Unlocking East Africa trade potential

A recent report by the United States Agency for International Development (USAid), Trademark Africa and the EAC secretariat confirmed that the bloc maintains a trade surplus in Africa, with exports surpassing imports.

In 2022, EAC's export surplus was approximately $1.8 billion, while the region faced a trade deficit of $29 billion with the rest of the world.

This indicates a more robust trade performance within Africa than global trade dynamics. EAC's exports have consistently increased, from $14 billion in 2018 to $25 billion in 2022.

Within Africa, EAC's exports have also steadily increased, reflecting a positive trajectory in intra-African trade. This trend highlights the potential for the region to further capitalise on its trade relationships within Africa, especially under the African Continental Free Trade Area (AfCFTA) framework.

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The report identifies several key sectors within the EAC that are ripe for development, including agriculture, textiles, pharmaceuticals, and mining.

It emphasises the potential for growth in these sectors, particularly in agriculture where the region can enhance its exports by focusing on high-demand products such as coffee, tea, and horticultural produce. Manufacturing especially textiles and processed foods, also presents major growth avenue that can cater to both regional and global markets.

Despite these opportunities, the EAC faces several challenges in optimising its export potential, including infrastructural deficits, varying levels of economic development, and the need for regional policy harmonisation. A primary challenge is the issue of political goodwill.

Varying levels of commitment to regional integration can impact collaborative trade efforts, as some countries may fear losing sovereignty, hindering full engagement in trade initiatives.

Moreover, overlapping memberships of EAC countries create a complex regulatory environment, leading to confusion and inefficiencies.

The AfCFTA offers an opportunity for the EAC to enhance its export potential. It provides a platform for the region to expand its market access, allowing member States to tap into a larger consumer base across the continent.

This increased intra-African trade can also attract foreign direct investment, crucial for developing local industries and enhancing export capabilities. By minimising trade barriers and enhancing market access, the AfCFTA can contribute to the prosperity of the EAC member states.

The initiative highlights the importance of aligning trade policies and frameworks to harmonise the efforts of EAC member countries. The Regional Trade Policy (RTP) and the Regional AfCFTA Implementation Strategy are pivotal documents guiding these efforts.

They outline a clear path for harmonising national trade policies, addressing overlapping memberships and developing sector-specific strategies for key industries.

The report offers policy recommendations for improving trade performance, emphasising the importance of enhancing trade facilitation measures, investing in infrastructure, and fostering regional cooperation to address identified challenges effectively.

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Trade performance underscores the necessity of strategic planning and policy alignment to fully leverage the benefits of the AfCFTA for the EAC's export potential.

The EAC RTP, formulated in 2021, aligns with the EAC's core trade-related protocols, including the Customs Union and Common Market Protocols. It aims to realise the EAC's trade and economic objectives by proposing various policy actions.

These include developing a legal framework for balanced market access, addressing challenges posed by overlapping memberships in multiple RECs, promoting production of value-added goods, and harmonising trade policies across member states.

Despite infrastructure, policy harmonisation, and political will challenges, the EAC has shown a strong trade performance particularly within Africa, and has significant opportunities for further growth under the AfCFTA framework.

Strategic alignment of trade policies and investment in critical sectors such as agriculture and manufacturing are essential steps forward.

The EAC's Regional Trade Policy and AfCFTA Implementation Strategy provide a roadmap for addressing these challenges and capitalising on opportunities, ultimately contributing to the prosperity of its member states.

The writer is Kenya’s Ambassador to Belgium, Mission to the European Union, Organization of African Caribbean and Pacific States and World Customs Organisation.