KIGUTA: Zeal to work together as EAC has waned over the past two years

The outgoing director-general in charge of trade and customs at the East African Community, Peter Kiguta, spoke to Christabel Ligami about the state of integration and the flow of trade in the region.

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The United Nations Economic Commission for Africa ranks the regional economic bloc as the best performing in Africa. What would you attribute this rating to?

The Customs Union stands out. It has shown some level of cohesiveness particularly while negotiating trade deals between the East African Community and third parties — such as the Economic Partnership Agreements (EPAs) with the European Union, the Trade and Investment Partnership with the US, and the Tripartite Free Trade Area with the Common Market for Eastern and Southern Africa and the Southern African Development Community. 

In the course of implementing the Customs Union, we have tried as much as possible to avoid unilateral actions by partner states such as varying Common External Tariff and imposing non-tariff barriers.

The failure to sign the EPAs with the EU, however, has posed a challenge. Countries appear to be more cautious about committing to anything during trade meetings, and are taking hardline positions. Suspicions are also resurfacing.

What needs to be done to raise the momentum of regional integration?

That will require political commitment at the highest levels.

There is a need to give the EAC more powers. I hope the anticipated restructuring of the EAC shall yield the expected results. It is my hope that during the next Summit the Heads of State will deliberate integration issues more frankly.

What effect has Brexit and the election of Donald Trump as the US president had on EAC trade?

We have the chance to attract European and American firms that had relocated to Asian countries to benefit from cheap labour.

These firms are looking for new locations as labour costs continue to rise in Asia. EAC countries could attract such firms to produce goods for export to Europe and America under the EPA and the African Growth and Opportunity Act (Agoa) preferential market access.

However, though Agoa was extended for 10 years from June 2015, it’s not certain what decisions Trump will take as president, going by his decrees on trade with other countries.

On the Brexit issue, the UK will stop being a member of EU and EPA will cease to apply, depending on the trade arrangements Britain will negotiate with the EU. This could affect Kenya’s exports as Britain is a major market for flowers and vegetables.

How is the EAC handling the cut in donor support and delays in remittances by member states?

While partner states have not been making their contributions promptly, four of them have no arrears. However, the delays have affected the EAC’s schedules, forcing us to introduce cost-cutting measures. For example, procurement rules and regulations have been streamlined, resulting in annual savings of $3 million.

EAC is also rationalising its budget to address donor dependency which has come down to around 50 per cent from over 80 per cent. Partner states are also exploring a funding mechanism to address the budget shortfalls.

Do you see full integration becoming a reality any time soon?

Although the EAC has been cited as the best performing economic bloc in Africa, challenges persist in the implementation of collective policies and programmes. EAC has performed well in the implementation of the Customs Union, but the same cannot be said of the Common Market.

There is a lack of commitment by some partner states. The dilly dallying in the signing of the trade agreement also threatens to undo some of the progress made under the Customs Union implementation.

The enthusiasm earlier exhibited by countries to move the region towards higher levels of integration seems to have waned over the past two years.

After 12 years as trade director-general, what are your key achievements?

I set up a Customs and Trade Directorate which has successfully overseen the implementation of the Customs Union. Consequently, intra-regional trade grew to more than $7 billion in 2015, from around $1 billion in 2004.

The share of intra-regional trade to total volume of trade has grown to around 17 per cent, from 5 per cent in 2004. I am also happy that we managed to bring down the cost of doing business by reducing the time it takes to move containers from the ports of Mombasa and Dar es Salaam to inland countries.

We are also implementing a regional mechanism for monitoring non -tariff barriers to trade with a view of eliminating them.

In terms of supporting cross- border trade for small and micro enterprises, I started the Jua Kali/Nguvu Kazi regional exhibition that rotates annually across the partner states where exhibitors can sell their goods tax-free. I also successfully steered partner states during negotiations for EPAs and Collaboration Agreement with the US on trade facilitation and Technical barriers to Trade which was signed in 2015.

What were your biggest challenges?

Changing mindsets of both the public and private sectors from national to regional orientation, which has sometimes impacted on programmes.

In some cases, technical advice has been interpreted as favouring a particular country. Other challenges relate to inadequate resources both human and financial.

However, the biggest personal challenge was failure to have the EPA signed by all the five partner states. I had hoped to kick-start the implementation of the agreement before exiting the office.

The office you are exiting from has been advertised twice. Similarly, the EAC has been searching for a qualified person to fill the position of a registrar of the regional competition authority, six months after a budget was approved to operationalise the office. Are people not interested in working for the regional body?

Yes, the position has been advertised twice. But I do not see this as a reflection of lack of interest to work with the EAC. Rather it’s a show that maybe the qualifications required are too high and those eligible are few and already comfortable where they are working.  I recall when I was appointed, the position had to be advertised twice.

In future the Council may have to relook at the qualifications and adjust them accordingly.