Trade among the countries of the East African Community now amounts to a mere 14%, yet it was 21% in 2015. This means the East African Monetary Union will be delayed further, for the recommended level of trade among the partner countries should be at least 25% for it to take off.
The East African Community’s business lobby wants the region to cure the chronic problem of non-tariff barriers by going borderless. Non-tariff barriers have been blamed for the declining trade among the EAC member states.
The issue of borders for Uganda came to the fore recently, following a nationwide fuel shortage that was sparked by a ministry of Health directive requiring truck drivers entering the country to pay $30 (Ush104,272) for Covid-19 tests.
The East African Business Council (EABC) says outer borders like the one at Mombasa should be maintained for customs work, but those inside the community such as Busia, Malaba and Katuna, which have only remained to serve the personal interests of a few individuals in government, should be pulled down.
Going borderless would, according to John Bosco Kalisa, the EABC Chief Executive Officer (EABC), allow the EAC to fully implement the customs union and common market protocols, which have been in force since 2010 but have been implemented with serious limitations.
“Removing these borders would reduce opportunities for implementation of the many questionable barriers announced by EAC partner states,” Kalisa says.
EAC partner states have since 2010 when the common market came into force resorted to trade blockades and even border closures, with severe consequences for regional trade.
On the night of January 31, Rwanda partially opened its border with Uganda, after closure for three years. That is the second time, in under two years, of Rwanda taking steps to open borders with one of its EAC partners.
In 2021, Rwanda started the process of re-opening its border with Burundi following a change in government in Bujumbura, as Evariste Ndayishimiye replaced the late Pierre Nkurunziza, who had been president since August 2005.
Rwanda had taken the decision to close the border with Burundi after Bujumbura accused the leadership in Kigali of sponsoring the 2015 failed coup against Nkurunziza’s government. The closure of Rwanda’s border with Uganda is also related to allegations of Kampala sponsoring dissents who harbour intentions of overthrowing the government in Kigali.
While Rwanda took the path of closing its land borders to settle state disputes, other EAC partner states target particular goods, services or even people with blockades. An example is Tanzania, which has refused to recognise national identity cards issued by partner states as a valid travel document into its territory despite different treaties and protocols that established the East African Community suggesting so. In some cases, Tanzania even asks for visa fees from East African travellers.
“East Africans are supposed to travel with just their identity cards but somehow Tanzania has introduced a charge of $100 that targets Kenyans,” says Kalisa.
Kenya, on the other hand, has in the recent past blocked Ugandan maize over alleged high levels of aflatoxin. Poultry and poultry products have also been at the centre of wrangling between Kenya and Tanzania, and between Uganda and Kenya, as each country competes for superiority in the region’s market.
Sugar, sugarcane and milk are the other products from Uganda whose traders have struggled to access the Kenya market in recent years.
On account of these trade disruptions, information from the East African Business Council (EABC) shows that EAC’s trade between partner states has been declining when taken as a percentage of the region’s total trade. The percentage of trade between states in the EAC, also known as intra-EAC trade, has declined from 21 percent in 2015 to 14 percent now.
The decline in intra-EAC trade means the region’s population cannot fully enjoy the benefits of integration. While re-establishing the EAC in 1999, the case made by the founders – Yoweri Museveni (Uganda), Daniel Arap Moi (Kenya) and Benjamin Mkapa (Tanzania) – was that the people of the three countries would have access to the cheapest goods available in the region, as competition would spur efficiency among producers. A wider market, increase in innovation and access to affordable goods would, according to the leaders, lead to a reduction in poverty.
Reducing intra-EAC trade also means that the region cannot move to its next stage of a monetary union, whose implementation date is supposed to be 2024. One of the prerequisites for implementation of the monetary union is that the region achieves 25 percent intra-EAC trade at the very minimum, since the regional currency can only circulate through the exchange of money for goods and services.
In blocking goods and services, Mr Kalisa adds, the EAC partner states are punishing citizens.
“We did studies in Kenya and citizens there said they liked Ugandan sugar and milk,” says Kalisa.
Mr Kalisa adds that Kenya’s decision to blockade Uganda’s products was taken by politicians interested in pleasing their cronies. He says that although countries usually claim to be protecting the interests of their nationals, decisions such as the blocking Uganda’s maize or sugar to Kenya are usually taken because one lobbyist convinced their friends in government to act as such.
“One connected lobbyist will convince the politicians to forego national interests and instead protect a few individuals who own inefficient factories,” Kalisa says.
In 2018, Nicholas Nesbitt, the EABC chairperson, fired Lilian Awinja the CEO at the time, accusing her of failing to bring about the necessary cohesion that would stop lobbyists influencing their national governments to introduce different non-tariff barriers.
The EABC replaced Awinja with Peter Mathuki, who is now the EAC secretary general, saying he would be the man to end the wanton introduction of non-tariff barriers in the EAC. But years later, nothing much appears to have changed.
While Kalisa wants a borderless East Africa as the solution, Daniel Birungi, the Executive Director Uganda Manufacturers Association, wants the EAC secretariat to get powers to penalise countries that are found to have unfairly introduced non-tariff barriers.
“Those proposals are not achievable at the moment,” says Damali Ssali, a trade expert who over the last eight years worked to help ease trade facilitation in East Africa.
Ms Ssali says it is unlikely that countries in the region would hand the EAC secretariat powers to punish states that introduce non-tariff barriers. She also adds that going borderless is impossible to achieve at the moment.
“We are not there yet. If countries can’t trust each other with something as simple as Covid-19 test certificates, how can you trust that when they approve say clinker, it isn’t actually guns that are being sent over,” Ssali says.
On the reduction in intra-EAC trade, Ssali says one of the biggest problems is the Covid-19 pandemic, which handed the ministry of Health a role in trade facilitation.
“The problem is that since Covid-19, the ministry of Health, which is not traditionally a trade facilitation unit, has taken the lead in making policy on how crossing the border is done,” Ssali says.