Set plans and benefit from the EAC market
Jul 08, 2010
July 1, marked the commencement of the East African Common Market. <br>The common market is a step ahead of the earlier East African customs union ushered in by signing the Customs Union Protocol in 2005.
By Prof Augustus Nuwagaba
July 1, marked the commencement of the East African Common Market.
The common market is a step ahead of the earlier East African customs union ushered in by signing the Customs Union Protocol in 2005.
A common market involves the free circulation of goods, capital, people and services within member states.
On the other hand, a customs union involves the application of a common external tariff on all goods entering the member states. This, in effect, means the abolition of import duties, quotas or discriminatory taxes as goods travel within member states.
At the signing of the protocol, one major worry for most Ugandans was the loss in revenue since import duties would no longer be charged from imports and goods manufactured in some partner states.
On the commencement of the common market, many Ugandans expressed worries that they will not benefit from the expanded market of up to 140 milion people.
Ironically, these worries are not without reason but they are also not justified. The common market is here and irreversible.
A common market means that resources such as capital, labour, goods and services will freely move within the borders of partner states.
Being in a market demands that one is in possession of products (merchandise or services) that are attractive to buyers.
The implication is that while theoretically the East African common market provides 140 million potential buyers, it is more crucial that one’s products (labour, goods, services and capital) are attractive enough for the people in the market.
In other words, Ugandans need to strategically position themselves if they are to be relevant to and benefit from the common market.
It is more rewarding to enhance Uganda’s competitiveness rather than lament on how Kenya will dominate the market.
The only way to achieve this is to sharpen our skills, generate human capital, manufacture quality products and ensure low cost of doing business.
We can attain low business costs by ensuring low energy costs, build good roads, railway systems, establish less business processes, for example, making it easy to secure land titles.
In addition, we have to enhance professionalism (for instance lawyers, bankers, insurers) and reduce household poverty.
Reduced household poverty will mean we will have increased demand because people will have more disposable income and purchasing power.
The European Union (EU), an economic and political union, first established by six countries under the Rome treaty of 1957 and later expanded to 27 members by the Maastricht treaty in 1993, comprise 500 million people.
It commands 28% ($16.5 trillion) of the gross world product.
No member state has ever left the EU because of the tremendous benefits reaped by each of them. Even countries such as Norway, Iceland, Liechtenstein, Atelu and Switzerland, which have not formally joined the EU, have partly committed to the EU’s economy and regulations. They realise the benefits from the union.
The member states benefit from free movement of goods, services, and capital across a single product market, based on a standardised system of laws and controls.
It is this standardisation and control that has led to competitiveness and subsequent enhancement of product quality across the union.
Apart from direct benefits of a wider market for member states to sell their products, one important benefit from the East African common market would be the strategic positioning of each state to benefit from the World Trade Organisation, G8, G-20 and other major economies and at the United Nations.
The EU has stood the test of time essentially because each member state has something significant to contribute to and benefit from the union. There is no country that dominates the union at the expense of others. Otherwise, the EU would have collapsed.
Instead, each country strives to maximise the benefits from the union and indeed, it is this competition that binds the different partner states of the union.
The same thing can happen in our East Africa community union.
The writer is an international development consultant
July 1, marked the commencement of the East African Common Market.
The common market is a step ahead of the earlier East African customs union ushered in by signing the Customs Union Protocol in 2005.
A common market involves the free circulation of goods, capital, people and services within member states.
On the other hand, a customs union involves the application of a common external tariff on all goods entering the member states. This, in effect, means the abolition of import duties, quotas or discriminatory taxes as goods travel within member states.
At the signing of the protocol, one major worry for most Ugandans was the loss in revenue since import duties would no longer be charged from imports and goods manufactured in some partner states.
On the commencement of the common market, many Ugandans expressed worries that they will not benefit from the expanded market of up to 140 milion people.
Ironically, these worries are not without reason but they are also not justified. The common market is here and irreversible.
A common market means that resources such as capital, labour, goods and services will freely move within the borders of partner states.
Being in a market demands that one is in possession of products (merchandise or services) that are attractive to buyers.
The implication is that while theoretically the East African common market provides 140 million potential buyers, it is more crucial that one’s products (labour, goods, services and capital) are attractive enough for the people in the market.
In other words, Ugandans need to strategically position themselves if they are to be relevant to and benefit from the common market.
It is more rewarding to enhance Uganda’s competitiveness rather than lament on how Kenya will dominate the market.
The only way to achieve this is to sharpen our skills, generate human capital, manufacture quality products and ensure low cost of doing business.
We can attain low business costs by ensuring low energy costs, build good roads, railway systems, establish less business processes, for example, making it easy to secure land titles.
In addition, we have to enhance professionalism (for instance lawyers, bankers, insurers) and reduce household poverty.
Reduced household poverty will mean we will have increased demand because people will have more disposable income and purchasing power.
The European Union (EU), an economic and political union, first established by six countries under the Rome treaty of 1957 and later expanded to 27 members by the Maastricht treaty in 1993, comprise 500 million people.
It commands 28% ($16.5 trillion) of the gross world product.
No member state has ever left the EU because of the tremendous benefits reaped by each of them. Even countries such as Norway, Iceland, Liechtenstein, Atelu and Switzerland, which have not formally joined the EU, have partly committed to the EU’s economy and regulations. They realise the benefits from the union.
The member states benefit from free movement of goods, services, and capital across a single product market, based on a standardised system of laws and controls.
It is this standardisation and control that has led to competitiveness and subsequent enhancement of product quality across the union.
Apart from direct benefits of a wider market for member states to sell their products, one important benefit from the East African common market would be the strategic positioning of each state to benefit from the World Trade Organisation, G8, G-20 and other major economies and at the United Nations.
The EU has stood the test of time essentially because each member state has something significant to contribute to and benefit from the union. There is no country that dominates the union at the expense of others. Otherwise, the EU would have collapsed.
Instead, each country strives to maximise the benefits from the union and indeed, it is this competition that binds the different partner states of the union.
The same thing can happen in our East Africa community union.
The writer is an international development consultant