Member states of the east African trade bloc will have to do better in a number of areas if they are to take full advantage of the European Union’s 447 million-person market.
That was the conclusion of discussions about a scoping report presented at a workshop held on May 25 in Kigali, Rwanda by the Stockholm Environment Institute (SEI) and the East African Science and Technology Commission.
The report determined that though the bloc is making progress, it’s struggling to create jobs, tame corruption, prepare for the effects of climate change, innovate, develop its infrastructure, attract foreign direct investment, and control currency volatility. If it doesn’t do better, local businesses might suffer from reduced trade with the EU.
A long to do list
Eight nations make up the East African Community (EAC)—Kenya, Tanzania, Uganda, Rwanda, Burundi, Democratic Republic of Congo, Ethiopia, and South Sudan. To the EU they mainly export coffee, cut flowers, tea, tobacco, fish, and vegetables. From the EU they import machinery and mechanical appliances, equipment and parts, vehicles, and pharmaceutical products.
The report was written by policy experts at SEI to inform regional stakeholders about relevant EU trade gaps and their implications for East Africa.
Here are some of the issues the EAC will have to tackle, according to the report:
Create jobs: Trade between both blocs should create new value chains—and new jobs. “Job creation needs continuous training and more budgets in research and development,” said King’uru Wahome, deputy director of Industries at the Ministry of Industrialization and Trade in Kenya. He also added that, to trade better with the EU, east Africa must draw more women into technology.
Prosecute corruption: To achieve optimum trade balance with the EU, the EAC will need to show more effort in prosecuting corrupt trade players in the East Africa Court of Justice while domesticating laws enacted by the East African Legislative Council, participants said. Though east Africa’s scores across several categories are low, its score on prosecuting corruption is “zero,” Anderson Kehbila, program leader of natural resources at SEI, told workshop attendees, though it wasn’t explained how these scores were determined.
Protect business data: Much of Africa is struggling with the question of how to protect users data, particularly against foreign countries. Just as EU has the General Data Protection Regulations (GDPR), east Africa should to have a regional data law to boost online trade between the regions.
Greater regulatory awareness: Overall, east African manufacturers and processing plants, which make products to be exported, should be more aware of, and have greater capacity for, EU regulations should trade relationships be strengthened.
“Trade laws should not be made in isolation. Rules of origin, fair trade, carbon emission requirements, currency volatility revaluations and financing frameworks need strengthening,” Caroline Cherop, head of trade at Kenya National Chamber of Commerce and Industry (KNCCI), said at the workshop.
The biggest challenge of all
One major challenge, according to the report, will be preparing east Africa for the effects of climate change. This is in part because the effects on elements such as precipitation (pdf) are expected to be dire, and significant investment is still needed to prepare. developing countries worldwide will need about $100 billion of new investments per year over the next 40 years to build resilience to the effects of climate change, while mitigation costs are expected to be in the range of $140–$175 billion per year by 2030, according to the World Bank.
The EU also has its own climate investment targets to hit. The European Green Deal seeks to reduce carbon emissions by 55% by 2030 while aiming to make Europe a carbon-neutral continent by 2050; the EU regulates the emissions of its trading partners via the Carbon Border Adjustment Mechanism.
Here, all the problems identified above come together.
SEI Africa centre director Philip Osano urged east African governments to use digital tools such as Trase software, which is designed to help companies improve the sustainability of their supply chains.
“It helps to monitor progress against sustainability goals. It identifies hotspots, business people and supply chains most closely linked to impacts of carbon emissions. It is easier to take action,” he said.
Generally, renewable energy is taking hold slowly in east Africa. Excessive red tape has been stifling investment in climate-friendly projects in the region, while state subsidies for fossil fuels keep prices artificially low, making it hard for renewables to compete.
Paul Muchiri, youth director at KNCCI, said east African governments must remove these barriers and create an environment in which investments in renewable energy make financial sense. “The private sector should play a role in pushing for these reforms, which have the potential to unlock billions of dollars worth of investment opportunities,” he said.