NTBs and disputes blamed for the slowdown in trade among East African states
Official data shows that the volume of trade among the East African Community partner states is not high enough, to prevent trading partners such as China and India makin major inroads into the region.
According to the EAC Secretariat, the overall intra-regional trade has been meagre, accounting for a paltry 0.2 per cent of global trade in 2017, compared with 0.3 per cent in 2016.
According to the EAC Trade and Investment Report 2017, the region’s merchandise trade with the rest of the world recorded an 8.6 per cent growth to $46.9 billion in 2017, up from $43.1 billion in 2016.
East Africa is heavily dependent on imports from the Far East and Europe, with petroleum products, machinery, electronics, motors and iron and steel and foodstuffs such as rice and wheat being key items.
The challenges facing intra-regional trade include persistent trade disputes, inadequate value addition to the agricultural sector, which has affected export prices, NTBs and a restrictive trade regime that limits the capacity of manufacturers to enter the regional market for products that are produced from raw materials that benefit from exemptions and remission schemes.
The latest data compiled by the Central Bank of Kenya shows that China has become the country’s largest trading partner, with imports constituting 22 per cent of total imports during the 12 months to June 2018.
During the period, Kenya’s imports from the European Union accounted for 12.4 per cent of total imports while the share of imports from African countries stood at 14 per cent.
On the other hand, Kenya’s exports to the EAC declined to 21.2 per cent in 2018 from 22.7 per cent previous year while exports to Common Market for Eastern and Southern African (Comesa) countries declined to 24.1 per cent from 25.8 per cent.
Kenya’s exports to the rest of the world — the UK, Netherland, US, Pakistan, United Arab Emirates, Germany, India and Afghanistan — increased to 64.1 per cent from 61.4 per cent. Exports to Uganda decreased to 9.9 per cent from 10.7 per cent while exports to Tanzania and Rwanda remained unchanged at 4.9 per cent and 2.9 per cent respectively.
Last year, China applied for a free trade area with the EAC after the EAC’s Sectoral Council of Ministers of Trade, Industry, Finance and Investment adopted the terms of reference for a comprehensive cost-benefit analysis of the region’s trade with third parties.