Toward an African Union: East African progress



East Africa has moved at least two steps closer to realizing the regional unity that is a part of the African Union's continental integration goals, including the formation of an African currency by 2028. Five nations in the region announced a treaty last month to share the waters of the Nile river in a more equitable manner despite protests by Sudan and Egypt, who have traditionally benefited from water resource agreements created during colonial times. They need one more regional state to sign on to the treaty to make it official, probably Burundi or DR Congo.

In addition, Burundi, Kenya, Rwanda, Tanzania, and Uganda are preparing for the next step in the re-establishment of the East African Community with the introduction of the Common Market on July 1st. Member states will enjoy the free movement of goods, labour, capital and services as well as enjoy right of residence and establishment. One notable effect is that it will now be more economically beneficial for traders to deal with manufacturers in the region, rather than continue to assume that importing goods from East Asian markets is always cheapest.

E African nations firm on Nile deal
(SOURCE: Aljazeera)

[...] The stand was adopted as the latest meeting of the Nile Basin Initiative (NBI) in Addis Ababa, Ethiopia's capital, ended with open disagreements on Sunday. After more than a decade of talks driven by anger over the perceived injustice of a previous Nile water treaty signed in 1929, Ethiopia, Uganda, Tanzania, Rwanda and Kenya signed the agreement in May without their northern neighbours.

"The signed [agreement] can't be unsigned," Asfaw Dingamo, the Ethiopian minister for water resources, said, referring to the pact signed in May. "But we hope to reach a consensus and I hope to do it very soon."

The five signatories have given the other Nile Basin countries - Egypt, Sudan, Burundi and the Democratic Republic of the Congo - one year to join the pact. The new deal would need at least six signatories to come into force. Burundi and the Democratic Republic of the Congo have not signed the deal yet and have so far been tight-lipped about whether they plan to or not.

[...] Under the original pact Egypt, which faces possible water shortages by 2017, is entitled to 55.5 billion cubic metres a year - the lion's share of the Nile's total flow of around 84 billion cubic metres. Around 85 per cent of the Nile's waters originate from Ethiopia and the Lake Basin is estimated to harbour more than half of Kenya's surface water resources. (source)



Are we ready for common market?
(SOURCE: New Vision)

During the East African budget readings on June 10, 2010, all the finance ministers reaffirmed the commencement of the East African Community Common Market on July 1, 2010. The common market will see the East African Community (EAC) member states enjoy free movement of goods, labour, capital and services as well as enjoy right of residence and establishment. [...] When the common market comes into force, in addition to goods originating from partner states paying 0% rate of [various import/export taxes]. The 0% rate will also be dependent on proof that the goods are produced within partner states through issue of a certificate of origin. Further still, under the common market, services, labour and capital will move freely within the member states. Members will also have right of residence and establishment in many states.

[Potential benefits and concerns of the Common Market ...]

Reduced cost of doing business as import duty costs will not be incurred; Fair competition among importers of similar products - some importers have been getting away with paying less or no tax for the same goods; Increased trade and cooperation among businesses in partner states; More efficient use of resources resulting from free movement of capital, labour and services; Goods within the region will become cheaper thus increasing demand and, therefore, trade volumes among member states;

Full implementation of the common market protocol rules - Will all revenue authorities implement the rules set out in the common market protocol?; Different levels of development between the partner states - some more qualified and richer individuals from more grown economies of member states like Kenya may take the jobs and land of poorer and less qualified individuals in other partner states like Rwanda or Uganda; Some of the traders do business and import from the Far East and European countries so they will still have to pay taxes at importation and compete with those who purchase from within the region. This category of importers will not fully benefit from the Customs Common Market.

[...] Importers who have been importing outside the EAC region may consider restructuring their supply chains and source for producers of similar items within the region. (source)