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Last Updated: Tuesday, 2 March, 2004, 18:02 GMT
Hopes and fears for Africa trade pact
By David Lewis
In Tanzania

Uganda Baati steel plant
Ugandan steelmakers worry about Kenyan competition
The customs union deal signed this week between Tanzania, Uganda and Kenya comes a full four years after the countries embarked on their latest attempt at regional integration.

The original East African Community collapsed in 1977 due to the war against Idi Amin in Uganda, as well as economic and political divergences.

In 1999, Uganda, Kenya and Tanzania signed a treaty re-establishing the Community, but attempts to forge agreements since then on economic and political union have taken some time to materialise.

We believe the customs union protocol will set the ground for business development in east Africa
Arnold Kilewo, Tanzania Breweries
The three countries, with a combined population of 90 million and gross domestic product of some $25bn, hope they will now be able to start pooling their resources, boosting trade, and taking advantage of their combined markets.

Under the protocol, trade will be liberalised as tariff and non-tariff barriers will be eliminated, a common external tariff will be maintained, and an integrated market established.

Kenyan giant

Many in the business community, such as Arnold Kilewo, managing director of Tanzania Breweries, are confident that the protocol will bear fruit.

Billboard adverts for Tanzania Breweries
Tanzania Breweries is one of the country's major manufacturers
"We believe the customs union protocol will set the ground for business development in east Africa," he told the BBC's World Business Report.

One potential problem, however, is Kenya's private sector, which is far more advanced than its regional neighbours'.

There is concern that it might dominate the region.

"I would expect our Kenyan colleagues in the manufacturing sector to be able to give room for Tanzanian manufacturers to export to Kenya more freely for a given period, so that we can catch up," said Mr Kilewo.

Little by little

The protocol aims to address this imbalance with a so-called system of asymmetry.

Tanzania and Uganda will open up their markets to Kenyan competitors over the next five years, while Kenya will open its markets immediately.

Some businessmen in Tanzania are still worried, but Christine Kilindu, the chief executive officer of the Confederation of Tanzanian Industries, is confident the weaker economies will have a chance to prepare themselves.

We have to be able to capitalise on the political will of the people of east Africa to be one,
Professor Sengondo Mvungi, Dar es Salaam University
"Yes, I am confident that it is being dealt with sufficiently," she says.

"We have taken note that we are at different stages of development. That's why one market is opening up earlier than the other.

"This gives the Tanzanian business community time to grow, time to innovate, and time to change so that when the market finally opens we will be able to compete."

Bloc after bloc

Another potential complication is the growing number of regional blocs to which the countries already belong.

Alongside the east African community, there is SADC, the southern African development community, as well as COMESA, the common market for eastern and southern Africa.

Tanzania is a member of SADC, but not of COMESA, while Kenya and Uganda are members of COMESA but not of SADC.

Dr Sengondo Mvungi, a professor specialising in regional integration at the University of Dar-es-Salaam, says this could undermine the new customs union's potential to act as a unifying force.

"The east African subset has to look at itself as a special subset. We have to be able to capitalise on the political will of the people of east Africa to be one," he said.

And although the signing has taken place with some final details of the agreement still incomplete, Dr Mvungi is not alone in thinking that if the region is to develop and make an impact in global business, east Africa cannot afford to miss out on this latest opportunity.


SEE ALSO:
East Africans sign customs pact
02 Mar 04  |  Africa
Trade to boost East Africa
20 Jun 03  |  Business
Africa firmly on US agenda
20 Jan 03  |  Business


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