Kenya seen reaping huge gains from EAC By BD TEAM January 6 2010 When the presidents of Kenya, Uganda and Tanzania decided to revive the stalled East African Community integration project 10 years ago, few people beyond the government circles thought it was a tenable idea. But after years of emotive discussions tempered with suspicions, walkouts and even threats of isolation, the three nations have not only succeeded in forging a fully-fledged customs union but have also succeeded in roping in two other landlocked countries in the region – Rwanda and Burundi - to join the bandwagon. According to head of political affairs at EAC Secretariat Beatrice Kiraso, the quest for regional integration will not stop until other landlocked regions whose umbilical cords are connected to East Africa such as Southern Sudan and DRC are recruited. The customs union that the region set in motion at beginning of this month means tariffs on goods traded across the region has flattened at zero per cent while those imported from outside the region must attract uniform external tariff. Going forward, the ongoing service sector liberalisation is set to ease free movement of labour, capital and access to land across the region once the common market is rolled out in six months time. At national levels, however, it is the increased production of goods and enhanced efficiency in executing services that will determine how fast the region will implement the remaining phases of the integration. The Business Daily team sought the views of key sector players on the implementation of the regional integration agenda. William Lay, Chairman, Kenya Motor Vehicles Association and MD, General Motors East Africa "The combined demand for new motor vehicles in Tanzania, Uganda, Rwanda and Burundi is equivalent to Kenya's and therefore at General Motors, we should be looking at doubling our current installed capacity. My comment: [I doubt whether this is true cause while GM East Africa makes noises that its Kenyan market is equal that of other EA countries, Kenya has not witnessed increasing mining activities like Tanzania has and Tanzania has its own General Automobile, Toyota Tanzania, Hyundai EA and Mantrac Tanzania, Scania Tanzania that also supply to great lake region Rwanda, burundi, Uganda, DRC, Zambia. Also the EA common Market's rule of origin requires the vahicles to have been assembled at least 30% to access the EA market free, something GM East Africa and the whole of EA existing assembling plants can't comply at the moment! The paragraph above Sounds to be purely undermining tactics at its best it would have made a sense if the number of vehicles Kenya procure yearly would have been mentioned in comparison to the number for the rest of EA countries! otherwise it is hype journalism] However, influx of used motor vehicles especially those used for commercial purposes has seriously dented the regional market. We cannot claim to be moving into a fully-fledged customs union when politicians keep undermining the application of the region's Common External Tariffs with several requests for exemptions. In this region, the cartel that imports used vehicles is very influential and easily gets its way with local politicians. As an industry, we lost our grounds in the regional negotiations last year when the national budgets introduced duty remissions on importation of certain classes of vehicles, creating a loophole that used vehicle dealers have since exploited to swamp the region with the kind of motor vehicles that break down our roads every day. At GM, we are currently using only 30 per cent of our installed capacity but we believe that increased sales in the common market will enable us to hire 200 more Kenyans this year. Prof George Godia, Education Secretary, Ministry of Education "The opening up of a Common Market presents the best opportunity for Kenya to sort out its oversupply of teachers at a time when its neighbours experience acute shortages. While previous agreements with other countries to have Kenyan teachers work in the region have helped ease the pressure, we expect that the common market will remove the imbalances. [Currently, we have over 50,000 trained but jobless teachers most of who could be absorbed in the regional market [This is the biggest lie i ever heard in my lifetime! citing this article here by the same Nationmedia http://allafrica.com/stories/printable/200909210007.html Kenya needs about 65,000 teachers to ensure quality education how can it be this confusion happening in the span of less than 3 months? Is Nationmedia a propaganda machine of Kibaki regime?]. It is anticipated that member states will be freed to hire teachers from outside their national borders to plug the skills gap. The Common Market could also provide an avenue for Kenya to invest more in its education system to expand access as regional students could come calling more than is the case currently. Universities for example are expected to have a wider reach. Sam Omukoko, Managing Director, Metropol East Africa Ltd. "Kenya is emerging as the region's hub for provision of financial services as is evident from the growing number of indigenous banks that have set up operations in neighbouring countries. The coming into effect of an East African Common Market will only strengthen these pioneering companies as they will have already established the capacity needed to operate as a regional company. One of the key reasons why interest and transaction costs charged by financial service providers remain relatively high is because we have over one hundred institutions including commercial banks, insurance companies and stockbrokers competing for a very small captive clientele base in Kenya. But with the expansion into the region, financial institutions are likely to enjoy exposure to a wider potential customer base, to which they can then offer cheaper services driven by the high-volume, lower-margin business operation model [likewise Tanzania and Uganda can say the same]. Hasit Shah, Chairman, Fresh Produce Exporters Association of Kenya (FPEAK). "FPEAK already hosts the secretariat for fresh producers from the Comesa member countries and from the EAC region. Locally, we got enough rains to produce more and opening up of the borders by the common market protocol is good for farmers who have been seeking unfettered entry to regional markets. [Isn't this the country animals plus people were dying and shown all over the media under this sun begging for help that Kenya is in dare need of food? Isnt this the same people that caused a lot of chaos to Tanzania with escalating cattle rustling and mass migration of Massais in Serengeti and Loliondo in 2009?]. It will also be very easy to expand operations across the region and market our products in the export market as a single region. But high power costs are likely to erode the gains and make us uncompetitive. Kenya and Tanzania is struggling because of lack of investment in the power sector. Pricing is also an issue. Producers from Egypt and Morocco pay a quarter of the costs that Kenyan producers pay. This is because Egypt relies on affordable hydro-based power generated from the River Nile. Unlike, in the EAC, power costs in Ethiopia are lower because they have invested more. Nixon Ooko, Operations Director, Fly540 "The signing of the common market protocol during the 10th anniversary of the East African Community heralds the escalation of tourism and trade in the region. There will be significant growth in air travel throughout the East African region and our airline is ready to meet this need. From next week, Fly540 will be linking Nairobi with Mwanza and Bujumbura with three weekly 50 seater aircraft on Mondays, Thursdays and Saturdays. Our recent acquisition of a CRJ-100 will be followed by additional jet and turbo prop aircraft to support further expansion. We are bullish about the future of air travel in East Africa and beyond and we forecast our business to double this year [This is the company under name Lonrho that stole from Kenya massively and sold its assets and disappeared without paying stamps under Moi regime and now it comes again under a new name fly 540 after divesting and investing in Zimbabwe and Equatorial Guinea, lets see how it gonna feature with a new companion at the Ngong road i.e. Baba Jimmy! And for your info. Nyerere kicked them out of Tanzania in early 1980 cause of first repetitively cooking financial books to evade tax and second cause of frustrating and mendling with Liberation struggles in Zimbabwe and Angola through supporting proxies]. Generally, Fly540 is evolving into a Pan Africa airline. To supplement the fleet at our Nairobi hub we have based aircraft in Tanzania and Uganda. There are also plans to open up hubs in Angola, Ghana and Zimbabwe. John Wanyela, CEO, Kenya Bankers Association "Although some Kenyan banks have already established branches across the region since the customs union was established five years ago, many more opportunities are expected to come along as the integration process continues. Among the workers in the industry, the common market to be implemented from July this year can only mean increased job opportunities. It will open the borders for easy of professionals within the region. Expansion and growth in the industry that is expected to follow. Banks that seek to expand and increase their presence in the region will further create job opportunities and support sustainable growth which will in turn help the population in the region to improve their standards of living. [The usual blahblah every bank can do the same no need to brag] http://www.businessdailyafrica.com/Company%20Industry/-/539550/837444/-/view/printVersion/-/90q9iez/-/index.html My take: Nation Media continues to advocate careless journalism that disregards ethics and reality on the ground! I urge Tanzanians to avoid Nationmedia newspapers cause their aim is to scare and play with your minds through glorification of baba Jimmy's regime and country at large! They have already played the minds of Kenyans in this forum who believe everything they read on the Nationmedia newspapers. I advice to better read The Standards if you want to get genuine information from Kenya!