access to productive resources, inadequate participation of local communities, poor physical infrastructure and utilities, and low public expenditure, according to the Secretariat.

The EAC aims to achieve prosperity, competitiveness, security, stability, and political unification in East Africa.