EAC divisionism complicates single customs territory

EAC divisionism complicates single customs territory

By Charles Kazooba

It is factual that ideological differences within the East African Community (EAC) member states have built cracks that are delaying full integration.

Apparently, Kenya, Uganda and Rwanda are pursuing a progressive line whereas Tanzania and Burundi are being forced to abandon their conservative tendencies.

This is greatly affecting implementation of the single customs territory (SCT). At most technical meetings towards the rolling out of the single customs territory Tanzania and Burundi have been ignored.

The two even expressed displeasure for being left out of the project. However, towards the end of last year, together, the five countries re-united and endorsed the customs territory to reduce the cost of doing business on the northern corridor.

The three states under the unpopular arrangement of ‘coalition of the willing’ agreed to post customs officials to assess and collect revenue at Mombasa port and oil installations in Western Kenya–Nakuru, Kisumu, and Eldoret.

The January 1, 2014 commencement date of the SCT was agreed upon during a summit in November 2013 that brought together presidents from the five EAC partner States of Kenya, Uganda, Rwanda, Burundi and Tanzania.

The summit agreed to implement the single customs territory under a destination model of clearance of goods where assessment and collection of revenue is done at the first point of entry, which allows free circulation of goods in the single market with variations to accommodate goods exported from one partner state to another.

In November last year the Uganda Revenue Authority had tried out the single customs territory with big oil companies mainly Vivo Energy and Total. URA said they would implement the SCT progressively to avoid a massive switch over.

But along the way implementation of the customs territory is getting complicated.

Only assessment is being done at the point of entry and payment of taxes will still be done at point of final destination—in Partner States even though the summit that both assessment and collection of revenue be done at point of entry.

The argument by the council of ministers and bureaucrats is that collection of revenue should wait until a single revenue collecting body and a revenue sharing model are put in place.

So, the Partner States will in the meantime continue to retain control over their revenue collection function.

Secondly, Tanzania and Burundi will wait until in June when Tanzania and Burundi can start implementing the programme.

In reality though the implementation, which was initially planned to begin in January with the three countries moving their revenue staff to common entry and exit points to begin goods clearance has been delayed after Tanzania and Burundi protested their exclusion.

The three states have been prompted to go slow on their plans. Therefore more time has been given to Tanzania and Burundi allowing the two countries the opportunity of preparing for the shift towards the single customs territory.

The cracks between EAC member states were first visible on June 25 last year when Presidents Yoweri Museveni (Uganda), Uhuru Kenyatta (Kenya) and Paul Kagame (Rwanda) decided to fast track the integration process and distributed responsibilities among themselves.

 It was agreed that Uganda chairs the railway development and political federation sector, Kenya chairs the oil pipeline development and electricity generation and distribution while Rwanda chairs the Customs, single tourist visa and EAC e-identity card sector.

Since then the three leaders have severally met to update themselves on the progress. However, they appear to be getting stuck having sidelined the other two members, Tanzania and Burundi.

For instance, there is little talk lately about the political federation project. In fact, at the November summit, all Heads of State stayed away from a planned rally at Kololo Airstrip, Kampala for the launch of the federation campaign.

Tanzania has since argued that Kenya, Uganda and Rwanda were being insensitive by rushing the integration process.

And most analysts agree that slow pace should also apply to the implementation of the single customs territory.

They argue that the partner states need to put in place payment systems to manage transfers of revenues between states and an independent audit system for early detection of deviations to the protocol.

They say that enabling laws should be put in place to authorize acceptance of electronic information as evidence for transactions, a centralized bond guarantee system and operational single window borders including a centralized customs administration.

The region should also first harmonize domestic taxes on goods through adopting common domestic laws, procedures, codes structures and definitions, incentive regimes, minimum and maximum tax rates in the short run with a view to adopting common rates in the long run.

And most importantly, the future success of the single customs territory can only be guaranteed if the region has got institutions that protect integration vision, and able to drive the territory even when political will-power fails nationally.

Once the customs territory has been fully implemented return journey transporting cargo from Mombasa to Kigali would take less than 10 days compared to the 20 days trucks currently take and there would also be fewer checks along the route.

It has been taking weeks to transport cargo because of roadblocks and weighbridges yet the longer a truck stays on the road, the more costs to maintain the drivers.

These costs are not absorbed by the truck owner, but are passed on to a trader who in turn passes them on to a consumer.

The cost of transporting a 20-foot container from Mombasa to Kigali is expected to drop from $383 to $193, resulting in savings of about $45 million annually, according to a study by the East African Community.

Generally, the cost of doing business in the region will reduce by between 15 per cent and 30 per cent.

The single customs territory will therefore ensure clearance of goods at the first point of entry within East Africa and cut off time and resources used by various governments to collect customs tax at various borders.

Journalists and NRM: is there a red line?

By Charles Kazooba

Around mid-March a list of 150 names of journalists allegedly recruited to promote the suspected Premier Amama Mbabazi’s presidency project ahead of the 2016 elections circulated on social media; it was a bombshell.

Never have journalists been accused of being partisan in such big numbers. The document was well packaged and designed that to a none-keen observer it would pass for gospel truth.

The attack on the media surfaced in a war of words between pro-President Yoweri Museveni and pro-Mbabazi supporters. Amidst that tension, the media was dragged into the fray.

Of course, the allegation that over 100 journalists had been hired by Mbabazi to polish his image was not true. In fact, many prominent pressies chose to ignore it.

Those of us that got interested in the subject settled of two theories behind the allegation; that originators of the document wanted to blackmail the President by making him panic into thinking that his closest political ally had serious intentions to challenge him in 2016 general elections and by dragging the media into partisan issues journalists’ work would lose credibility.

Tainting the credibility of journalists and their work means undermining the entire media industry. And when this happens, especially now, when everybody is preparing for the 2016 general elections it becomes easier to manipulate the media and even pre-determine what is published. 

However, the Mbabazi allegation opens a can of worms and drags us into a much bigger debate of whether Uganda’s media or journalists are partisan and what should be done.

When anyone raises the proposition that Uganda's media are mostly partisan must gird himself for a barrage of protests from journalists. But anyone with an IQ above five will concur with me that there is some level of bias.

In May 2011, President Yoweri Museveni, in a letter published in the New Vision Wednesday, called journalists “enemies” for their coverage of anti-government protests in which at least 10 people had died.

“The media houses both local and international such as Al Jazeera, BBC, [regional television station] NTV, The Daily Monitor, etc, that cheer on these irresponsible people are enemies of Uganda’s recovery and they will have to be treated as such,” wrote Museveni.

More than a dozen times the Opposition has also attacked some media houses and individual journalists for being partisan. In very common cases some journalists have deliberately refused to balance their stories to carter for their interests.

On the other hand, at many other news organizations, some journalists are essentially advocates for political parties, in many cases hired by news organization because of their affiliation.

But still the media will insist that it is objective. What is happening right now is the equivalent of politicians keeping secret their party membership and trying to convince the electorate that their only objective is to work for the good of the country. Which everyone knows is completely ludicrous.

One issue we also can’t rule out is ignorance. It is also possible that some media practitioners cannot tell whether their actions or statements make them partisan.

So, what do we do? Either our mass media needs to come clean and declare their bias or they must insist that journalists, reporters, commentators and particularly opinion contributors, declare their political bias or allegiance.

Secondly, since over 90 per cent of practicing journalists only know President Museveni’s government it is important to re-orient the Uganda media to appreciate multiparty politics.

We could probably adopt the European style of journalism, which is aggressive, analytical, and opinionated. The European media are not afraid to express their opinions while presenting the researched facts. 

Or we could do the American way where objectivity is emphasized. Objective journalists make quick decisions, and seemingly have more credibility. 

US news organizations have policies discouraging journalists from revealing political affiliations outside of work for the sake of safeguarding the organization’s impartiality. 

For instance, many U.S. newspapers do not allow reporters to voice their opinions publicly, march in demonstrations, volunteer in political campaigns, wear political buttons, or attach bumper stickers to their cars. The ball is in our court, and we have to decide now.

Uganda’s politics of intrigue in Arusha could backfire

By Charles Kazooba

Early February this year President Yoweri Museveni summoned all legislators from his party, the National Resistance Movement (NRM), to National Leadership Institute, Kyankwanzi for a retreat to discuss ways of rebuilding cohesion within the organization.

Museveni was wary that some people in the party had formed cliques which could disintegrate the party. The President, also the NRM Chairman wanted the legislators to iron out their differences so that the party could stand the test of time.

That retreat was also attended by legislators representing Uganda in the East African Legislative Assembly, who are members of NRM. Those regional lawmakers had their grievances, which they tabled before the Mr Museveni. 

The major subject of discussion was censure of Rt Hon Margaret Zziwa, who didn’t attend the meeting but was being accused of misconduct, poor governance, poor leadership, disrespect, intimidation of EALA members and staff and loss of confidence and trust.

Some of those that attended that meeting say the President didn’t appear convinced that those legislators had a prima facie case against Zziwa. It can be said that Mr Museveni therefore never took the matter seriously.

Before that meeting with the President there was an attempt to censure Zziwa on grounds that she had arbitrarily directed that the East African Parliament stops rotating amongst partner states. But that decision had been made by the EALA Commission, and not unilaterally by the Speaker.

There has been so much infighting between the NRM lawmakers in EALA ever since Zziwa, who had the least number of votes amongst the NRM team during primaries, did the unthinkable; beating the most favourite, Byamukama, by 33 votes to 12.

Byamukama lost dramatically. That marked the beginning of deep-rooted wrangles between the NRM legislators in Arusha. The other lawmaker that had shown interest was Mike Ssebalu, who withdrew since the writing on the wall was that it was a women’s battle.

Since then cliques have been formed spearhead by the NRM legislators waiting for an opportune time to throw out Zziwa as if she wasn’t one of their own. It appears NRM has never warmed up to Zziwa as leader of the East African Parliament.

Wrangling within the East African Legislative Assembly had reached the peak with NRM lawmakers mobilizing colleagues to censure the Speaker Rt Hon Margret Zziwa.

In fact, when they met with Museveni again on March 20, they left very infuriated because the President declined listening to their “petty grudges”. Instead, Mr Museveni in that meeting demanded that next time the EALA representatives want to meet him it has to be about policy issues.

The infighting between those NRM lawmakers later on culminated into a censure motion against Zziwa, which was tabled on March 27. The motion had been signed by all representatives of Rwanda and Burundi, six from Uganda, five from Tanzania and five from Kenya.

But they have to first deal with Hon Fred Mukasa Mbidde’s petition filed in the East Africa Court of Justice. 

Mbidde, in a bid to pour cold water on the ongoing campaign to kick out Zziwa, also raises more broad questions on legality of the decisions made by the regional parliament in absence of rules of procedure.

The other matter that will be coming up for contest in court is how the Assembly Commission was instituted. Mbidde says that it is the House Business Committee that by way of a motion moved by one of its members became the Commission after enactment of the Parliament Administration Act. Therefore there were no elections as should have been under normal practice.

The petition filed by Mbidde Foundation on March 20 raises issues on failure by the Assembly to adopt the rules of procedure on its first sitting.

Yet Rule 88 of the rules of procedure of EALA emphasizes that during the first sitting of the Assembly elected under the Treaty sitting as an informal meeting convened and presided over by the Clerk shall adopt the rules of procedure.

This was not done and accordingly the Assembly has no rules of procedure under which it can legally remove the Speaker who was elected at the first informal meeting.

But it also implies that all those decisions made by the Assembly at the time when technically rules of procedure didn’t exist could be declared null and void if the East African Court rules in favour of the petitioner.

Apparently, there is also a huge contradiction between the Treaty and rules of procedure adopted by the previous Assembly.

If court allows the censure of Zziwa, it will be the first time such an action happens in the setup of the East African Community. 

But more importantly, Uganda will have been exposed as a partner state that lacks very solid and credible credentials of nationalism. It is unheard of that a country would just sacrifice her own people in such important positions of responsibility because of contradictions in internal politics.

Even though Zziwa’s tormentors claim Uganda would retain the Speakership after censure, there is no guarantee that contenders from other partner states would not try to grab the seat from Uganda.

This case study also gives a hint on why Uganda could have a raw deal in the East African integration process. The lack of being clear on Uganda’s interests could be a factor in determining what the Kampala government should negotiate for and how it should get it.

Ever since the death of Rt Hon Eriya Kategaya there hasn’t been a father-figure to guide Uganda on the correct path of integration. This is partly the reason a rift recently developed between the partner states and implementation of projects is based on coalition of the willing.

It is therefore important that Ugandan leaders go back to the drawing board and define their code of conduct and strategic interests.

Only new markets can save East Africa’s tea industry

Only new markets can save East Africa’s tea industry

By Charles Kazooba

The volume of tea sold at the Mombasa auction has risen six-fold since 1980, to 300,000 metric tons in 2011.

Over the last decade, the average price of tea at the Mombasa auction has also increased, more than 50 per cent from the 1990-2000 average. So, the tea industry in East Africa was doing well until the Arab Spring struck and started choking the market.

East Africa exports 70 percent of her tea to Pakistan, Egypt, UK, Afghanistan and Sudan. So, as the ripples from Egypt's unrest spread down the Nile and into East Africa, the consequences for the tea industry became tumultuous.  

Tea is the second most consumed beverage in the world, after water, with an estimated 18 to 20 billion cups of tea consumed every day. And East Africa contributes 28 per cent of the world market supply.

Statistics show that Uganda currently ranks 13th among the world’s largest tea producers and third in the east and central Africa region after Kenya and Malawi.

Therefore, before the Arab Spring struck Egypt in 2011, tea farmers in Uganda were assured of battered bread on the table, but not in 2012 and 2013.

With the overthrow of President Mohammed Morsi in July 2013 and the ongoing campaign against the Muslim Brotherhood causing continued political instability, demand for tea plummeted and prices went with them.

In 2010, the last year before the uprising in Egypt, Kenya supplied the tea-obsessed UK with around half of its tea, but Egypt was the single largest destination for Kenyan tea exports, buying nearly a fifth of what the factories around Nyeri produce.

However, it shouldn’t be forgotten that 90 per cent of Uganda’s processed and graded tea finds its way into the international markets through the Mombasa Auction Market where it is branded and consumed as Kenyan tea in the international markets.

Black tea prices have tumbled more than 40 per cent as top importers Pakistan and Egypt cut purchases just as output surged on the back of favourable weather in late 2012 and early 2013. The price plunge was one of the fastest and deepest in the recent history of the industry.

A kilo of tea sold at an average $2.38 per kilo between July and November 2013 compared to $3.65 over the same period in 2012. Tea prices are said to have reduced by 30 per cent since July 2013 to the lowest price registered since October 2008 when a kilo sold at $ 2.05.

The tea industry in East Africa has experienced the lowest decline in auction average prices. This is the lowest since 2001. And this is happening when the costs of tea production are shooting up.

Apart from the Arab Spring the prices of tea further dropped due to an increase in production. For instance, between January and September 2013 production increased by 22 percent (Kenya), 17 percent (Rwanda), 9 percent (Uganda) and 18 percent for Tanzania contributing an extra 60 million kilograms of tea to the Mombasa tea auction centre than the same period in 2012.

In addition, Uganda's tea industry has long been dogged by quality problems. The quality of Ugandan tea is low. The case is worsening because of shortage of labour. So, farms have resorted to using machines like pluckers instead of manual plucking. A machine does not select which ones to pluck and which ones to leave.

In response to complaints from buyers, Kenya recently imposed stricter standards on the quality of tea coming into Mombasa, and, according to Peter Kimanga, president of the East Africa Tea Traders Association, the World Trade Organization is attempting to raise tea standards worldwide.

Yet a further tightening of regulatory standards could spell disaster for the roughly 65,000 Ugandans who manufacture the country's third-largest export, which generates $100 million per year.

Fortunately, prices are again shooting up in the first half of 2014 compared to 2013. On the consumption side, top importers Pakistan and Egypt – the world’s fourth and fifth largest buyers of the commodity – are returning to the market as security in both nations improves following unrest earlier this year.

But the long-term solution should be to look for new markets and boost local consumption through new branding. For instance, seven new markets that included Vietnam, Philippines, Azerbaijan, South Sudan, Myanmar, South Korea and the Czech Republic have been established.

In addition, recent markets such as Angola as well as seasonal markets such as Syria and Chad have come on board.

The request by the East African tea producers that governments scrap value-added tax on domestic sales is another positive agenda that governments in East Africa should seriously take into consideration to stimulate prices through increased consumption.

Kenya, the world’s biggest black-tea exporter, imposes a 16 percent value-added tax on sales, while Uganda, the region’s third-biggest producer, and Malawi, charge 18 percent.

Tea producers also want their governments to introduce a price stabilization fund to cushion them from fluctuations.

EAC divisionism complicates single customs territory

EAC divisionism complicates single customs territory

By Charles Kazooba

It is factual that ideological differences within the East African Community (EAC) member states have built cracks that are delaying full integration.

Apparently, Kenya, Uganda and Rwanda are pursuing a progressive line whereas Tanzania and Burundi are being forced to abandon their conservative tendencies.

This is greatly affecting implementation of the single customs territory (SCT). At most technical meetings towards the rolling out of the single customs territory Tanzania and Burundi have been ignored.

The two even expressed displeasure for being left out of the project. However, towards the end of last year, together, the five countries re-united and endorsed the customs territory to reduce the cost of doing business on the northern corridor. 

The three states under the unpopular arrangement of ‘coalition of the willing’ agreed to post customs officials to assess and collect revenue at Mombasa port and oil installations in Western Kenya–Nakuru, Kisumu, and Eldoret.

The January 1, 2014 commencement date of the SCT was agreed upon during a summit in November 2013 that brought together presidents from the five EAC partner States of Kenya, Uganda, Rwanda, Burundi and Tanzania.

The summit agreed to implement the single customs territory under a destination model of clearance of goods where assessment and collection of revenue is done at the first point of entry, which allows free circulation of goods in the single market with variations to accommodate goods exported from one partner state to another.

In November last year the Uganda Revenue Authority had tried out the single customs territory with big oil companies mainly Vivo Energy and Total. URA said they would implement the SCT progressively to avoid a massive switch over. 

But along the way implementation of the customs territory is getting complicated.

Only assessment is being done at the point of entry and payment of taxes will still be done at point of final destination—in Partner States even though the summit that both assessment and collection of revenue be done at point of entry.

The argument by the council of ministers and bureaucrats is that collection of revenue should wait until a single revenue collecting body and a revenue sharing model are put in place.

So, the Partner States will in the meantime continue to retain control over their revenue collection function.

Secondly, Tanzania and Burundi will wait until in June when Tanzania and Burundi can start implementing the programme.

In reality though the implementation, which was initially planned to begin in January with the three countries moving their revenue staff to common entry and exit points to begin goods clearance has been delayed after Tanzania and Burundi protested their exclusion.

The three states have been prompted to go slow on their plans. Therefore more time has been given to Tanzania and Burundi allowing the two countries the opportunity of preparing for the shift towards the single customs territory.

The cracks between EAC member states were first visible on June 25 last year when Presidents Yoweri Museveni (Uganda), Uhuru Kenyatta (Kenya) and Paul Kagame (Rwanda) decided to fast track the integration process and distributed responsibilities among themselves.

 It was agreed that Uganda chairs the railway development and political federation sector, Kenya chairs the oil pipeline development and electricity generation and distribution while Rwanda chairs the Customs, single tourist visa and EAC e-identity card sector.

Since then the three leaders have severally met to update themselves on the progress. However, they appear to be getting stuck having sidelined the other two members, Tanzania and Burundi.

For instance, there is little talk lately about the political federation project. In fact, at the November summit, all Heads of State stayed away from a planned rally at Kololo Airstrip, Kampala for the launch of the federation campaign.

Tanzania has since argued that Kenya, Uganda and Rwanda were being insensitive by rushing the integration process. 

And most analysts agree that slow pace should also apply to the implementation of the single customs territory.

They argue that the partner states need to put in place payment systems to manage transfers of revenues between states and an independent audit system for early detection of deviations to the protocol

They say that enabling laws should be put in place to authorize acceptance of electronic information as evidence for transactions, a centralized bond guarantee system and operational single window borders including a centralized customs administration.

The region should also first harmonize domestic taxes on goods through adopting common domestic laws, procedures, codes structures and definitions, incentive regimes, minimum and maximum tax rates in the short run with a view to adopting common rates in the long run.

And most importantly, the future success of the single customs territory can only be guaranteed if the region has got institutions that protect integration vision, and able to drive the territory even when political will-power fails nationally.

Once the customs territory has been fully implemented return journey transporting cargo from Mombasa to Kigali would take less than 10 days compared to the 20 days trucks currently take and there would also be fewer checks along the route.

It has been taking weeks to transport cargo because of roadblocks and weighbridges yet the longer a truck stays on the road, the more costs to maintain the drivers. 

These costs are not absorbed by the truck owner, but are passed on to a trader who in turn passes them on to a consumer.

The cost of transporting a 20-foot container from Mombasa to Kigali is expected to drop from $383 to $193, resulting in savings of about $45 million annually, according to a study by the East African Community.

Generally, the cost of doing business in the region will reduce by between 15 per cent and 30 per cent.

The single customs territory will therefore ensure clearance of goods at the first point of entry within East Africa and cut off time and resources used by various governments to collect customs tax at various borders.

EAC eliminates trade barriers as tension amongst members escalates

By Charles Kazooba

The East African Community could soon become the fastest growing economic bloc in the world having eliminated almost all trade barriers thus creating a more favourable environment for doing business.

EAC, which is second to ASEAN as the most progressive bloc, has embarked on implementation of a single customs territory that was launched on August 25 in Kampala.

Under the single customs territory, tax on goods imported into the three countries will be paid at Mombasa and trucks weighed only on crossing the border. In theory, all the roadblocks from Mombasa (Kenya) to Kigali (Rwanda) will be eliminated and the weighbridges reduced from nine to three at most.

During a regional meeting in Kigali, Rwandan capital on Monday 29, Presidents Paul Kagame (Rwanda), Uhuru Kenyatta (Kenya) and Yoweri Museveni (Uganda) agreed to launch of a single tourist at the next infrastructure summit – potentially in Juba, South Sudan early next year.

 The summit heard that a reduction in the number of roadblocks and weighbridges had reduced the time and cost of transporting goods from Mombasa to the interior.

The cost of transporting a 20-foot container from Mombasa to Kigali is also expected to drop from $383 to $193, resulting into savings of about $45 million annually.

Rwanda and Uganda have given signals of their intent to back Kenya's railway corridor linking both countries, including South Sudan to the Kenyan coast.

Amongst themselves, the three member states also agreed to make movement of their people easier and create a favourable working environment.

Ugandans will use their voter’s card as travel documents to Rwanda and Kenya because they do not have national ID cards. Students without voters’ card can use school identity cards. The application of entry coupon will accompany the identity cards. The coupon will act as an entry stamp.

According to officials that attended the meeting, $100-visa with 90 days validity will be paid at the point of entry or in foreign missions. Each state will take a share of $30. However, the country that processes the visa entry will receive an extra $10 in an administration cost.

Uganda also decided to waive work permit fees following similar moves by Kenya and Rwanda. Citizens of the two countries will still need to apply for permits but they will be issued free-of-charge.

However, the developments come at the heels of complaints from Tanzania and Burundi that they are being left out of major projects yet the EAC Treaty demands that all member states move together.

Earlier, in August only during only Heads of State from Uganda, Kenya and Rwanda launch talks on the single customs territory in Kampala, Uganda, at an extra-ordinary meeting.

The three states claim Tanzania and Burundi have always dragged their feet, and therefore can rejoin at their own pace.

Since the August meeting in Kampala only leaders and officials from Kenya, Uganda and Rwanda have been attending EAC meetings.

Tanzania's isolation, however, puts in limbo its $4.7 billion railway line project linking Dar, Kigali and Burundi, whose construction is scheduled for 2014.

 In a statement issued by Tanzania’s ministry of East African Cooperation, Dar said the ongoing tri-lateral talks between Kenya, Rwanda and Uganda were against the EAC protocol.

Dar administration said that the Kenyan, Rwandan and Ugandan leaders were in contravention of Article 7(1) (e) of the EAC protocol. “Even though this Article allows member countries to enter bi-lateral or tri-lateral agreements, it is a must that issues under consideration for implementation under this arrangement are fully discussed and agreed upon by all member countries,” read the statement.