East Africa trade bloc inks common market treaty
AFP
East Africa trade bloc inks common market treaty
20 November 2009
(AFP) ARUSHA, Tanzania — Leaders of the five-member East African Community bloc on Friday signed a common market treaty to allow free trade, movement and right of residence, the first of its kind on the continent.
The presidents of Burundi, Kenya, Rwanda, Tanzania and Uganda signed the East Africa Common Market Protocol, opening up a region of 126 million people for businesses and free movement of its residents.
"This was a great step," Tanzanian President Jakaya Kikwete said after the signing. "We are going to move to other stages after this historic event."
Investors lauded the decision, which they say will boost intra-regional trade that has remained inferior to exchange 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," he told AFP.
The protocol is expected to come into force in July 2010 when the member states shall have ratifed it.
Dar es Salaam Stock Exchange dealer George Fumbuka said the common market "is expected to stimulate increased intra-regional trade" and "produce entrepreneurs to compete in other regions".
"It is anticipated that the ratification process will be smooth since most of the outstanding issues have been ironed out after protracted negotiations by partner states," Kenya’s ministry of East African Community said this week.
The bloc’s Secretary General Juma Mwapachu told AFP in a recent interview 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.
However, efficiency of the common market will be hobbled by poor roads and railway network across the region. The bloc only recently launched projects to link the member states with a railroad, notably landlocked Burundi and Rwanda.
First established in 1967, the EAC collapsed 10 years later due to differences in economic ideologies and political fall-out after the ouster of Uganda’s first president Milton Obote.
It was resurrected when leaders of Kenya, Uganda and Tanzania agreed in November 1999 to create a European Union-style common market for their 90 million citizens to strengthen their economic and political clout.
Rwanda and Burundi joined the bloc in 2007, expanding its population to 126 million and a GDP of 60 billion dollars (40.4 billion euros).
In 2005, the grouping established a customs union setting common tariffs for external goods. It is currently working to form a monetary union by 2012 and ultimately a political federation.
