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Joint EAC Export and Investment Promotion Strategy: 2011-2016
The East African Community (EAC) is the regional intergovernmental organisation of the Republics of Kenya, Uganda, the United Republic of Tanzania, Republic of Rwanda and Republic of Burundi with its headquarters in Arusha, Tanzania. The EAC region covers a surface area 1.82 million Sq. Km, a combined population of close to 133.5 million people , a GDP of US$ 74.5billion  and Average GDP per capita of US$ 558 (EAC report, 2010) and has a vast potential in mineral, water, energy, forestry and wildlife resources. It also has agricultural, livestock, industry and tourism development.
 
The EAC regional block has completed one year in the implementation of a Common market protocol since its commencement on 1st July, 2010. As EAC region gears itself toward greater and deeper integration, it is important to develop and implement joint strategies to prepare and get the region and its constituent Partner States ready to enter international markets both for Trade and Investment opportunities.  Under this Joint Export and Investment Strategy for EAC, the region is pronouncing itself on the desire and effort for positioning the region as a single export basket and an investment destination.

The new trade bloc aims to work towards economic policies that are pro-market, pro-private sector and pro-liberalisation. By pooling their resources and promoting free trade and investment within the region, the EAC aims to emerge as a leading business destination in Africa. The strategy is expected to transform and position the EAC at the global stage as a credible and viable single investment destination, as well as an attractive location for undertaking export business.

This strategy therefore takes cognizance of the practical realities in the Partner States with respect to potential for export and investment, priority issues and potentials and capacities in Export Sector and attraction of investment, and the constraints associated that call for joint efforts. The strategy there has been taken as a guide to enhance the synergies among the Partner States in a bid to develop EAC as a Single export basket, taking into account the ongoing initiatives under the EAC Customs Union Protocol, the Common market and the numerous projects and programmes that have been undertaken or underway to promote and develop EAC region’s exports and improve investment.

The rationale for the Joint Strategy

The EAC Council of Ministers in 2006 adopted the first EAC Export and Investment Promotion Strategy in line with the third EAC development strategy. With the adoption of the fourth EAC development strategy it becomes necessary to develop the next strategy to jointly promote exports and investments in the region. With emerging challenges of globalization coupled with regional integration, the Community is required to reorient its investments and exports programmes for the benefit of the people of East Africa.

It is in this regard that this initiative to formulate the next EAC Joint Export and Investment Promotion Strategy focusing on how to develop, promote and implement programmes and policies by the five Partner States over the medium term 2011-2016 takes centre stage.

The Joint Export and Investment Strategy for EAC focuses on how to develop, promote and implement jointly export and investment promotion programmes and policies by the five Partner States over the medium term 2011-2016. After the review of the export trends and potentials and investment performance of the Partners States, the strategy sets out strategies and measures that will not only sustain the growth registered but also qualitatively improve the regions’ exports and investment flows. The strategy seeks to promote efficiency in production in response to intra-region competition among businesses, enhancement of domestic, cross border and foreign investment and promotion of industrial diversification and export promotion drives.

The Partner States need to pursue open, liberal and transparent investment policies that significantly contribute to their economic progress principally through the private sector led development including policies that provide for amongst others:
  • openness to foreign investment;
  • right to private ownership and establishment;
  • full protection of property rights;
  • liberalized foreign exchange markets;
  • conducive earnings repatriation conditions;
  • stable, transparent and predictable regulatory framework;
  • simplification of investment establishment procedures thereby replacing the regulatory role of investment screening and approvals with promotional assistance and facilitation;
  • national treatment status; and
  • right to national and international impartial arbitration in the event of a dispute with government.
 
The attainment and implementation of the above ideals is underpinned by a clear approach and development of a concise investment promotion strategy. The vision for regional integration and development in the EAC is to strengthen the regional market, create wealth in the region, and enhance competitiveness through increased production, value addition, trade and investment in the region.

The above scenario makes a case for a focused and intensive investment promotion campaigns for EAC Partner States. Furthermore, competition for investment resources is highly intense as there are over 170 Investment Promotion Agencies ( IPAs) worldwide going for the same resources while Africa only receives about 2% of all Foreign Direct Investment( FDI) inflows. Competition among sub-Saharan Africa to attract FDI in manufacturing and services has degenerated into incentive based rivalries that have not been well calibrated. Hence, in many cases has resulted in the attraction of investment whose impacts on the economies has been drastically reduced by the hefty incentives.

The Partner States, therefore, need to harmonise their investment laws and policies as a systematic way of charting out actions towards achieving the goals of regional integration and development.

This strategy formulation process has already had two sessions in Bujumbura Burundi and Dar es Salaam Tanzania in July and September 2011 respectively. It is anticipated that once finalised, this document will provide clear development roadmap with targets and timelines which partner states need to work towards in order to realise the regions aspirations.

Strategic interventions

The strategy outlines the following strategic interventions which once achieved will reposition the region as an attractive investment destination in Africa. These include; 
  • Facilitate consolidation, expansion and diversification of EAC export markets for goods and services;
  • Expand EAC export basket through identification and promotion of new exportable products;
  • Enhance export competitiveness through product development and  value addition;
  • Create an enabling business environment that improves regional and global trade flows and encourages export competitiveness;
  • Enhance the visibility of EAC as the ideal business destination through aggressive image building and conducive policy environment;
  • Encourage public-private consultations for effective policy formulations and implementation of key export and investment promotion initiatives in  the region;
  • Address capacity gaps in human capital, institutional, legislative and technical aspects with a view to enhancing, innovation, technological  and skill development to promote exports and investments;
  • Formulate a focused and coordinated approach to the Promotion of FDI, DI, Cross Border Investment by the Partner states;
  • Enhance information dissemination, sharing and management for effective and prudent decision making.
 
Benefits of this strategy
 
The following are some of the benefits anticipated from this strategy:
  • Provide an inventory of investment potentials and investment promotion strategies in each of the five member states
  • Document export potentials for each of the member states including top exports and imports
  • Highlight the policy framework pertaining to trade matters for each of the member states of the EAC regional trading block including the structure of these economies
  • Highlight the challenges to export and investment promotion in the region
  • Highlight intra-EAC trade performance and investment flows from 2006 to 2010

Once finalised, this strategy document will be uploaded into the Council website for use by the business community.
 
 
 
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