An ambitious plan to rescue east Africa from poverty by building a European Union-style trade bloc is making slow progress, mainly due to squabbles over tariff reforms.
Delegates at a meeting of east African business leaders which closed on Wednesday said Tanzanian and Ugandan fears of domination by Kenyan big business had hindered progress, leaving much of the region’s trading potential untapped.
Kenya, Uganda and Tanzania have pledged to tear down barriers to free trade between their 80-million people, aiming to create a single market that will present golden new opportunities to the region’s businesses.
The three states around the shores of Lake Victoria established an East African Community in 1999, agreeing to set up a customs union within four years as a stepping stone to deeper economic integration.
”East African businesses in general are an endangered species,” said Amanya Mushega, secretary-general of the East African Community. ”When you are quarrelling about the nuts and bolts, multinationals from other regions are taking over,” he told the three-day conference in the Kenyan town of Nanyuki.
Slow progress towards economic union in east Africa was a reminder of the challenges facing an ambitious new plan to combat the continent’s economic malaise, championed by South Africa, Nigeria, Senegal, Algeria and others.
That scheme — the New Partnership for Africa’s Development (Nepad) — seeks closer economic integration as a key pillar of its anti-poverty strategy, but big differences in economic policies and the size of businesses are seen as hurdles.
The east African business leaders agreed on proposals for the private sector to take a bigger role in managing infrastructure, and to work towards investing $300-million by June 2005 in a maritime fibre optic cable to reduce the region’s high communication costs.
But finding consensus on trade has proved more difficult, a reminder of the economic and political differences that tore apart a previous East African Community in 1977.
Officials at the meeting said the main point of disagreement is that Tanzania and Uganda want Kenya to abolish tariffs on their exports while they retain tariffs on Kenyan goods, gradually reducing them as their industries mature.
Tanzanian business, which is still struggling to shake off years of state socialism, has been the most vocal in insisting on protection from competition from leaner Kenyan firms.
”Flexibility and maturity are what is needed to unblock the lack of consensus to move forward with a customs union,” said Natwar Gotecha, chief executive of the Tanzania Cigarette Company, which has been lobbying its government not to allow unregulated cigarette imports from Kenya.
The planned customs union envisages removing tariffs imposed by the three countries on each other’s goods, as well as agreeing a common tariff for imports from outside the bloc.
Progress has been bogged down partly by haggling over whether the top band for tariffs on imports from outside the region should be 25% or 20%. – Reuters