Rwandan private sector bosses given ear over challenges
According to Ambassador Dr. Richard Sezibera, the EAC Secretary General, the private sector is the most important group if the dream of the East African Community is to be achieved.
“Failure to involve the private sector in the first attempt of the EAC led to its collapse and we don’t want to repeat the same mistake,” Sezibera noted.
The East African Secretary General’s Regional CEO Forum, which was first held for the first time in Nairobi, bestowed the second opportunity to Rwanda in a breakfast meeting held in Kigali. The meeting organized by the East African Community (EAC), in partnership with East African Business Council (EABC) and Trademark East Africa (TMEA), attracted over 100 heads of companies in Rwanda giving them a rare opportunity to engage the head of EAC concerning key challenges limiting the performance of Rwandan businesses in the EAC.
“You are the captains of industry and if your issues are not addressed then we can’t achieve that much from the proposed EA common Market,” said Hannington Namara, the CEO of the Private Sector Federation.
Secretary General Sezibera observed that although the private sector has been represented at various forums of the EAC, he feels their issues have not been effectively voiced and giving them a direct audience would do a lot to bridge the gap.
Key among the issues that dominated the three-hour breakfast were the challenges that would be presented by the single custom territory with participants urging partner states to harmonize legal instruments and other hitches before fully flagging off the SCT. Others included harmonizing taxation policies, fast-tracking the single visa and the EA passport.
“The SCT is a great idea, definitely the best we could come up with, but we need to be sure that we are ready to apply it without risking misunderstandings among partners,” said one of the presenters.
The SCT seeks to ease cross-border trade facilitation among partner states while reducing on the number of non-tariff barriers in existence at the moment. “However, if we don’t harmonize our practices before full application, the SCT risks becoming an NTB itself,” remarked another.
Ephraim Turahirwa, the general manager of Rwanda Mountain Tea, was more philosophical in his analysis of the EAC. “Geography made us neighbors, history made us relatives and economics has made us partners, why then shouldn’t trade among us flourish?” he questioned colleagues.
Faustin Mbundu, the PSF chairman, for his part pointed out that if NTBs are not addressed by EA, then all partners stand to lose the expected benefits.
Bank of Kigali’s COO Lawson Naibo said in all the efforts EA was pushing, financial sector harmonization should come first. “It’s the most vital element of trade. Easy access to finance across the region can ease business and facilitate further trade and investment,” observed Naibo.
While Sezibera agreed with him, there seems to be a determination by some member states to slow down the expansion of financial service providers from partners to protect local firms. In fact, Naibo said, banks from within the region are treated as international entities which reduces their competitiveness.
Apparently, it’s not only banks as John Mirenge, the CEO of RwandAir, also revealed that his airline was not benefiting from the supposed advantages of a regional player. “Foreign international airlines get more freedom than us begging the question of whether we are in a community at all. We need to move for a domesticated region so that we compete on quality of services but on a level ground,” pleaded Mirenge.
For example, he added, “current fares would be costing 50% less if it weren’t for some unnecessary taxes which hike the cost of transportation as well as general over heads of doing business.”
Rwandan transporters too are not happy with their country charging all trucks into Rwanda a uniform fee of $152 while Rwandan trucks are charged $500 into Tanzania. “That’s quite unfair and reduces our competitiveness,” said a participant from the transport industry.
These and many other challenges raised were accepted by the Secretary General as genuine issues that need serious consideration by the various platforms in the EAC, but quickly added that despite the challenges, there’s evidence that the integration is moving at a healthy speed that should be even do better with time.
“Trade among partners has increased from US$ 2 billion to US$ 4b between 2005 and 2010, with Kenya dominating at 41%,” noted Dr. Sezibera.