EAC project to boost cross-border trade

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East African Business week, June 26, 2011

ARUSHA, TANZANIA – The East African Community (EAC) secretariat is planning to formulate a project intended to support development of local markets across borders of the partner states, an official has said.

“The project is aimed at among others to reduce the informal cross border trade through which member states lose billions of dollars annually,” Mr. Richard Owora, the EAC head of corporate communications and public affairs said.

“We are in collaboration with the Africa Trade Policy Center and the United Nations Economic Commission for Africa (UNECA) to spearhead the proposed project entitled “Empowering Border Communities through Modernization of Shared Markets,” Owora said.

The proposed project is a strategy for implementing the EAC Gender and Community Development Framework and the Social Development Agenda with a planned focus on capacity building to enable border communities take advantage of opportunities in the EAC Common Market.”

Owora made these remarks in a statement issued after a two-day meeting held in Kigali, Rwanda to formulate the project that would spearhead the development of markets across borders.

He said information from the Uganda Bureau of Statistics (UBOS) for example indicate the volume of unofficial trade rose from US$300 million in 2007 to over US$1.5 billion in 2009, representing a growth rate of over 300%.

Informal trade refers to unrecorded trade of goods and services passing through borders to neighbouring markets. Uganda’s unofficial trade is high with Sudan followed by the Democratic Republic of Congo, Kenya, Rwanda and Tanzania.

According to the Programme Officer of Consumer Unity and Trust Society, Nairobi Resource Centre, Mr. Victor Ogalo, most of the informal cross border trade is in staple food commodities such as maize, beans, rice, fish, groundnuts and bananas.

It also includes food aid that has a direct impact on regional food security, low quality consumer goods such as shoes, clothes, textile and vehicle and bicycle parts and even fake drugs while some of the informal cross border trade goods reflect the same ones that benefit from export promotion schemes, such as textiles.

“However, they attribute their continued engagement in informal cross border trade to presence of physical and technical barriers in formal trade,” Ogalo said in a research paper on informal cross border trade in East Africa.

Mr. Owora revealed that Kenya’s volume of trade with neighbours has also been growing steadily since the region started implementing a custom union in 2005.

“Trade ministry data indicates that Kenya’s export into the region grew from Ksh53 billion in 2006 to Ksh90.5 billion in the year 2009,” Owora said. “This reported trade level, however, does not include products worth billions of shillings that are exchanged across national borders informally.”

Informal cross border trade between Rwanda and its neighbours Burundi, Tanzania, Uganda and Democratic Republic of Congo (DRC) has hit Rwf40 billion, according to a government survey report.

Rwanda permanent secretary in ministry of EAC affairs, Robert Ssali who opened the experts’ meeting said that the project would contribute to partner states’ efforts in addressing poverty and the complex relationships between poverty and gender, youth and unemployment.

Mr. Owora said that Article 120 of the EAC Treaty spells out the areas of focus for community development in relation to social welfare.

These include poverty alleviation programmes, eradication of adult illiteracy in the community, and the development and adoption of a common approach towards the disadvantaged and marginalized groups.

“The social development agenda which is being spearheaded by the Community aims at alleviating poverty at the regional level and at the same time complements economic development efforts by Partner States to improve the living standards of their nationals.

“It is in this context that one of the key priority areas of the EAC gender and community development framework is to enhance infrastructure at community level with focus on those that will enhance community development such as community access roads, community centers, rural training centers, water and sanitation and health centers” he noted.

He said that while the East African Community is currently implementing the Common Market which represents a deeper state of cooperation by the Partner States, there is a need to empower communities in light of the opportunities offered by this second stage of integration.

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