Date Posted : 2010-07-01 10:19:13 | << Back to other news Stories

East African Common Market starts July 1, 2010

Uganda will on July 1^st launch the start of the East African Common Market protocol following six years of cross-border negotiations with its regional partners, Kenya, and Tanzania.

A Common Market is an area where goods, capital, labour and services are able to move freely. The new trading bloc is the first step in the long road to the removal of all trade barriers amongst the East African states.

 When fully implemented, it will open up opportunities for people and businesses to enter new markets tax-free and eventually also lead to a common currency planned for 2012/2013,  and a political federation thereafter.

In March last year, a treaty signed by the three states moved to transform the customs union launched in 2005 in to a full Common Market, which is a revival of the defunct East African Community which collapsed in 1977 after 10 years.   

The First Deputy Prime Minister and Minister for East African Community Affairs, Eriya Kategaya, notes in a June 24 statement posted on the ministry’s website, that the trading bloc will benefit all EAC economies by increasing productivity and urged Ugandans to support it.

“The factors of production will be allocated more efficiently as capital and labour move to where returns are the highest. Competition is likely to increase, resulting in more efficient businesses and cheaper prices for consumers,” writes the Minister.

Uganda is seen to be at a disadvantage in comparison to its more industrialized neighbours. Concerns have also been raised about workers and businesses from other EAC states entering Uganda, taking over jobs, and establishing businesses that will drive Ugandans out.

Mr Kategaya however, argues that Uganda’s competitive advantage in sectors such as Agriculture and Education will more than compensate for its fledgling industrial base.

“I believe that Uganda should be concentrating on identifying where the opportunities are for us to benefit for the Common Market, and looking to other countries to see where there are gaps in their markets,” he adds.

Since 2003, the volume of trade among EAC partner states has grown from 1,342 million United States dollars to now over 2,807 million United States dollars by 2008 and is now well 3000 million united sates dollars.

According to UN COMTRADE Statistics 2009, export values to Tanzania from Uganda grew to $30.5m (29%) between 2004 and 2008, while exports to Rwanda grew by 53% in the same period under the customs union. Exports to the Democratic Republic of Congo grew by 41% in the same period. The statistics are evidence of the gains of integration.

In order to level the playing ground - at least in the short run- Kenya will pay duty on its goods entering Tanzania and Uganda for the first five years, to compensate for its more developed industrial base.

The Uganda Exports Promotion Board (UEPB) has already launched the export development and promotion training programme among key sectors identified in the National Exports Strategy (NES) to pave way for the smooth implementation of the Common Market.

These sectors include coffee, fruits, vegetables, natural ingredients, services, education, steel and tubes items, foods and beverages and body care products.

UEPB is also set to identify universities and other educational institutions that are service-export ready and work with them to improve areas critical to attracting more students and building marketing and promotional strategy in the region.

With increased competition arising from a more open market, it is vital that Uganda firms be facilitated to improve their competitiveness through reduced business operating costs particularly in the areas of finance, vocational training, infrastructure and utilities. Uganda therefore needs to develop a National Implementation Strategy that will identify how Uganda will position itself to exploit the expected benefits from the Common Market.

For more information, please click on the Minister’s full statement; and the statement from the EAC Secretary General, Juma Mwapachu; and another on Frequently Asked Questions about the Common Market. The statements were originally posted on the Ministry of East African Affairs, Uganda and can be accessed at: www.meaca.go.ug/