The African Executive website. 1st July 2010 marks the commencement of the operationalisation of the East African Community (EAC) Common Market. Following the completion of the ratification of the Protocol on the Common Market, the complex and long march towards transforming the EAC region into a Common or Single Market begins with resolve and fervour.
Unlike the operationalisation of the Customs Union which had a big bang start-up with the Common External Tariff and zero rating of Customs duty in respect of intra-regional trade in goods (except for goods destined to Tanzania and Uganda from Kenya) taking effect from day one, the operationalisation of the Common Market is a process. Indeed, the process is complex in terms of what is required to be undertaken at the levels of the Partner States and, in certain respects, at the level of the EAC itself.
A New Milestone
It is important that the citizens of the East African Community Partner States and economic players in the EAC region have a clear understanding of what the 1st of July holds and portends. Yes, the date is a historic one and is deservedly celebratory. Achieving successful negotiations leading up to the adoption of the Common Market Protocol, its approval by EAC Heads of State and its ratification in record time is a milestone for the EAC. No other Regional Economic Community in Africa has achieved such milestone.
It is a milestone that epitomises strong political will and firm commitment by all the EAC stakeholders in deepening and widening integration. Yet what we have achieved so far is only the basic legal framework that outlines what needs to be done and implemented for the Common Market to make meaning and have impact in transforming the lives of the East African Community citizens.
Hard Work Begins
Thus, 1st July 2010 for the EAC Common Market, means entry of the critical phase when the Partner States, which, pursuant to the Treaty establishing the EAC are the principal implementers of EAC programmes, must begin to determine how the four freedoms encapsulated in the Common Market Protocol should resolutely be put into effect. It also marks the beginning of serious work at the EAC executive organ level, notably the Council of Ministers, in determining what regional-based interventions can and should be undertaken to speed up the process of getting the four freedoms to take force, mainly through a legislative process.
The EAC region has in the past decade effected a number of policy and legal measures at Partner States’ level that are within the ambit of the Common Market Protocol. These measures will make life easier in getting a fuller and quick implementation of the Common Market Protocol provisions. A number of examples can be adduced, particularly in the field of services, an area which, in other Economic Community regions, including the European Union, have posed serious challenges at the implementation level.
Some Common Market Freedoms Already in Place
Examples span a wide range of services: banking and finance (including insurance and brokerage); distribution (retail in particular); transport and logistics; telecoms (notably mobile telephony); air transport; tourism (hotels and lodges, tour operators); education (primary, secondary and tertiary); energy; professional services (accounting and auditing, management consultancy and other knowledge services); ICT (plus broadband internet); media (print, radio and TV); and music. In other words, the EAC economies have seen significant cross-border services intensify, benefitting from bold economic liberalisation policies and measures effected in all the five EAC Partner States.
Immediate Challenges in Services Sector
The entry of the Common Market Protocol will thus provide impetus to an already thriving cross-border services industry. The impetus will largely lie in creating the empowering conditions at the level of the Partner States for the services sector to be scaled up and made more robust and buoyant. A few examples can be mentioned.
First, the case of air transport is yet to be fully liberalised within the framework of the Yamoussoukro Decision. The EAC region needs not only a “free skies” agreement but also deeper liberalisation of air transport operations to bring down costs of passenger and cargo transportation which are currently too high.
Second, the securities market is yet to be “regionalised” and the capital account is yet to be sufficiently liberalised by Tanzania to enable Tanzanians participate outside the present framework of cross-listing of market shares at national level. Removal of restrictions on capital flows should serve as a catalyst for capital market development and the provision of long term and risk capital most needed to spur economic development. At the EAC level, there are definitive programmes on-going towards the promotion of a regional capital markets regime and institutions.
Third, the regulatory framework for cross-border television broadcasting is still stringent; it needs to be further liberalised to promote greater offerings by competing regional networks.
Fourth, whilst there is significant cross-border tertiary education access, tuition fees, even in public universities, are yet to be harmonised in spite of decisions having been taken at the EAC level requiring charging of similar fee rates.
Fourth, the cross-cutting challenge of work permits which underlie the effectiveness of the services sector needs to be frontally addressed. You cannot realise the full benefits of free movement of professionals under the services sector when labour market policies and laws stand in the way of such freedom. A starting point in leveraging this freedom could be to eliminate the requirement of work permits for citizens of EAC Partner States who have professional qualifications and who seek to set up their own businesses in fields such as law, medicine, engineering, accounting and auditing and architecture.
Making Free Movement of Labour Work
Free movement of labour is key in promoting human capacity in the EAC region for social and economic transformation. It is important that the EAC Partner States quickly work out the modalities for enabling such freedom to take effect. An initial word of appreciation to Rwanda and Kenya is deserved for leading the elimination of work permits, at a bilateral level, between them. In Rwanda, the elimination of work permits is extended to all citizens of EAC Partner States. An important element in the process of elimination of work permits, wholly or partially, is the conclusion of the Mutual Recognition of Academic and Professional Qualifications.
The EAC, through the Inter-University Council of East Africa, has reached an advanced stage in setting up a mechanism through quality assurance that will form the basis for determining such mutual recognition. A related issue is mutual recognition of accreditation of higher education institutions which would remove the regulatory requirement of tertiary education institutions moving across borders applying for fresh accreditation. The EAC is working towards the harmonisation of social security benefits in order to support the free movement of labour. EAC Partner States are already at advanced negotiating stage in this area.
Free Movement of Persons
To most ordinary citizens of the EAC Partner States, the 1st of July infers the free movement of persons in the region. This is one issue that the Partner States will have to offer elaborate explanations. Suffice to state that citizens of the EAC region have enjoyed free movement across their borders for years.
The national passports and the East African passport travel documents are accepted and respected at border points without a visa requirement and six months’ stay each time of entry is offered without hassle. This free movement will be further facilitated when all the five Partner States introduce Third Generation (Machine Readable) identity cards. Only Rwanda has such an ID in use. Kenya is about to introduce one this year. Tanzania and Uganda are in the process of introducing such IDs as well. Burundi will follow.
The EAC Common Market is finally here. It ushers in a higher level of integration beyond trade in goods which the Customs Union caters for, with positive impact on the economies of the Partner States as reflected by growing intra-regional trade in the past five years. The broad economic space which the services sector will unleash will trigger the expansion of economic activities and jobs in the region.
Cross-border capital movements will also spur the growth of industrialisation driven by an expanding and more productive agricultural sector. East Africans have every right to be proud of the stage of integration the EAC has reached. But it is upon them to exploit all available opportunities to make the Common Market work for them and for the better livelihoods of all citizens of the EAC. We can do it; let us together make it happen.
This article, published by the African Executive, was written by Ambassador Juma V. Mwapachu, Secretary General of the East African Community.