Burundi actualité

The presidents of Burundi, Kenya, Rwanda, Tanzania and Uganda signed the East Africa common market protocol in the Northern Tanzanian town of Arusha, at a ceremony coinciding with the 10th anniversary of the East African Community's (EAC's) revival.

The protocol is expected to come into force in July 2010 when the member states have ratified it.

"It is anticipated that the ratification process will be smooth," a spokesman for Kenya's ministry of east African community said this week.

This time last year, the member states were thrashing out the protocol and trying to reach a consensus on social, environmental and technological issues. There were disagreements over the right to free movement and permanent residence in the region.

There were also fears that Kenya, as the relative economic heavyweight, would dominate the union. Therefore it will be subject to taxes as a way of helping the other countries' industries to catch up.

General Juma Mwapachu, the bloc's secretary, said in a recent interview with AFP that the leaders had no option but to enter the common market.

"There is no choice. Let us go into the common market and confront the challenges," said Mwapachu, a Tanzanian.

After the signing the Tanzanian president, Jakaya Kikwete, heralded the move as a "great step".

"We are going to move to other stages after this historic event," he said.

Investors praised the decision, which they say will boost intra-regional trade, something that has stubbornly remained inferior in volume to that with external markets and regions.

"From 36 million people in the Kenyan market we are moving to 126 million. The impact is going to be great," said Vimal Shah, the chief of a giant Kenyan beverages and food manufacturer.

"We cannot remain an island anymore. The key now is to become competitive."

However, efficiency of the common market could be hobbled by poor roads and railway networks. The bloc only recently began projects to link the member states by railway - in particular landlocked Burundi and Rwanda.

While most major roads are in relatively good condition, during bad weather, many side roads are only passable by four-wheel drive vehicles In Rwanda, there is no railway at all, but there are plans to build a railway linking the country with Tanzania and Burundi by 2013.

First established in 1967, the EAC collapsed 10 years later due to differences in economic ideologies and political fall-out after the ousting of Uganda's first president, Milton Obote.

It was resurrected when the leaders of Kenya, Uganda and Tanzania agreed in November 1999 to create a European-style common market for their 90 million citizens, to strenghthen their economic and political clout.

Rwanda and Burundi joined the bloc in 2007, expanding its population to 126 million and bringing its collective GDP to $60 billion.

In 2005, the grouping established a customs union setting common tariffs for external goods. It is working to form a monetary union by 2012 and ultimately a political federation.

Michael Keating, an associate fellow of the Chatham House Africa programme, said that the treaty was a "welcome recognition that if Africa is to be competitive internationally, there needs to be greater economic as well as political integration.

"Fifty-three countires operating independently is not a winning formula," he said.

"[The treaty] is really great news. It creates a market for 100 million people."

He said that the EAC was essentially economically motivated, but that it could also have political benefits.

He added that in the last three years, momentum had been building to bring the community back together, but added it was too early to say whether it would be successful.

But he said that when the EAC first existed, it "yielded definite benefits. There were east African railways, east African ports, an educational network."

He said that the community had the potential to be especially beneficial to the smaller countries, specifically Burundi.

"Think how tough it is to trade and how tough it is to get access to the sea when you're landlocked," he said. "Being part of a community gives them a leg up that they would not otherwise have."
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Regional CEOs believe a crucial window of opportunity has opened with the signing of the East Africa Community (EAC) Protocol in Arusha on Friday. The move is widely expected to spur economic growth. President Kibaki of Kenya, with presidents Jakaya Kikwete of Tanzania, Paul Kagame of Rwanda, Yoweri Museveni of Uganda and Pierre Nkurunziza of Burundi finally signed the protocol that had been under negotiation since April 2008 that ended in September.It is hoped that the common market will accelerate the economic growth and development of partner states through the realisation of the free movement of goods, persons, labour, services and capital.
Under the deal which is expected to become effective July 1, 2010, partner states are obligated to guarantee free movement of persons who are citizens of other member states as well as to ensure there is not discrimination against them.A debate bringing together top regional chief executives participating in this year’s edition of the CEO’s Most Respected Company Survey organised on Friday by regional media giant, the Nation Media Group and audit firm PricewaterhouseCoopers (PwC), agreed that the protocol’s time had come.

Patrick Bitature, a Ugandan businessman, said the signing of the protocol had actually come 10 years late for him since he has been doing business in the region since 1999. “This opens a new era for the business community in East Africa,” he said.The common market also provides for the right of establishment, residence, free movement of services and capital within the region.

Speed up

It is also expected to speed up integration and inject new energy for the economic development of landlocked countries such as Rwanda and Burundi.Despite the positive outlook, some professionals from Rwanda have expressed concern over the harmonisation of tariffs, in which they say Rwanda will be at a disadvantage. Juliana Kisimbi, an investment officer at the Embassy of Rwanda in Nairobi, said when the region’s trade tariffs are harmonised, Rwanda will be at a disadvantage given that its infrastructure is not fully developed.But one analyst said Rwanda will be a major beneficiary as most of the taxes levied on the transport of her goods from Kenya will be scrapped or set at the minimal.

Philip Kinisu, a partner at PwC Kenya, said the EAC’s 120 million population, equal to that of Nigeria, affords numerous opportunities. “I see opportunities for industries and companies to spring up and grow,” he said.Mr Kinisu said East Africa got off lightly in the global financial difficulties experienced last year and part of this year. The effects of the recession were dampened before they could be felt in the region, he said. The EAC protocol also affords East Africans the possibility to benefit from the recent discovery of oil in Uganda. Kenyan businessman Chris Kirubi said he had been waiting for it for about 20 years.“We can now sell tourism across the region.
The benefit to the whole region is real. With the Ugandan oil, there is no need to spend money in other countries for oil as we have our own now,” he said. President Museveni said during the signing ceremony that the oil money would be useful in the development of the region’s infrastructure that is seen as the most crucial part of efforts to come up with a unified political federation by 2015 and a monetary union by 2012. According to the protocol, companies and firms in a member state will receive equal treatment in other member states, creating a new wave of opportunities for business expansion.

Kenyan firms are said to be at an advantage since most already have a regional presence. Equity Bank, KCB Group, NIC Bank and Fina Bank are represented throughout the bloc. Companies that have set up shop in countries outside Kenya include East African Cables, Jubilee Insurance, Bamburi Cement, Athi River Mining, Kenya Airways through Precision Air and a number of small and medium businesses.

Pan-African Bank, Eco-Bank, according to managing director Anthony Okpanachi, has its eyes set on Tanzania. “We plan to officially open shop in Tanzania as from January next year. EAC common market protocol is the best initiative a region can have. In West Africa we have tried with Ecowas but have not been able to reach where EAC has reached,” he says. Equity Bank chief executive James Mwangi is optimistic that the region is moving towards a monetary union.
 
“With the undersea fibre optic cables in the region we can now see seamless connectivity within the region. Coupled with the fact that we will have a uniform tax regime, a monetary union is a reality,” he said.
 “The signing of the common market protocol is a great step towards having a common currency for the region, but we need to take it to the next level of implementation,” said KCB Group chief executive Martin Oduor-Otieno.

Customs union

Under the auspices of the EAC common market, a series of measures will be taken to integrate the regional market. They include achieving a full-fledged customs union, eliminating tariff barriers, non-tariff trade barriers and technical trade barriers, allowing the free flow of goods, services, capital and persons.
Other measures are adopting a common external tariff, introducing harmonised product standards, as well as harmonising finance, trade, monetary, education, employment and labour policies.It is widely believed that implementation of the common market will bring the region into a new stage of development, with increased regional trade, more foreign investment and better regional economic competitiveness.