Geza Ulole
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Tanzania is an underdog in the EAC common market
Published on: Thu, 07/08/2010 - 1:43pm
Evarist Kagaruki
The coming into effect on July 1, of the EAC Common Market Protocol heralds the beginning of the integration of the economies of the communitys member countries, namely Tanzania, Kenya, Uganda, Rwanda and Burundi. The long-awaited landmark treaty is essentially about free movement of people, capital, labour, goods and services as well as the right of establishment in the region.
The Protocol creates a single regional market for over 120 million people who, hitherto, were having difficulty integrating and trading with each other in the region. It also enables the Partner States to stand as one strong bloc that can easily penetrate overseas markets and tap foreign capital through investments. The Common Market further consolidates regional integration after the establishment of the Customs Union in January 2005.
With the removal of restrictions under the Common Market Protocol, the EAC citizens will now be able to interact and conduct business among themselves (as East Africans) and invest anywhere in the region. That is the essence of regional integration from the perspective of the ordinary wananchi who are the real beneficieries of cooperation in the community.
But while the benefits deriving from the Common Market are obvious (as afore-stated), looking at the big picture one also sees the great disadvantages, especially for a country like Tanzania which had joined the regional economic cooperation as a desperate underdog in the economic sense. I will explain.
Since the adoption of market policies in Tanzania, the economy has continued to have a weak supply capacity due to lack of protection of the infant domestic industries; and also because of low levels of investment in the manufacturing sector and in agriculture.
Because of the unguided liberalisation regime, the country has been turned into a virtual dumping ground of subsidised cheap (and in most cases substandard) imports. This has killed the manufacturing sub-sector and subjected local producers to unfair competition.
Compare and contrast this situation with that of Kenya, for example, where, despite their trade being liberalized as well, they have in place a policy framework that ensures strict regulation of the countrys trade regime. The Kenyan government makes serious interventions in the liberalised trade by way of selective import restrictions (or trade barriers) to ensure total protection of local industries, the market and the economy in general.
Because of this fundamental difference in policy-orientation, Kenya boasts a strong and thriving economy with the capacity to produce high quality (competitive) goods of international standards. Tanzanias industrial base, on the other hand, remains weak (and vulnerable) and capable only of manufacturing comparatively inferior products that can hardly compete in the regional, let alone global, market.
The Protocol on Standardisation, Quality Assurance, Metrology and Testing, which came into force on January 2001, will no doubt help Tanzania improve the quality of her industrial products. The Protocol provides for a regional mechanism that would ensure that goods and services traded in the EAC are up to the set standards which conform to WTO rules. But this is a big challenge to the government which, with the establishment of the EAC Common Market, will need to rethink its policy on industrialisation with a view to protecting our industries and enhancing their capacity to produce quality goods. Short of that, Tanzania shall continue to be a net importer of product made in the other EAC member states and a perpetual exporter of raw materials (rather than value-added goods) to the regional market.
Tanzania is an underdog in the EAC common market | TheExpress Online & PigaHODI.com - Tanzania's News and Information Gateway
Published on: Thu, 07/08/2010 - 1:43pm
Evarist Kagaruki
The coming into effect on July 1, of the EAC Common Market Protocol heralds the beginning of the integration of the economies of the communitys member countries, namely Tanzania, Kenya, Uganda, Rwanda and Burundi. The long-awaited landmark treaty is essentially about free movement of people, capital, labour, goods and services as well as the right of establishment in the region.
The Protocol creates a single regional market for over 120 million people who, hitherto, were having difficulty integrating and trading with each other in the region. It also enables the Partner States to stand as one strong bloc that can easily penetrate overseas markets and tap foreign capital through investments. The Common Market further consolidates regional integration after the establishment of the Customs Union in January 2005.
With the removal of restrictions under the Common Market Protocol, the EAC citizens will now be able to interact and conduct business among themselves (as East Africans) and invest anywhere in the region. That is the essence of regional integration from the perspective of the ordinary wananchi who are the real beneficieries of cooperation in the community.
But while the benefits deriving from the Common Market are obvious (as afore-stated), looking at the big picture one also sees the great disadvantages, especially for a country like Tanzania which had joined the regional economic cooperation as a desperate underdog in the economic sense. I will explain.
Since the adoption of market policies in Tanzania, the economy has continued to have a weak supply capacity due to lack of protection of the infant domestic industries; and also because of low levels of investment in the manufacturing sector and in agriculture.
Because of the unguided liberalisation regime, the country has been turned into a virtual dumping ground of subsidised cheap (and in most cases substandard) imports. This has killed the manufacturing sub-sector and subjected local producers to unfair competition.
Compare and contrast this situation with that of Kenya, for example, where, despite their trade being liberalized as well, they have in place a policy framework that ensures strict regulation of the countrys trade regime. The Kenyan government makes serious interventions in the liberalised trade by way of selective import restrictions (or trade barriers) to ensure total protection of local industries, the market and the economy in general.
Because of this fundamental difference in policy-orientation, Kenya boasts a strong and thriving economy with the capacity to produce high quality (competitive) goods of international standards. Tanzanias industrial base, on the other hand, remains weak (and vulnerable) and capable only of manufacturing comparatively inferior products that can hardly compete in the regional, let alone global, market.
The Protocol on Standardisation, Quality Assurance, Metrology and Testing, which came into force on January 2001, will no doubt help Tanzania improve the quality of her industrial products. The Protocol provides for a regional mechanism that would ensure that goods and services traded in the EAC are up to the set standards which conform to WTO rules. But this is a big challenge to the government which, with the establishment of the EAC Common Market, will need to rethink its policy on industrialisation with a view to protecting our industries and enhancing their capacity to produce quality goods. Short of that, Tanzania shall continue to be a net importer of product made in the other EAC member states and a perpetual exporter of raw materials (rather than value-added goods) to the regional market.
Tanzania is an underdog in the EAC common market | TheExpress Online & PigaHODI.com - Tanzania's News and Information Gateway