Regional organisations fail to reach targets
Nairobi - Few of the objectives set by economic regional
organisations in Africa with regard to the free movement of goods, people and
capital are being realised.
This is despite many of the organisations – like the
East African Community (EAC), the CFA or franc zone (the currency for 14
French-speaking countries whose economies are linked to the French monetary
unit) and the West African Economic and Monetary Union (Umeoa) – having been established
The EAC is regarded as the fastest-growing region in
Yet, said Richard Sindinga, director for economic
affairs in the Kenyan ministry for the EAC, trade in this African community
still limited as a consequence of, inter alia, the lack of harmonisation.
The EAC was established in the 1970s and made a comeback
in the 1990s.
At PwC’s 14th African Tax Symposium in Kenya Sindinga explained
the challenges that prevent the different regional organisations from reaching
At the same time Gabriel Kitenga, head of public
policy at East African Breweries, gave an overview of the progress indeed made
by the communities.
His analysis shows that the Southern African
Development Community (SADC) probably takes the lead.
According to Sindinga, everyone is striving for a
common market where goods, people and capital can move freely. But in reality a
strong nationalist sentiment still prevails.
“We think like Kenyans, Ugandans and Tanzanians.
Harmonisation has taken place only to a small degree. Intra-Africa trade is
probably the lowest of all regions.”
Average trade between countries in Africa is around 12%,
compared to 45% within die Association of Southeast Asian Nations (Asean),
54% within the Nafta (North American Free Trade Agreement) region and 60% within
the European Union.
The reasons for the performance of economic
communities outside Africa are advanced integration and greater business
activity between members of the community – and they have more to offer each
other (than Africa has).
According to Kitenga, most regional groupings are striving
towards the same ideals, yet some of the countries belong to more than one
institution, even though their needs could be satisfied by belonging to only
This costs time and money which is unnecessarily
Kitenga reckons there are various reasons why African
communities are less successful than those in other regions. (See the box
He said harmonisation of Africa's economic communities
should take place in line with trade and taxation policies across the regional
The legal framework should be harmonised as should fiscal
incentives, tax structures and procedures and standards.
In terms of trade, political integration,
institutional framework, monetary integration and a common external tariff,
SADC leads the way, followed by the Economic Community of West African States (Ecowas)
and the EAC.
According to Sindinga, bigger markets and greater
incentives for intra-trade in Africa are necessary for these communities, in
order to realise real benefits for the members.
One issue with serious implications for these regional
communities is the interpretation of the Rules of Origin.
These rules represent the criteria required to
determine the national source of a product.
According to the World Trade Organisation (WTO) the
rules are important because levies and restrictions on trade depend on the
source of importation.
The different interpretations and applications of the
rules lead to serious conflict, which certainly does not promote cooperation at
According to the WTO, a measure of harmonisation is
necessary in a globalising world. It appears that Africa needs more than a mere
measure of harmonisation.