East Africa is considered below the radar in terms of intra-regional trade. CHRISTABEL LIGAMI spoke to CARLOS LOPES, the executive secretary of the Economic Commission for Africa on the regional trade and integration agenda.
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Data at the EAC secretariat indicates that Intra–EAC trade is approximately 22 per cent of the total. How would you rate the five partner states on this?
Compared with other regions that have better infrastructure, East Africa is doing well and with the ongoing infrastructure development all over the region, we expect that trade among the partner states will grow by 40 per cent. In Africa, East Africa is the most integrated in terms of trade. The amount of intra-trade here is almost near the levels of South East Asia, that is at 25 per cent
What are the EAC countries not doing to increase trade among themselves to the level of EU partners?
The regional economy at the moment is jumping from agriculture to service provision, skipping the manufacturing stage that creates jobs.
EAC countries need to aggressively industrialise and venture into value addition for their agricultural products. This way, trade among the partners in these commodities will increase.
They also need to rebase their national accounts. Kenya and Uganda have tried this by rebasing their informal sector and therefore the other partners need to follow suit.
Roaming in East Africa is at the most advanced level in the world which signifies a level of sophistication that the governments don’t know how to account for. They rely on the telecommunication companies for accounting. This needs to change.
There are new discoveries in oil and gas in the region, should we expect this to change our regional economy?
The discoveries in oil and gas are coming at the wrong time when the markets are very volatile.
This requires caution for the newcomers in the oil and gas industry like East Africa and therefore East African countries should not put so much hope into it. This is because most of the growth in the energy sector will be shifting towards renewable energy.
It is projected that the US will in the coming years be an exporter of renewable energy . Therefore, the EA countries should start thinking of refined products rather than crude. The market for refined products in the region is very big.
The East African Common Market Protocol on the free movement of goods, services and labour was signed in 2010 but implementation by the partner states has been a challenge. What should the partner states do?
For the partners signing the protocol signals the political will to allow free movement of goods in the region. What the EAC countries are doing is realistic because this has to be a transitional process.
The countries that feel they are ready to implement a particular thing on the protocol should be allowed to do so and the rest can join later when they are ready.
There has been concern about the EAC monetary union and caution that that countries need to go slow on it. Should the partner states go ahead and implement it?
The monetary union is an important incentive to trade but could be a problem if the countries implement it without harmonising their trade policies investment policies, fiscal and monetary policies. Just like what is happening in the EU.
A monetary union needs to be comprehensive at all stages.
The region is also in the process of formalising a political federation and the plan is to adopt the roadmap before the federation is implemented. What are your views on this?
A political federation is a political decision. It has no sustainable economic base because it is difficult to set. If the EAC countries will integrate into a political federation as planned then they will have set a precedent in the world.
You will be launching a report on the economic impact of Ebola in the next couple of days. What are the key findings in the report?
The report focuses on the affected West African countries. There is a huge exaggeration and perception on Ebola and the whole Africa. There is confusion between the social and economic impact.
The social impact is high and it affects the whole population because the food reserves, for example, are depleted. But the economic impact is not so high because the affected countries depend on extractive industries. The economic impact on Africa is about 0.05 per cent.
The East African
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