Tanzania, Burundi to join ‘coalition of the willing’

Tensions are beginning to thaw within the East African Community following a meeting in Kampala last week during which member states on the two sides of a rift made conciliatory moves towards each other.

For the first time, Tanzania attended the series of infrastructure talks launched by Kenya, Uganda and Rwanda last year.

Burundi, which last participated in the summit in August 2013, expressed interest in joining all regional initiatives.

Kenya, Uganda and Rwanda formed the Summit, informally known as the Coalition of the Willing, in June last year to accelerate implementation of projects related to regional integration.

These meetings raised the ire of Tanzania which, along with Burundi, had initially been excluded.

Tanzania criticised the Summit and its agenda, saying they contravened the spirit of the EAC Treaty by independently pursuing such initiatives as fast-tracking political federation.

GEOPOLITICS

Vice-presidents of Burundi and Tanzania attended the Kampala meeting as observers. They were invited to express interest in specific projects.

Burundi sought to become a partner state within the Summit but Tanzania apparently decided to keep the coalition at arm’s length.

“The Heads of State welcomed the interest of the Republic of Burundi to participate in all projects and directed the ministers of Foreign Affairs to coordinate its interest and invite ministers of Burundi and Tanzania to the next technical and ministerial meeting,” read part of a communiqué issued last week.

East Africa’s geopolitics seem to inform the positions taken by Burundi and Tanzania.

Landlocked and relatively underdeveloped, Burundi can ill-afford a combative relationship with the other EAC members. Tanzania, on the other hand, has vast mineral resources and a long coastline.

South Sudan, which has a pending application to the East African Community (EAC), was also asked to present its areas of interest to formally join the standard gauge railway initiative.

It is also telling that the coalition has decided to officially re-christen itself. Last year, official communication from the three countries made reference to the Tripartite Infrastructure Summit.

This has since changed to the Northern Corridor Integration Projects Summit, implying that Kenya, Uganda and Rwanda are trying to be more inclusive of other countries in the region.

SINGLE TOURIST VISA

President Uhuru Kenyatta, in a speech at the Kampala meeting, said the region would soon launch a similar Central Corridor Integration Project Summit in which Tanzania and Burundi would play important roles.

“The new central corridor will link waterways and power initiatives in the region,” said Mr Kenyatta.

During the Kampala summit, the countries launched the East Africa single tourist visa.

The travel document, which will operate in the same manner as the European Union’s Schengen visa, is expected to boost trade in the region by lowering fees and giving tourists access to multiple countries.

Although Rwanda had initially been tasked with spearheading the project, Kenya has been directed  to develop within two weeks a sample application form which will be shared with partner states. 
Further, citizens from the three countries can now use national and student identity cards as travel documents. Ministers are to provide harmonised standards for student IDs before the next meeting.

STANDARD GAUGE RAILWAY

In sourcing funds for the construction of the standard gauge railway (SGR), Uganda and Rwanda agreed to adopt a financing mechanism similar to the one being used by Kenya.

The Kenya government is sourcing about 85 per cent of the money needed for its portion of the SGR from the China Exim Bank in a controversial deal.

Beyond that, ministers of Finance have been directed to take advantage of the African Development Bank’s Africa50 investment vehicle to mobilise infrastructure funds.

In energy,  member states that are yet to respond to an offer by Uganda to invest in its Sh213 billion refinery have been given a deadline of next month.

Kenya has already committed to invest Sh6.38 billion in the refinery in return for a three per cent stake. It is not clear whether Rwanda has made a similar offer.

Technology became part of the coalition’s agenda soon after infrastructure and freedom of movement issues.

Last week, the coalition agreed to harmonise taxation in the mobile phone business in the face of rising costs of making calls in the region.

But even as the coalition accelerates integration, the region was last week jolted into reality as a report published by the World Bank Group revealed that the bloc is performing poorly in implementing the Common Market Protocol.

The East African Common Market scorecard notes that old regulations restricting movement of goods, capital and people are still in the law books while fresh restrictions have been enacted through legislation or in administration.

“Laws and regulations of the EAC partner states, however, still present barriers to increased cross-border trade and foreign direct investment in the region,” notes the report.

Although the region began addressing the movement of goods well before the Common Market Protocol was adopted in 2010, there are many issues that are yet to be dealt with.

In addition to failure to eliminate non-tariff barriers (NTBs), countries are frustrating implementation of the common external tariff by repeatedly seeking exemptions to the law.

Some of these exemptions are occasioned by the fact that each member state is also a member of another African economic bloc.

For instance, Tanzania is part of the South African Development Community while Kenya, Uganda, Rwanda and Burundi are members of the Common Market for East and South Africa.

FREE MOVEMENT

Goods imported by countries in the EAC from the other blocs in which they are members are not subject to the Common External Tariff (CET).

The report estimates that between 2005 and 2012, goods worth Sh1.9 trillion ($22.7 billion) came into the community without being subjected to CET.

“They (partner states) are all members of multiple free trade areas. This means that the Partner States apply different tariffs to extra-regional trade partners. These and other exemptions impede effective free movement of goods,” reads the report.

Rwanda, which has eliminated 94.1 per cent of all NTBs is the closest to realising freedom of movement.

Kenya has eliminated 85.4 per cent of NTBs. Tanzania is the worst performer in this category, having eliminated only 66 per cent of NTBs.

On movement of capital, out of 20 operations that were meant to be liberalised, only two are without restrictions in any of the EAC partner states. 

These are external borrowing by residents and repatriation of proceeds of sales of an asset.

Kenyan laws are the most conducive to movement of capital as the country has removed restrictions on 17 out of 20 operations.

Tanzania and Burundi regulations make the two nations the most difficult to move capital in and out of their borders.

According to the World Bank, at least 25 laws need to be repealed in the EAC to ensure that capital moves freely. 

Some of these regulations include a law in Burundi that reserves shares in privatised companies for citizens, and Tanzania’s categorisation of EAC investors as “foreigners”.

Even as the coalition makes it easier for East Africans to cross borders, the World Bank report makes it clear that getting jobs in neighbouring states is an uphill task.

The scorecard analysed 500 laws regarding movement of services across the region.

Out of these, 63 laws were found to be inconsistent with the spirit of the EAC while 73 per cent of the rules dealt with employment of professionals such as engineers, lawyers, engineers and accountants.

PEER LEARNING

Overall, Tanzania has the worst record when it comes to recognising professionals from its neighbours. Kenya comes a close second while Burundi provides the most freedom for EAC professionals.

The community plans to use the scorecard to provide benchmarks to guide faster implementation of the common market.

“It will foster peer learning and facilitate the adoption of best practices in the region.

This will strengthen the regional market, grow the private sector and deliver benefits to consumers,” said EAC secretary-general Richard Sezibera in a statement.
Earlier, the community had proposed legislation that would see action taken against countries that fail to eliminate NTBs.