EAST African Community (EAC) states of Tanzania, Kenya, Uganda and Rwanda jointly unveiled their budgets for the fiscal year 2018/2019 on June 14, 2018.
In the budget proposals, the EAC partner states posed various measures to protect local manufacturers in the region through high import duty on ranges of products including crude palm oil, palm stearin, edible oils, nails, tacks, drawing pins, corrugated nails staples, safety matches, potatoes, mineral water, edible offal, sausages, textiles, footwear, and Iron & Steel Products.
Ms Lilian Awinja Chief Executive Officer (CEO) of the East African Business Council (EABC) is of the view that the move is praiseworthy that the partner states are keen to offer protection so that local industries thrive.
“It is praiseworthy to see that the EAC partner states governments are keen to offer appropriate protection, incentive structures and support for the growth of domestic nascent industries in the region,” says Ms Awinja.
However, she notes that the proposal in relation to the motor vehicle and motor cycle industry has both wins and losses. In the budget proposals.
Rwanda grants stay of application of EAC Common External Tarrifs (EAC-CET) and apply a duty rate of 10 percent instead of 25 percent on road tractors for semi-trailers, motor vehicles for transport goods with gross weight exceeding 20 tons and buses for transportation of 50 persons and above.
While, Uganda grants stay of application on EAC-CET and apply a duty rate of zero percent instead of 10 percent on road tractors for semitrailers.
Uganda proposed to reduce import duty from 25 percent to zero percent on motor vehicles exceed 20 tons; reduction of import duty from 25 percent to 10 percent on buses for transportation of more than 25 persons.
“Uganda’s proposed ban on importation of motor vehicle of 15 years and above from the year of manufacture, is commendable as it paves the way for the region to embark on harmonization of age limits of imported vehicles, to boost the motor vehicle industry.
“It is also admirable to see that in the budget proposals, the EAC partner states agree to grant a duty remission on importation of completely knocked down (CKD) kits at a rate of 10 percent for a period of one year, this encourages local manufacturing and assembly of motorcycles,” says Ms Awinja.
The motor vehicle manufacturing and assembly is a volume driven industry due to high cost of plant investment.
The capacity of motor vehicle assembly plants in the region is grossly under-utilized and is confronted by intense competition from imported second had vehicles mainly from Japan and United Arab Emirates.
This hiders the development of local content supply base, which is dependent on high volume of production.
“The propose of the stay of application on EAC-CET on motor vehicles for transportation of goods and passengers is likely to frustrate efforts of local motor vehicle assemblers in the region, who will face stiff competition from similar imported vehicles under lower duty rate than agreed EAC- CET,” she reiterates.
The CEO thinks the EAC partner states need to maintain 25 percent Common External Tariff on both new and used fully built motor vehicles imported in the EAC, to boost productivity of local motor vehicle and motor cycle assembly plants.
Surely, industry has potential to contribute significantly to the attainment of an industrialized EAC economy by 2032. She says that EABC that was established in 1997 seeks to foster the interests of the private sector in the integration process of the EAC.
Being the representative of private sector associations in the region, EABC was granted observer status in organs and activities of the EAC.
Ms Awinja says that EABC therefore participates in various sectoral meetings, meetings of the Coordination Committee, the EAC Council of Ministers, and the Summit of the EAC Heads of State; with a view to ensure, that the agenda of the Private Sector is well articulated and received by the policy makers.
It is in such budget presentation as these of the partner countries that the vision and mission of the EABC should be embedded as all work towards betterment of the countries and their people.
Its vision aims at borderless East Africa for business and investment while the mission is to promote sustainable private sector-driven growth.
EABC Membership is drawn from the six East African Partner States and is open to all national and regional associations as well as corporates with interest in the EAC integration process or operations in the region.
“At national level, EABC activities are coordinated through the EABC National Focal Points, who are also the national private sector umbrella bodies.
These are Federal Chamber of Commerce and Industries Burundi (CFCIB), Kenya Private Sector Alliance (KEPSA), Rwanda Private Sector Federation (PSF), Tanzania Private Sector Foundation (TPSF) and Private Sector Foundation Uganda (PSFU).
It is in that light, EABC has been joining hands with other bodies outside the EAC so as to seek support for its members and partner states.
One such example is the East African Women in Business Platform (EAWiBP) that was linked with the International Trade Centre (ITC), ahead of the official launch of the Market Access Upgrade project (MARKUP) at the EAC Headquarters.