The East African Business Council (EABC) board met in Kigali, last week, to discuss strategies that will help encourage the implementation of key projects by East African Community (EAC) states that seek to improve the business environment.
This comes on the back of a lot of frustration among the business community because of the slow pace by partner states in the implementation process despite Heads of State directives for the projects to be prioritised.
Lilian Awinja, the EABC chief executive officer, says the fact that some partner states are backtracking on some of these projects when others are undertaking the projects is very discouraging and unfortunate. Speaking in an exclusive interview with Business Times’ Peterson Tumwebaze after the meeting, Awinja said the delay is costing the region in terms of trade, investments, jobs and economic prosperity.
You held an EABC board meeting in Kigali last Friday. Briefly tell us what it was about
We mainly wanted to discuss issues affecting regional businesses and how we can address them as a region. Some of these issues are policy challenges, while others are financial in nature. For example, the directives that were issued by Heads of State for immediate implementation across the region are yet to be enforced. This is very discouraging for us as a business community.
We still have a long list of pending projects aimed at improving doing business in the region. Lack of implementation of these projects as agreed at regional level affects businesses negatively. Therefore, we are calling on all member countries to follow through these initiatives to boost the business environment. We want these projects, like the single customs and the Common Market Protocol, which has not yet been fully implemented, to be effected immediately. In addition, the electronic cargo tracking system has already been implemented by Kenya, Uganda and Rwanda, but yet to be embraced by Tanzania and Burundi.
Some of these projects, including e-cargo tracking system, are Northern Corridor initiatives. Can you, then, blame Tanzania and Burundi for their failure?
We are saying this facility should be looked at as an EAC matter, a reason we are now calling on the secretariat to help engage the remaining partner states so that they embrace it. This should be a regional programme if we are to fully facilitate free movement of goods across the region. EABC is confident that if this facility was adopted and implemented as a region, it will further reduce the cost of doing business in the region.
You have been advocating for the ratification of the double taxation treaty and a harmonised tax regime across the region!
Currently, its only Tanzania and Burundi that have not yet ratified the treaty… We are, therefore, urging them to move fast and ratify it. This is because a harmonised tax regime will translate into more intra-regional trade and more foreign direct investments (FDIs).
Increasing intra-EAC investments is at the fore of this agenda.
Ironically, most of EAC partner states already have these agreements with third party countries outside the region. So, why is it difficult to have this double taxation treaty ratified among regional nations?
Why do you think some countries have developed cold feet on these projects?
From the business community point of view, it is very discouraging when we fail to market ourselves as a region and take advantage of the more than 150 million people strong market.
In fact, we need to understand that when investors come and produce here, it’s because they want to tap into this market. Investors want to see smooth movement of what they produce across the EAC; this should be the core of regional integration.
Therefore, when some member states show reluctance to implement most of these directives, then it baffles us as members of the business community.
You have been lobbying for a harmonised EAC industrialisation policy. Have you made any progress so far on that front?
We are still working on issue! there is already a policy in place, what is remaining is its implementation. However, we need to agree on all the issues. For example, Heads of State made some key directives, especially on cotton and textile industry. While some partner states are implementing their directives, others have backtracked.
Therefore, EABC is calling on all the countries to implement the ban on second-hand clothing as directed.
Though we may face challenges at the beginning, the ban has many benefits in terms of job-creation and boosting the regional economy. We are also looking at the entire value chain as we approach this matter; we want our industries to start sourcing raw materials from within the region and not outside as has been the case.
Governments must equally invest more to further reduce the cost of production and help attract more businesses into the region.
To further boost industrialisation, we are calling for a harmonised regional procurement law to help compel both public and private entities to buy locally-made products. We must ensure that raw materials to construct these projects are sourced locally.
But then what happens to the push by governments to promote consumption of locally produced products at national level, say Made in Rwanda campaign?
Such campaigns are not necessarily a bad thing, but we need to appreciate the entire EAC community because we encourage investors to invest in the region not as individual countries. We also need to understand that regional demand is growing, and the only way we can meet this demand is by encouraging consumption of what we produce as a region.
What is your take on the recent ban of polythene bags by some partner states?
This is an issue that needs to be approached with caution. First of all, we need to protect the environment, but the issue should be addressed in a more sustainable way. Some partner states have banned the use of polythene bags, but they still allow importation of industrial plastics for packaging.
Therefore, the bigger question should be how to dispose of such plastic materials that are still being allowed into the region. As EABC, our view is that we should look at this matter from waste management point of view. The region still has a lot of e-waste, therefore, we need to have a comprehensive Bill on how to manage waste.
Traders that lost $4 million worth of goods during the post-election violence in Kenya in 2011 have not yet been compensated. Is EABC helping them to recover this money?
We have engaged the government of Kenya and hope those that lost their goods will be paid. It may take long, but we shall continue our engagement with the Kenyan authorities. President Uhuru Kenyatta has already directed the Attorney General and the ministry of trade to address the issue. Therefore, we are confident the matter will be resolved. We are only saying this process should be expedited because it is taking so long.
Tell us more about EABC Excellence Business Awards
These are the inaugural business wards and they are designed to encourage investors to take advantage of regional integration. We are looking for companies that have impacted on the regional integration.
What is your parting message?
We are saying that 2018 should be a year for us to make the difference as a region. We must move fast and implement all the directives as was directed.
Telecoms cut roaming rates under the one area network a few years ago. However, traders still complain about the high cost of communication in the region, especially for data. What should be done to ease this challenge?
We are aware the issue of roaming data rates has not been addressed by telecoms in the region. However, we believe that if telecom sector taxes are harmonised, this will facilitate trade.
Data charges are high because of excessive taxes across the region. A study conducted by EABC in 2014 to examine the regulatory framework in the telecom sector discovered that there is still a lot of taxes paid by investors in this business. Therefore, this affects the final pricing of both data and voice rates.
What is your take on Rwanda’s African Union chairmanship?
We are excited about Rwanda’s appointment to chair the African Union. The EAC business community will take this as great a opportunity to market our potential to attract investments into the region.
You recently conducted a study on how liberalising the region’s airspace would impact on business. Tell us more about the survey
A lot has been done!However, there are still a few remaining issues, which need to be addressed. It is necessary for us to finalise this matter to further facilitate businesses in the region.
We are calling on member states to move fast and grant airlines the 5th freedom to boost aviation business and ease movement of people and goods in the region.