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E.Africa traders seek ways to boost exports to Europe

Business Daily Africa, Nairobi

E.Africa traders seek ways to boost exports to Europe

By George Omondi

4 October 2009

Players in the services industry from across the East Africa Community region are working on a raft of reforms that could unlock potential ahead of the signing of economic partnership agreements (EPAs) with the European Commission.

Among the envisaged changes is the formation of an umbrella body bringing together all the service providers in the region to lead the foray into the EU countries once the preferential trade instrument is signed.

At a two- day meeting concluded in Kampala at the weekend, industry players drawn from finance, ICT, tourism, education, legal, accounting and other professional services agreed to forge a united front against numerous constraints that sector players face in their hunt for opportunities at regional and international markets.

“Though critical to the regional economy, services sector still lacks organisational structures — both at the national and regional levels —making it harder for players to negotiate for favourable trade terms with other blocs like EU or world bodies WTO for lucrative opportunities,” Mr Gerald Sendaula, Uganda’s former finance minister and East African Business Council (EABC) vice chairman said in a statement sent to Business Daily.

Data show that the service sector is the fastest growing segment in the region.

The 2007/8 estimates indicate that the sector contributed 49 per cent of Uganda’s national wealth, 60 per cent of Kenya’s and 54 per cent of Tanzania’s GDP

Even with the new entrants to the EAC, the sector was vibrant in Burundi where it contributed 45 per cent of GDP in the 2007/8, and 55 per cent of Rwanda’s over the same period.

“Different member states already have several fragmented associations for bankers, insurers, and a number of other professional societies but as a region going into a common market, we need a single body to champion the growth of entire services sector,” he said.

Restrictive rules

So far, the EAC secretariat has hired the Toronto-based International Lawyers and Economists Against Poverty (ILEAP) to provide technical support to the EABC in developing a model for setting up a coalition of sector players in the services sector in the region.

Among the challenges awaiting the coalition are limited supply capacity, inadequate laws and regulations, an absence of national policies on trade in services, and restrictive international market entry rules for regional practitioners.

For a start, the regional services industry coalition will therefore be expected to draft a common service export strategy for region.

“Bringing together diverse interests into a Service Coalition will complement efforts of industry specific associations and give the region an additional weight to promote private sector interests in service reforms,” said Mr Senduala

Mr David Primack, the acting ILEAP’s Executive Director said an organised services sector will give it the much needed jab.

“Despite the very positive trends over the past decade, countries in East Africa need such a coalition to help in hunting for new opportunities,” he said

At the Common Market negotiations concluded in the region a few days ago, EAC Partner States agreed to eliminate internal barriers to trade in services through progressive liberalisation.

The Draft Common Market Protocol - to be signed into a treaty by heads of state summit in November – also identifies financial services, tourism, education, communication, transport, distribution and business services sectors that face immediate liberalisation with the coming to force of a common market in the region.

The Kampala meeting came just weeks after a council of ministers’ meeting in Arusha directed the Secretariat to request ILEAP to provide technical assistance in developing the Trade in Services’ legal text that will guide the ongoing EPAs negotiation with EC on regional trade in services.

According to another statement sent to Business Daily earlier, the envisaged legal text will address the issue on subsidies, at the national level, and determine which professions can confront free trade without safeguards after an economic needs test (ENT) is conducted.