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President Museveni says instead of competing against each other, EAC partner states should diversify in areas where they have competitive advantage
President Museveni has asked East Africa Community (EAC) partner states to concentrate on areas where they have a competitive advantage instead of using taxes or non-tariff barriers (NTBs) to protect themselves against competition.
Speaking during a retreat on the EAC Common Market in Arusha, Tanzania on July 20, President Museveni said that EAC partner states were competing to sell the same products instead of diversifying to give due advantage to the best or largest producer.
“Policy can make things fail. For instance, a country like Uganda easily produce enough food such as maize, milk and sugar, but we don’t produce a lot of rice like Tanzania does,” he said, noting that it was better for Uganda to import rice from Tanzania because it is better placed to produce more and efficiently than Uganda, instead of levying taxes on rice ostensibly to protect Ugandan rice growers.
During the retreat it was observed that the private sector was active in pushing for tax protections otherwise known as NTBs that continue to choke trade in spite of policies to eliminate them.
NTBs have also been significant in contributing to the decline of intra-EAC trade, which is under 20 percent.
Some EAC partner states have been cited in increasing barriers to cross-border trade and investment, which are often lobbied for by local business groups in a bid to protect themselves from the competition beyond borders.
Since the Common Market Protocol was passed 10 years ago, EAC partner states have managed to resolve 230 NTBs as at the end of February, only for new ones to emerge.
Ms Betty Maina, the EAC Council of Ministers chairperson and Kenya’s Cabinet Secretary, Ministry of Trade, Industrialisation and Enterprise Development, said she had heard that business rivalry among individual companies that trade within the EAC borders canvass and connive to increase or reduce tariffs on their goods in order to deny others a chance to sell their goods.
“Some of the trade issues that the private sector raises in form of NTBs could be sorted out at the individual government level and should not find its way to the EAC level,” she said.
The private sector is also blamed for churning out similar products such as maize, eggs, and sugar but then impose internal taxes to prohibit the same products from being imported.
The retreat also heard that implementation of high charges and taxes in the region is contributing to high telecommunications and broadband internet costs.
These, together with high licensing and numbering fees, unharmonised inter-operator tariff rates and the non-adoption of the One Network Area model across the EAC partner states has contributed to the high costs of doing business.
“For instance, the cost of making a telephone call between Kigali (Rwanda) and Arusha (Tanzania) is similar to the cost of flying between the two cities,” said Prof Manasseh Nshuti, Rwanda’s Minister for EAC Affairs.
If the one network area is implemented, it would result in eliminating charges for receiving voice calls while roaming in Kenya, Rwanda, South Sudan, Uganda, the DR Congo and Tanzania.
“It is high time partner states implemented decisions they themselves agreed upon. This could save us a lot of time we spend in discussing what is not working under the CMP,” said Prof Nshuti.
Some experts have blamed government policies on agriculture (food), manufacturing, communication, bureaucracy by civil servants manning immigration and customs, and partner states’ failure to cede sovereignty over the free movement of goods and services as some of the causes for the slow implementation of the common market.