By ADAM IHUCHA
The East African Business Council and German industry lobby have agreed to foster trade and investments between the region and Europe’s
largest economy.
With the Gross Domestic Product (GDP) worth $3852.56
billion in 2014, representing 6.21 percent of the world economy, according to
the World Bank, Germany is the fourth largest economy in the world.
To start
with, the EABC and the Federation of German Industries (BDI) have
inked a $1 million partnership project, among others, to bridge business
information gap between the Germany and EAC.
The BDI,
founded in 1949, is the voice of 38 industrial associations and represents the
interests of over 100,000 business enterprises with eight million employees.
EABC established
in 1997 to foster the interests of the private sector in the EAC integration
process has 54 Associations and 102 corporate Members.
“EAC is a
region of opportunities, but there’s a gap of information on what the bloc
offers in terms of investment prospects, so BDI-EABC partnership will
bridge it” says head of the BDI security
and raw materials department, Matthias Wachter.
According to
him, Germany companies are seeking for a lasting partnership with their EAC
counterparts in a bid to invest.
“The EABC-BDI
partnership would be a demanding one, because BDI members will demand the
crucial information on business opportunities,EABC members should also ask
too” Mr Wachter stressed.
A three-year-
deal, underlines the need for the EABC to enhance communication
strategy, particularly to maintain a regularly updated and interactive website
that will serve as portal for both sides members for all relevant trade
information.
The deal also
demands the EABC to strengthen its lobby and advocacy work for a
better, more effective business-enabling environment on the EAC policy-making
level.
“With a
better business environment, private business in the EAC region would have more
opportunity to expand their business and to succeed” reads part of the
pact.
The BDI will build the council’s capacity to lobby
professionally towards obtaining a conducive legal, administrative and
institutional business environment for goods, services and labour to move
freely across the region.
The EABC will be able to provide evidence for at
least three success stories in different fields of policy advocacy
each year and expand its total membership base by 25 per cent.
The EABC-BDI arrangement will also develop and
disseminate annual policy agenda, create technical coordination groups, develop
and disseminate harmonised position papers and develop and test innovative
avenues for policy advocacy ranging from policy campaigns to breakfast
meetings.
EABC Acting Director, Ms Lilian Awinja said that EAC Common External Tariff (CET) review,
domestic tax harmonization, elimination of non-tariff-barriers, harmonization
of standards and technical regulations, are among the targeted key policies.
“CET requires regular reviews to take into account the
dynamism of the Partner States’ economies in order to provide an appropriate
tax regime that supports the competitiveness of EAC industries” Ms Awinja
explains.
Basic items to be considered for review includes wire of
iron or non-alloy steel- plated or coated with zinc, Portland Cement, Sugar for
industrial use, Bars and rods, among others.
In terms of diverse domestic taxes, she says, they have
contributed greatly to high tax administration and compliance costs, harmful
tax competition, as well as smuggling of highly taxed excisable goods.
Indeed, each year, Tanzania, Kenya, Uganda, Burundi and
Rwanda combined forego nearly $2.8 billion in tax relieves as the
countries compete to offer incentives as baits in a bid to look attractive
to foreign investors.
Now, EABC recommends that the exempt, zero
rated, and relief regimes should equally be based on a framework guided by a
thorough feasibility study as well as a database developed and coordinated at
the EAC.
The lobby wants further liberalization of trade in
services as well as allowing free movement of services suppliers like
contractual services suppliers and independent services suppliers in the
region.
“We need elimination of NTBs and removal of roaming
charges to make call within EAC as local call” noted Ms Awinja.
Mr Dennis Karera, the EABC chairman was
buoyant the deal, would go along way in cementing cooperation between the EABC and
the BDI by promoting business between East Africa and Germany.
Mr Karera hinted that usually EAC is a big consumer of
durable and quality products from Germany and his association would study the
kind of products required in Germany.
Though statistics of trade between EAC and Germany are not
readily available, but the latter’s commercial presence in the region is
in hotel and hospitality industry, manufacturing,
pharmaceuticals, motor vehicle assembling and spare parts sectors.
According to tradingeconomics.com, services are the biggest
sector of the economy and account for 68 percent of total GDP in Germany.
Within services, the most important segments are public
services, education and health account for 18 percent, trade, transport,
accommodation and food services 16 percent, real estate 11 percent and business
services 10 percent.
Since German economy is export driven, manufacturing
accounts for 25 percent of total GDP and is crucial for the growth. The rest of
the industry constitutes 5 percent of GDP and agriculture makes the remaining 1
percent.
EAC Potential
The natural resource-rich EAC is a formidable
trade and economic bloc in Africa, according to the heads of the states summit
chairman, President Dr John Magufuli.
The East African Community has become one of largest
free trading bloc in Africa, offering crucial opportunities for business and
investments, thanks to admission of South Sudan.
The World Bank data show South Sudan would add 11
million plus people and Gross Domestic Product of $13.28 billion to the EAC
market that has 140 million populations and combined GDP of $110.3 billion.
Now, the 17-year-old EAC with six partner states of
South Sudan, Kenya, Uganda, Burundi, Rwanda and Tanzania, offers one of
Africa’s largest integrated market and combined GDP of $123.58 billion.
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