The continuous influx of imported goods in local markets have raised concerns for manufacturers and farmers in East Africa, forcing them to push for the full implementation of the Common External Tariff on goods from outside the region. They are worried about their interest rates given the fact that staple foods such as rice, cooking oil, noodles and wheat are largely from foreign countries.
So far, there is a drastic decline in the consumption of local agricultural products. This puts manufacturers and farmers at risk of low production and incurring huge losses. Local manufacturers blame these high imports on tax exemption by some partner states. But even though this could be true, it may not be the only contributing factor.
Over the last couple of months, EAC member countries have been caught up in interregional trade rifts rising from unlawful tariff and non-tariff barriers. These tariffs ultimately affect the entire region including the agro-industry because they stiffen market access and drive trade costs up. This frustrates small scale traders and reduces the output of manufacturers and farmers. If local agricultural products cannot access the markets to meet consumers’ demand, surely import goods will serve as a substitute.
Despite close relations between Kenya and Tanzania with deals that target integration, the situation of tax stands in the way of development and progress. “As long as transaction and logistics costs remain high, goods from outside the region will keep coming,” Joshua Rugema, CEO of the East African Commodities Exchange.
Agriculture is one of East Africa’s most important sectors and requires swift intervention in times of crisis. Although the sector still has untapped potential, it supports about 80 percent of the population living in rural areas. The region depends largely on agricultural activities to boost their economic growth, already accounting for about 36 percent of GDP.