2nd east africa congress of - icpak.com · presentation outline ... • capital and related...

PrideInn Paradise Beach ResortFriday, 20th April 2018

2ND EAST AFRICA CONGRESS OF

ACCOUNTANTS

Uphold . Public . Interest

EAC Common Market Protocol Opportunities and Challenges

1

… Quote…

"Trade liberalization is vital to the process of development.

Voluntary international exchange widens consumers’ range of

effective choices and lowers the risk of conflict."

James A. Dorn, July 2005

Credibility . Professionalism . AccountAbility

Presentation Outline

• Background in the Context of the EAC integration

• Key Provisions of the EAC CMP

• Challenges to Implementation

• The Missed Steps - Lessons

• Conclusion


Background – Context of EAC

The EAC Region comprises:

• Kenya,

• Tanzania,

• Uganda

• Rwanda

• Burundi and

• South Sudan


Total Area : 2.467 million sq. km.

Population: 190.5 million vs Nigeria

195m; EU 743m, Africa 1.3t

GDP per Capita: US$ 919

EAC Integration Process


• Are we moving too fast… what critical lessons from the EU?

CUSTOMS

UNION

COMMON

MARKET

MONETARY

UNIONPOLITICAL

FEDERATION

2005 – June 2010; July 2010 – 2012; 2012 – onwards; Ultimate

EAC CMP - Objective

By Articles 2 (2) & 5 of the EAC Treaty, Partner States undertook to establish among themselves a Common Market, as a transitional stage to and an integral part of the Community.

Article 76 (2) of the EAC Treaty, Partner States determined that establishment of the Common Market would be on the principles of progressivity.

By the aspirations of the CMP, has the EAC achieved the status of a single market for goods, services, labour andcapital, having common tax and common trade laws?


the Partner States undertook to, inter alia, establish among themselves a Common Market, as a transitional stage to, and an int

EAC CMP – Key Objective

To integrate the factors of production

(labour, land, capital, &

entrepreneurship) and markets which

were in respective individual member

states into one single and vibrant

market.



EAC CMP – Provides for



Fundamental rights enshrined around:

– Free Movement of goods

– Free Movement of persons

– Free Movement of Labour

– Right of Establishment

– Right of Residence

– Free Movement of Services and

– Free Movement of Capital

The above rights are fundamental to

realizing the aspirations of the CMP

Principles of the Protocol


Articles 6 and 7 of the EAC Treaty, provides for fundamental and

operational principles to secure the fundamental rights under the

CMP. Key of which are:

– National Treatment Principle – nationality is not a factor

– Most favoured nation principle - countries cannot

normally discriminate between their trading partners

Rights Incidental to Fundamental Rights


• Free movement of persons.

• Rights of Residence.

• Access to and use of land and premises under the right of

establishment.

• Capital and Related Payments and Transfers

• Protection of Cross-Border Investments

CMP Guarantees


The Protocol guarantees the following rights:

i) Equal opportunities

ii) Equality of treatment

iii) Freedom to exert ones’ faculties

Movement of Workers


Entitles a worker to:

Apply and accept offers of employment.

Move freely for purposes of employment

Take up employment

Reside in a partner state.

Freedom of association

Social security

Right of Establishment


Entitles a national of a partner state to:

• Take up and pursue economic activities

• Set up and manage economic undertakings.

• Join a social security scheme

• Set up agencies, branches or subsidiaries.

• Intra corporate transfers within branches and

subsidiaries

• Labour mobility

Real Statistics

Have the principles of integration borne fruits for EAC Partner States

in terms of achieving the aspirations of integration?


EAC Statistics

• The East African Community Secretariat,

in a draft trade and investment report, says

that the total value of intra-EAC trade fell

by 14.6 per cent to $4.4 billion in 2016,

from $5.1 billion in 2015.

• EAC trade has continued to be dominated

by agricultural commodities: Coffee, tea,

tobacco, cotton, rice, maize and wheat

flour….with little focus on manufacturing.


Africa – Intra Regional Trade Statistics


World Trade - Statistics


Opportunities from CMP

• A market of 190 million people with an expanding middle class;

• Huge mineral discoveries – oil in Uganda, Kenya, South Sudan, Natural gas in Tanzania;

• Relative peace and political stability in the region with the exception of South Sudan and intermittently Kenya and Uganda.

• Long coast line which should be tapped into as a gateway to the global markets.

• Region recorded the highest economic growth incomparable terms.

20

EAC Common Market -

Challenges

• EAC institutions designed on an inter-governmental model.• Excessive nationalism – inability to cede sovereignty and

protectionism tendencies• Supply constraints – Uneven economic landscape

• Harmonisation of Laws and Disparity in national laws;

• Overlapping Membership in other Regional Blocs: EAC,

COMESA, SADC, etc.

• Little focus on value addition

• Political mistrust

• Unhealthy competition within the region

• Political instability – in South Sudan, Kenya and Uganda.

“"Much of the underdeveloped world grows and produces agricultural

products. Because many of these underdeveloped nations have very little

political clout with the rest of the world, and because farmers in wealthy

nations have lots of political power, the goods from these poorer nations are

tariffed and quota’d right out of the richer nations’ markets."

Keith Brown

Thank You!!


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