Factors That Explain The Low Intra-Eac Trade For The Period Between 2010 and 2017: A Case Study of Kenyan Exports
Factors That Explain The Low Intra-Eac Trade For The Period Between 2010 and 2017: A Case Study of Kenyan Exports
BY:
SPRING 2018
FACTORS THAT EXPLAIN THE LOW INTRA-EAC TRADE FOR THE PERIOD
BETWEEN 2010 AND 2017: A CASE STUDY OF KENYAN EXPORTS
BY
651294
SPRING
2018
ii
DECLARATION
I, undersigned, declare that this is my original work and has not been submitted to any other
college, or university other than the United States International University- Africa for
academic credit.
Student.
This thesis has been presented for examination with my approval as the appointed supervisor.
Supervisor.
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DEDICATION
This work is dedicated to my family for their understanding and overwhelming support
without which I would not have been able to finalize. I also dedicate it to all the people who
tirelessly work towards the realization of a stronger and a more united East African
Community despite all the challenges they encounter. May we one day fully enjoy the fruits
of their labour.
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TABLE OF CONTENTS
DECLARATION.......................................................................................................................................iii
DEDICATION...........................................................................................................................................iv
ACKNOWLEDGEMENT.......................................................................................................................vii
LIST OF TABLES...................................................................................................................................viii
LIST OF FIGURES..................................................................................................................................ix
ABSTRACT..............................................................................................................................................xii
1.1 Background..................................................................................................................................1
1.3 Objectives....................................................................................................................................4
1.5.4 Researchers.........................................................................................................................5
2.1 Introduction.................................................................................................................................8
CHAPTER 3: METHODOLOGY........................................................................................................34
3.1 Introduction...............................................................................................................................34
4.1 Introduction...............................................................................................................................37
4.4 Why is intra-EAC trade still low despite the reduction of trade barriers....................................43
vi
4.4.4 Industrial Concentration.....................................................................................................49
4.4.6 Corruption..........................................................................................................................51
5.1 Introduction..............................................................................................................................55
5.4 Conclusions...............................................................................................................................59
5.3 Recommendations......................................................................................................................60
REFERENCES........................................................................................................................................64
ACKNOWLEDGEMENT
Research is never a product of the efforts of one person. I take this chance to acknowledge
everyone who has contributed to make this project a success. My sincere gratitude to my
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supervisor, Mr. Joseph Kimani and my moderator Dr. Elijah Munyi; thank you very much for
your input, refinement of my ideas and guidance without which this project would not have
been completed.
I also thank my classmates for the value adding discussions and assistance towards the
success of this project. To my family and friends, thank you for the moral support and
encouragement through this journey and above all, to the Almighty God for his providence
and blessings.
LIST OF TABLES
viii
Table 1.2 EAC Trade Report 2010-2014
LIST OF FIGURES
ix
Fig 1.2 Kenya’s Trade Balance in the EAC, 2012-2016
AU African Union
x
CET Common External Tariffs
CU Customs Union
EU European Union
HI Historical Institutionalism
xi
KNBS Kenya National Bureau of Statistics.
TI Transparency International
ABSTRACT
The East African Community (EAC) has taken a step forward by implementing a free trade
area, customs union and a common market in its region. It is also on the journey of achieving
an economic union and eventually a political federation. This implementation of the former
requires the removal of all trade barriers in the intra-regional trade. The EAC region has
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incorporated the removal of trade barriers for efficient regional integration among the
member states. However, the region has registered low trade in the past eight years.
This study is defined by two objectives: To examine why Kenyan export products are
experiencing contraction within the intra- EAC trade integration and to evaluate why the
level of intra-EAC trade is still low despite the decrease of trade barriers. To explain the
process of regional integration, the study has used the concepts of rational choice
institutionalism and historical institutionalism. Secondary data using qualitative methods was
The study found out that, several factors accrue to the low intra-EAC trade in the region.
partial harmonization of trade rules and states reluctance to surrender their authority to the
common market. The study further offers recommendations for the findings and provides
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CHAPTER ONE: INTRODUCTION
1.1 Background
“When goods do not cross borders, soldiers will” is a quote ascribed to the French economist
and Member of Parliament, Claude Frédéric Bastiat (Rothbard, 2011). In spite of the age of
the quote (expressed in the 19th century) the element of it remains meaningful. An openness
in trade is often defined to be a main tool not only for a stable environment, but also for the
political development. The philosopher Murray N. Rothbard even appealed that “exchange is
the lifeblood, not only of our economy, but of civilization itself” (Rothbard, 1990). Several
rules of today are articulated with the essence of increasing the trade not only in order to
upsurge the GDP of a developed state, but also in order to advance less development states.
Policies about increased trade are hence implemented as national goals in some nations and
Regional trade is trade which focusses on economic exchange mainly between countries of
the same region or economic zone. States within similar economic zone trade with each other
taking advantage of availability of economies of scale within the region because of prolonged
market brought about by removal of tariff and Non-Tariff Barriers (NTBs). Common markets
are being recognized in poorer regions of the world including Africa mainly to stimulate
production of items within the bloc that would then be imported, boost foreign direct
investments and defend infant industries from competition from non-member states (Bennett
1999).
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Daniel et al. (2011) has recognized five forms of regional integration: free trade area,
customs union, common market, economic union, and political union or federation. Free
trade area- increases trade among its members by eliminating trade barriers among them,
with each member left to create its own trade policy with non-members. Customs union is an
economic integration whereby states eradicate all barriers to trade among themselves, but
erect a mutual trade policy against non-members, by having a CET. In a common market,
member states eradicate all barriers to trade and factors of production that is people and cross
border investments, while an economic union exemplifies full integration of the economies
of member states, going past the demand of a shared market by demanding member countries
to blend their economic policies (tax, monetary and fiscal policies), and social welfare
agendas in order to complement their economies into a single unit and erect a common trade
In the East African Community, five partners (Kenya, Uganda, United Republic of Tanzania,
Rwanda and Burundi) have been able to achieve a customs union with a shared external tariff
executed in 2005. To eliminate internal tariffs, the joint market which bids for movement of
labor, capital and trade (merchandise as well as services) was legally launched in the year
2010. The EAC integration course appears to be the most functioning and quickly executed
in the African continent, by its display of strong political pledge on the part of the member
states. This has seen the addition of a new member, The Republic of South Sudan, recognized
during the 17th ordinary summit of the regional leaders of the EAC on the 2nd of March 2016.
Regardless of the reduction of all barriers to trade and factors of production hence
guaranteeing free movement of people and cross border investments, right of residence and
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formation, trade in the region is still low. This study aims at examining the factors leading to
the low intra-EAC trade in the period between 2010 and 2017.
Intra-regional trade in EAC is still low and encompasses of only 9.4 per cent of total EAC.
The EAC trade deficit depreciated by 36.8 per cent in 2016 partly due to a fall in imports into
the region (Nakaweesi, 2017). According to EAC Trade and Investment Report 2016,
regional total trade deteriorated by 19.5 per cent for the second successive year. According to
the report, total trade documented in 2016 reduced to $44.6 billion down from $55.4 billion
recorded the prior year. Furthermore, total exports reduced by 6.8 per cent to $14.9 billion
from $16.0 billion in 2015. Imports into the region also declined to $29.7 billion in 2016,
down from $39.4 billion recorded in 2015. The total intra-EAC trade also deteriorated to $4.2
billion in 2016. Intra-EAC trade remains low and presently stands at 13 percent of the total
trade volume. This relates poorly with other regional trade arrangements such as the
European Union and the North America Free Trade Agreement, where intraregional trade
accounts, respectively, for 60 percent and 48 percent of total trade portfolios (Muluvi,
The reduction of tariffs on intra-regional trade also known as Internal Tariffs (IT) and the
efforts to diminish NTBs and development in trade facilitation are among the on-going
initiatives to upsurge intra-EAC trade. Rather, the formation of a free-trade area, customs
union and a common market should increase intra-trade within the EAC signifying that intra
trade relations between the member states should increase both steadily and in value terms
(Shinyekwa & Othieno 2011). However, this is not the case and trade in the region is still low
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despite the implementation of such strategies. The reason for this trend despite all the effort
needs examining.
1.3 Objectives
1. To examine why Kenyan export products are experiencing contraction within the
2. To evaluate why the level of intra-EAC trade is still low despite the decrease of trade
barriers.
1. Why are Kenyan exports experiencing trade contraction in intra-EAC regional trade
integration?
2. Why is intra-EAC trade still low despite the reduction of trade barriers?
The study is aimed at providing valued information that may attest to be significant to the
following groups:
The East African Community Secretariat may use the results to articulate positive policies
and a framework that is relevant and subtle to challenges that influence regional trade.
The study is also important to multinational corporations that would want to invest or trade
within the East African Community. They will be able to recognize the challenges they may
4
come across and advance policies that will diminish their effects. Moreover, the study is also
applicable to companies that have highly capitalized in the EAC intra-regional trade and
export their products in the region. The study is important in the illumination of the factors
The study will empower the citizens of the recipient state to lobby their leaders concerning
the enactment of laws and invention of policies that effect trade relations with their
1.5.4 Researchers
The study will donate to the current literature on the factors influencing the contraction of
intra-regional trade in EAC. The study will offer valuable information to researchers on why
intra-EAC trade is still low despite the reduction of trade barriers which are supposed to
advance the levels of trade in the region. The study will be a significant source of information
to scholars who would like to delve further on the topic of intra trade relations in regional
integrations. Criticisms and omissions that may be understood or obvious in the study will
also be vital for inspiring further research for the verification of the findings of this study.
The study is precisely limited to examine the factors influencing trade contraction in EAC.
The scope of this study is restricted only to intra-regional trade between the EAC member
states with a focus of investigating trade contraction in Kenyan exports to the EAC region.
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1.7 Definitions of Terms
Trade: Based on this study, trade can be defined as exchange of goods and services between
Integration: The act of different states coming together and merging their policies to achieve
a common goal.
Regional Integration: Regional integration can be defined as a scenario where states under a
certain geographical area surrender their sovereignty to each other and unify to carry out
Chapter One: It will give a brief introduction of the research. It will also contain the
statement of the problem, objectives of the study, research questions, and significance of the
Chapter Two: It will look at the theoretical foundations and literature review. It offers an
assessment of the forms of regional integration in EAC and gives an overview of intra-
regional trade in EAC from 2010 to 2017. The research gap is also identified.
Chapter Three: It discusses the methodological approaches used to collect data for this study.
It also outlines the research design, the population and sample, data collection method, data
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Chapter Four: It analyses the data collected and provides the answers to the research
questions of the study and is structured according to the specific research objectives of the
Chapter Five: This chapter offers the summary of the findings, identifying some of the
defining findings of the study, the conclusion and recommendations. Limitations of the study
2.1 Introduction
To fully appreciate and comprehend the nature of intra-regional trade in EAC, this chapter
will probe into literature review to: first, show that EAC member states have embraced the
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process of regional integration by eliminating trade barriers and second; analyze the levels of
EAC intra-regional trade within the study period. Thirdly, it will review some of the causes
of the low intra-EAC trade highlighted by other researchers and some companies
experiencing trade contraction in the region and finally, the knowledge gap is identified.
In the 18th century, Western Europe was rather of a periphery and (relatively other regions)
underdeveloped. It had inadequate trade with few trading posts et cetera (Findlay &
O’Rourke, 2009). What is elucidated to have advanced and amplified the European trade is
mostly variables regarding cost reduction and Findlay and O’Rourke among others discuss
the European increase of trade as an answer to the decrease of costs. The European trade
upsurge was not secluded as exclusively intra-regional, rather, the intra-regional trade much
advanced alongside the intercontinental trade (Findlay & O’Rourke, 2009). Nevertheless, the
intra-European trade did increase and because the use of the European case is not to do an
assessment but as to find variables, these sorts of missing similarities will not affect the
The costs related with the European trade at this time concerned tariffs and various kinds of
grants aiming at protecting national production from international competition (Findlay &
O’Rourke, 2009). The isolationism can however be a dispute for an original national
importance when a state has not yet advanced adequately for international trade (cf. the
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infant industry argument) (Krugman & Obstfield, 2009). However, slightly differing to
preceding arguments Allen argues that “the inter-continental trade flourishing was a key
progress that boosted north-western Europe forwards” in the 18 th century (Findlay &
O’Rourke, 2009). Several minor European states had begun to slacken their trade strategies
in the early 19th century or even the late 18th century. Nevertheless, in the 1850’s several of
the main economies of Europe followed and began a liberalization course with e.g. average
tariffs dropping and decreases of import prohibitions, therefore reducing costs linked with
Another cost reduction, highlighted by Findlay and O’Rourke as donating to the enlarged
transport such as development of roads as well as the railroad. These transport developments
reduced costs that were related with trade and together with this, the trade volumes and the
trade divergence increased, i.e. a bigger variety of goods were trafficked among states
(Findlay & O’Rourke, 2009). In addition to the transport novelties were the technological
inventions, where the telegraph came to permit a closure of the communication between
diverse areas. When the information speed rose, there was an enablement of the potential
profits that could be made. Henceforth, the answers to supply and demand were alleviated as
the coordination, due to the telegraph, was eased (Findlay & O’Rourke, 2009).
Another variable that is highlighted as significant for the development of European trade is
the moderately peaceful environment that was present in the 19th century Europe. The trade
prior on had been disturbed by common wars and escorted policies about blockades et cetera
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2.2.2 Overview of Intra-regional trade in Africa
Because the intra-regional trade of Africa is demarcated as a key instrument for evolving the
continent, any determination to widen the understanding of the regional trade of today is of
importance. Policies targeting at growing intra-African trade are stipulated among African
states, in the African Union as well as in the EU and among several industrialized states
(Briet, 2010).
Observed empirical effects of trade can be found in improved economic potentials for states
as well as for individuals (World Bank, 2012). Nonetheless, in Africa, the amount of trade is
very inadequate. Despite the continent’s politically postulated determinations to advance its
global and intra-regional trade, the trade remains obstinately low (UNECA, 2012). The
African share of the global trade is 3.2 percent, while the intra-regional African trade is 12.8
percent (WTO, 2013). The World Bank has recognized intra-regional trade, i.e. trade between
for the African states (World Bank, 2012). Still, the key trade partners for most African
In 2012 the intra-African trade was 12.8 percent of the total trade of the continent. This can
be compared to the intra-regional trade in Asia which sums up to 53.4 percent or the intra-
regional trade in the South and Central America which sums up to 26.6 percent (WTO,
2013). Other trade numbers can be found in table below. The numbers are the certified
statistics and do not take the informal trade into account, which is rather challenging since
TRADE.
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Many strategies purpose at growing the intra-regional trade and e.g. the African Union has
espoused regional integration as its predominant development approach for the continent,
where the intra-regional trade establishes one part of the integration (UNECA, 2012).
Regional integration would permit the now relatively small African markets and resource
The African policies targeting at growing the regional integration, hence growing the regional
trade, are much absorbed on reducing tariffs. This is often founded in different regional free
trade treaties among African states that are geographically close. Nevertheless, some
deterrents to trade are found in non-tariff barriers (NTBs) (UNECA, 2012). NTBs are
governmental or legal matters that may hinder trade (WTO, 2014). The ideas include import
licensing, subsidies, complex rules of origin as well as roadblocks and harassments from
Other interferences to trade can be found in missing infrastructure, but also in the many
2012; Kimenyi et al., 2012; UNECA, 2012). In addition to these trade interruptions, financial
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infrastructure and technical infrastructure can also be presumed to disturb the intra-African
A hastening of the trade is not a clear goal per se but somewhat a political means to an end
where an amplified intra-African trade can mean that economies of Africa can be more
competitive, real and more of scale as the non-productive actors become ousted. Further on,
it can lead to spill-over effects and entice foreign outlay (Kimenyi et al., 2012). Irrespective
of which variable is reliant on and which is self-governing, the connection between trade and
development inclines to be presumed in much of the policy making, and thus the execution of
However, the African trade has advanced during the last decade and the global trade has
amplified widely. Yet, it is vital to note that it is only a few African states that are accountable
for the augmented share of the global trade. In 2006 five African states were accountable for
73 percent of the total export of the continent. The exported goods are mainly oil and gas
(Kommerskollegium, 2009).
Concerning the products that are subject to trade, many African states tend to specify in the
same goods as their neighboring states do. One feature of the missing economic divergence is
the related absence of comparative advantages (Kimenyi et al., 2012). When all states in a
region specify in the same products, there is little need for regional trade—and when the
regional trade is of small scale, the capacity of producing divergence is small (Kimenyi et al.,
2012). One advantage of divergence and hence specialization is that states can gain
comparative advantages by producing the products that they are the most effectual in
producing. By selling products a state has comparative advantages in producing, the state can
gain a yield by which it e.g. can import other products (Krugman & Obstfeld, 2009).
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The disparity to this can be empirically demonstrated in the current trade flows of Africa,
where the exports from Africa usually comprises of primary supplies. Additionally, the trade
patterns of the continent are dazzling the trade patterns of the colonial times, where the trade
processed goods and the African imports are besides more expanded than their exports. Many
African states have implemented aims of expanding their economy regarding risks of being
According to a study done by Grönbäck (2014), “Why do not African countries trade with
one another? A qualitative study of factors affecting the intra-African trade” the author aimed
at probing why in spite of many strategies which have been espoused to aid in increasing the
trade, intra-regional trade remains obstinately low. The author uses Mali and Zimbabwe as
the case study. In the results, the study exposed that; an absence of free trade was the key
answer to why the states do not trade with other states in the African region. Another factor
was the war-torn environment or a certain path dependency hindering trade reforms.
The author also intended at probing the factors distressing regional trade in Africa. The study
found out that, one of the interference to trade facilitation is road blocks and inconsistent
rules where the states have several REC memberships and the RECs adopt different sets of
rules.
The EAC market has a shared GDP of US$ 147.5 billion and a population of 145.5 million
persons in as of 2015. The treaty for creation of the East African Community was signed in
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1999 and entered into force in 2000 following its consent by the original three-member states
that is Kenya, Uganda and Tanzania. The membership of the EAC has since extended from
the original three following the entry of the Republic of Rwanda and Republic of Burundi
who consented to the EAC treaty in June 2007 and became full members of the community
with effect July 2007 and later the republic of South Sudan in April 2016 (Kenya Institute for
The EAC integration course is demarcated in four phases, namely: A Customs Union, a
Common Market, a Monetary Union, and eventually Political Federation. The Customs
Union came into force in 2005 and its purposes were to open and endorse trade and
recognized in 2010 with the objective of uniting the Customs Union and to offer for free
movement of goods, persons, services, labor, capital and the rights of establishment and
residence in the EAC region. Later, the Monetary Union protocol was employed in 2013 to
economic development (Kenya Institute for Public Policy Research and Analysis, 2017).
EAC predicted the development of a single market and investment area in the region and the
harmonization of strategies to inspire cross-border trade and investment, ease cross border
Kibua and Tostensen (2005) detected that preceding to the signing of the Treaty; several
actions were understood in agreement with the 1997-2000 development strategy. They
the same day and time, representation of preferential tariff discount, organization of
standards of goods and services, common recognition of health certificates issued by national
bodies for goods traded in East Africa; enablement of cross border movement of persons and
goods through an East African passport, allowing a seven-day grace period for personal
motor vehicles, generating immigration desks for East Africans at international airports, re-
introducing interstate passes and retreating of visa charges for students; and lastly
The East Africa Community Customs Union, a second expansion method covering the period
2001-2005 was prepared, concentrating mainly on the creation of a customs union and later
on a common market and the expansion of collaboration for shared profit of member states.
The most notable innovation of the second expansion approach is the formation of the East
which was to be implemented over a five-year term by the partner states. They also decided
to resolve the delinquent of multiple memberships in regional blocs and to remove non-tariff
barriers (Otieno, 2013). The purposes spelled out in the EACCU protocol (2005) include the
economic development and industrial adjustment. The protocol presented for the
development of a shared external tariff (CET), trade remedies and the prevention,
investigation and destruction of custom offences and collection of customs duty by executing
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Article 5(2) of the EAC Treaty offers that after the customs union, member countries will
advance to a common market. The EACCM was employed in 2009 and came into force in
July 2010 following the authorization by the heads of states of the five-member states;
Kenya, Uganda, Tanzania Rwanda and Burundi. The EACCM protocol (2009) pledges free
movement of goods, people and labor, rights of formation and residence, free movement of
services and free movement of capital. The protocol also illustrates other areas of partnership
by the member states and guidelines on competition, public procurement and subsidies (Lee
So far, actions made towards a shared market include; first, the enablement of the movement
of people through the outline of the East African passport, national identity cards and
founding of EAC citizens’ desk at points of entry, employment of a single migration entry,
special passes for border communities, progression of a protocol on the free movement of
persons, labor, services and the right of formation and residence and coordination of labor
policies and legislation, and second the coordination of economic policies through
liberalization of the exchange rate and interest rates, similar investment incentives, events to
blend economic policy and joint capital markets development policy (Cyrus, 2015).
Percentage Change
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1 3 4
IMP Uganda 576.5 692.6 646.9 616.6 684.6 20.1 -6.6 -4.7 11.0
Tanzani 295.9 378.1 678.6 397.0 709.8 27.8 79.5 - 78.8
a 41.5
Kenya 256.8 292.8 350.9 334.5 416.9 14.0 19.8 -4.7 24.6
Burundi 77.2 160.8 168.1 346.4 126.1 4.3 5.3 6.3 6.3
Rwanda 344.6 385.1 457.8 412.5 465.1 11.7 18.9 -9.9 12.7
Total 1,551. 1,904. 2,302. 2,107. 2,402. 23.1 20.6 -8.5 14.0
0 4 4 0 5
EXP Uganda 428.6 503.7 580.3 627.4 642.2 17.5 15.2 8.1 2.4
Tanzani 394.3 409.0 613.3 1,118. 779.5 3.7 49.9 82.3 -
a 0 30.3
Kenya 1,280. 1,544. 1,593. 1.451. 1,430. 20.7 3.2 -8.9 -1.4
0 4 0 0 8
Burundi 18.6 25.9 24.9 35.19 25.45 39.1 -3.7 41.3 -
27.7
Rwanda 50.4 81.2 343.5 467.0 352.4 61.0 323. 36.0 -
2 24.5
Total 2,171. 2,564. 3,155. 3,698. 3,230. 18.1 23.0 17.2 -
9 1 0 6 4 12.7
Total Uganda 1,005. 1,196. 1,227. 1,244. 1.326. 19.0 2.6 1.4 6.7
EAC 1 4 2 0 9
Trade Tanzani 690.2 787.1 1291.9 1,515. 1,489. 14.1 64.1 17.3 -1.7
Value a 0 3
Kenya 1,536. 1,837. 1,943. 1,785. 1,847. 19.5 5.8 -8.1 3.5
8 2 9 5 7
Burundi 98.5 186.7 193.0 381.6 151.5 94.9 3.4 97.7 -
60.3
Rwanda 395.0 466.2 801.3 879.5 817.5 18.0 71.9 9.8 -7.0
17
Total 3,722. 4,473. 5,457. 5,805. 5,632. 20.2 22.0 6.4 -3.0
9 6 3 6 9
From the table above, intra-regional trade values of EAC member states enlarged between
years 2011 to 2013. Then, the value of intra-regional EAC trade abridged to US$ 5,632.9
million in 2014 from US$ 5,805.6 million recorded in 2013. The deterioration in intra-trade
value in year 2014 can be accredited to negative weather situations in the EAC states which
led to a reduction in the value of exports by 12.7 percent (EAC Trade Report, 2014). The
coffee, tea, tobacco, cotton, rice, maize, wheat flour and manufactured goods such as cement,
petroleum products, textiles, sugar, confectionery, beer, salt, vegetable fats and oils, iron and
The table below entitles that, the value of intra-EAC trade declined by 10.0 percent from
US$ 5.6 billion in 2014 to US$ 5.1 billion in 2015. According to the table, the deterioration
was mainly accredited to the reductions of 8.3 percent, 19.2 percent and 27.5 percent in the
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Source: East Africa Business Council (2015).
Uganda and Burundi recorded an increase in their shares of total intra-EAC trade while that
of Kenya, Rwanda and Tanzania diminished. During the year, the level of intra-regional
imports to Uganda condensed by 8 percent to US$ 630.2 million from US$ 642.2 million in
2014. On the other hand, the upsurge in total trade of Burundi could be accredited to the
expansion in the level of imports which increased by 7.3 percent to US$ 151.1 million in
2015 from US$ 126.1 million in 2014. During the year, Kenya continued to rule intra-EAC
trade, accounting for about 33.4 percent of total intra-EAC trade while Uganda and Tanzania
accounted for 27.7 percent and 23.7 percent of the total intra-EAC trade, correspondingly.
percent from US$5.6 billion in 2014 to US$5.1 billion. Investment flows in 2015 also
19
declined by 16.4% from the previous year although the total amount was roughly double than
that of 2012 and 2013. Similarly, the trade inconsistency with the rest of the world continued
In a nutshell, EAC intra-trade routine in 2015 displayed a descending trend with a decline of
10 percent from US$ 5.6 billion in 2014 to US$ 5.1 billion. Investment flows in 2015 also
weakened by 16.4% from the previous year although the total expenditure was almost double
than that of 2012 and 2013. Similarly, the trade shortage with the rest of the world continued
to rise in 2015. The structure of intra-EAC trade was mainly subjugated by agricultural
merchandises namely; coffee, tea, tobacco, cotton, rice, maize and wheat flour and industrial
goods such as cement, petroleum products, textiles, sugar, confectionery, beer, salt, vegetable
fats and oils, iron and steel, paper, plastics and pharmaceutical products as in preceding
years.
The EAC trade and investment report 2015 discloses the trials that delay trade in EAC as
Non-Tariff Barriers (NTBs) that raised the cost of doing business; poor infrastructure at the
ports and along the main transport corridors; exclusion government that distorts the execution
of the CET; low value addition in the region that disturbs the export earning of the partner
states; absence of human and financial capitals by the performing agencies such as the
investment linked rules and strategies that are not synchronized at the regional level; and
According to the EAC secretariat trade report (2016), trade among the EAC member states
was dwindling as member states looked outside for other trading partners. According to the
report, intra- EAC trade decreased by 13 percent in three years, with total value deteriorating
20
from $ 5.8 billion in 2013 to $5.06 billion in 2015. Between 2014 and 2015, intra-EAC trade
contracted by 10 percent from $5.6 billion to $5.1 billion. In 2016, based on the report, a
cocktail of features was stifling intra-EAC trade while disheartening regional integration
process. Non-tariff barriers (NTBs), poor infrastructure at the ports and on the main transport
corridors, low value addition in the EAC region and absenteeism of a shared position on the
implementation of duty exception governments by the member states were known as key
factors that pervert the Common External Tariff (CET). Another factor documented was the
destination. Due to this, the report professed that EAC member states were hence looking to
substitute closer trade ties with states outside the bloc as the volume of trade between the
member states was lessening. These are the EU, COMESA, Southern African Development
Community (SADC), United States of America, United Arab Emirates, India and China
Anyanzwa (2017) opposes that the EAC intra-regional trade weakening is due to the failure
by member states to agree on trade liberalization and integration. These are the glitches
destroying the benefits of Customs Union and Common Market. According to the author, the
intra-regional trade creates only 9.4 per cent of the total trade of the bloc in spite of the
employment of the Single Customs Territory that offers for removal of tariffs and other
Kenya hinges on Africa to absorb more than 40 per cent of its industrial exports. KNBS
(2015) report designates a 30 per cent drop in exports to Uganda to $152.1 million from
$228.18 million in 2014.Africa persisted to be the chief destination of the state’s exports,
21
accounting for 40.6 per cent of the total during the review period. Within Africa, Uganda was
the prime market for Kenya’s exports, accounting for 11.3 per cent of total export earnings,
followed by Tanzania, which accounted for 5 per cent of total export earnings in the third
quarter of 2016. Tanzania’s imports from Kenya dropped to $67.5 million in the third quarter
of 2016, from $78.2 million over the same period two years beforehand. Rwanda, which in
2015 was the only state that had amplified its imports from Kenya, also recorded a drop to
The EAC region is the top Kenya’s export destination and accounted for 21.1 per cent of total
exports in 2016. This was mainly accredited to liberalization of trade under the Customs
Union and Common Market regimes. In 2017, Kenya exported Ksh 121.7 billion worth of
goods and services to the EAC equated to Ksh 126.8 billion exported in 2016, which
Uganda has been the foremost destination for Kenyan exports followed by Tanzania, Rwanda
and Burundi as designated by the figure above. In 2016, Uganda engrossed Ksh 62.2 billion
22
worth of exports from Kenya equated to Ksh 68.8 billion in 2015 mainly due to deterioration
in exports of cement, petroleum products, articles of plastics, alcoholic beverages and salt.
According to Gicobi (2017), Kenya’s exports to the East African region dropped in the first
eight months with the largest deterioration being recorded exports to Tanzania. Tanzania cut
imports from Kenya by more than $ 40.5 million to $ 134.2 million from $ 174.7 million, as
a trade war rumbled between the two states. Kenya has whined about products like cement,
edible oils, textiles, lubricants and products manufactures by industries outside the Export
Processing Zones that have been deprived of preferential market access to Tanzania because
of problems linked to the rules of origin. Kenya has objected Tanzania’s choice to execute a
higher local content requirement of 75 per cent of total input in export tobacco, contrary to
Additionally, data from the Kenya Dairy Board (KDB) designates exports to Tanzania
dropped to Ksh130 million ($1.3 million) in 2016 from Ksh648 million ($6.3 million) the
previous year. The regulator features the drop to trade limitations by Tanzania on Kenyan
products. Tanzania is one of the main markets for Kenyan milk products, but Dar es Salaam
has executed tariffs that make it hard for dairy product to access the market. Dar es Salaam
levies Ksh10.25 ($0.1) for every kilo of milk exported. Furthermore, data from the Kenya
National Bureau of Statistics (2017) displays that exports to Uganda, which has been the
main market for Kenya’s goods, weakened marginally in the eight months to August to $323
In the first eight months of 2017, Tanzania cut imports from Kenya to $134.2 million from
$174.7 million in the same period in 2016, while Kenyan exports to Uganda fell to $323
million, from $327.9 million over the same period. In 2016, Kenya’s exports to Uganda and
23
Tanzania deteriorated by 26.4 per cent and 46.7 per cent to $498.7 million and $252.9
million, correspondingly. Exports to Rwanda and Burundi deteriorated by 10.8 per cent and
18.3 per cent to $146.5 million and $ 50.4 million, respectively (Anyanzwa, 2018).
There seems to be a re-organization in trade relations, which has seen the other East African
member states, over the time, trade more with each other but less with Kenya in what some
see as a plot by Kenya’s neighbors to tame its overstated ego. This has left Kenya, for long
the cornerstone of the EAC, isolated. For instance, in 2016, Rwanda’s trade with Uganda and
Tanzania excavated as that with Kenya went down. Imports from Tanzania into Rwanda rose
from a trifling 1.3 per cent 15 years ago to 5.1 per cent in 2015. Uganda’s share of imports to
Kigali went up from 6.5 per cent to 12 per cent, in what many might see as re-organization of
relations among the East African states. But Kenya’s worst performance has been in
Tanzania, whose diplomatic relations with Nairobi has in recent times plunged. From being
the fourth position and commanding a 6.1 per cent share in Tanzania’s import bill, Kenya’s
exports into Dares Salaam have plunged expressively leaving the state at 8th position in the
With these statistics, it is apparent that EAC states have not fully harnessed the opportunities
presented by the EAC market. It is therefore important to investigate why intra-EAC trade is
low despite the decrease of both regulatory and institutional trade barriers, by narrowing it
down to the factors leading to the contraction of Kenyan exports in the region.
Trade value can decrease an economic bloc despite decrease of trade and institutional barriers
to encourage trade as illustrated in the above literature. This leads to the questioning as to
24
whether the reduction of trade barriers within the EAC regional integration is helpful to the
member states and to EAC regional integration based on the discrepancies in trading values
between the EAC member states from 2010 to 2017 as portrayed in the literature above. The
above literature has registered some of the factors that donated to the trade discrepancies in
EAC. This study aims to question the truth of claims made by the EAC and EABC reports
and other researchers studied above on the causes of contracting intra-EAC trade. Some of
the claims are: Non-Tariff Barriers (NTBs) that elevated the cost of doing business; poor
infrastructure at the ports and along the main transport corridors; exemption regime that
misrepresents the execution of the CET; low value addition in the region that disturbs the
export earning of the partner states; absence of human and financial resources by the
executing agencies such as the investment related policies and strategies that are not
harmonized at the regional level; and cumbersome administrative and regulatory practices
My study seeks to examine the significance of each of these elements in the contraction of
intra-EAC trade, by examining the factors contributing to the contraction of Kenyan exports
in the region and the low intra- regional trade in EAC in general.
Trade and intra-regional trade as an academic subject is wide and multidimensional. The
potential accesses and ways of understanding what affects trade are numerous and for this
study to be viable, there is a need to limit the number of studied scopes. To select study
objects in a reasonable way, theories are appropriate tools for directing the study about the
25
research. The theories of this thesis are hence used to make the study focused, but also in
Institutional analysis is used to answer questions mainly concerning how actors behave, what
institutions do and why the latter persist over time (Hall & Taylor, 1996). Institutions can
provide the codes of behavior by rules or norms and can provide frameworks for how to act
recognized within the institutions, the understanding of what causes change (or non-change)
may vary (March & Olsen, 2008). In the context of trade, and particularly the development
(or non-development) of trade, institutional analysis can permit a fit theoretical framework
for organizing the approach to the mystery of the thesis. Hence, because institutionalism
implies the interface between performance, ideas, agency and change, it can theoretically
provide systematic tools that can offer a set of clarifications as of why the EAC trade is as
limited as it is.
The Rational Choice Institutionalism is a viewpoint that understands the political life as
organized by rational actors in a calculating way (March & Olsen, 2008). The analytical tools
in this viewpoint are frequently used in the field of economics (Shepsle, 2008). Because trade
is a stimulating topic for researchers in economics, many of the rational choice tools have
been used in studies of economics. Hence, these sorts of studies have fixated much on costs,
benefits and free rider difficulties in trade policies and it has showed fruitful to use these
viewpoint of rational choice also in this study because it can donate to an increasing
26
knowledge about the intra-regional trade. Nevertheless, since this study is made from a social
also include another and balancing viewpoint of why EAC trade has not developed more. To
widen the understanding about the partial trade this study will include the standpoint of
Historical Institutionalism, a model which allows studies about e.g. structures and historical
The selected theories are developed from diverse viewpoints and hence permit diverse
understanding of political systems (Hall & Taylor, 1996). Nevertheless, both the theories
focus upon the role of institutions in the setting of social and political outcomes and the
viewpoints are not essentially limited, but rather harmonizing where they can be said to focus
on diverse features of the system (March & Olsen, 2008). Because trade can be affected by
many diverse institutions, the addition of two broad theories can be of importance when there
Hence, this theoretical section will be followed by two discrete presentations of the Rational
Choice Institutionalism and the Historical institutionalism since these two theories can
provide the comprehensive understanding about the topic. These theories will nevertheless
offer several possible descriptions of why the EAC intra-regional trade is as inadequate as it
Central assumptions
Rational choice institutionalism was authored by Barry R. Weingast (2002). The theory offers
a distinguishing set of tactics to the study of institutions. It covers three classes of questions:
27
the effects of institutions; why institutions are essential at all and the endogenous choice of
specific institutions, including their long-term resilience and existence. The theory adopts
that institutions are used by rational actors wanting to exploit their outcome. The theory is
based on norms about the rational actor and is deriving analytical tools from the field of
economics (Shepsle, 2008). In this viewpoint actors behave sensibly and have a fixed set of
preferences. To exploit the outcome accordingly to these likings, the actors behave in a
The actors, i.e. the individuals, additionally act in accord with their prospects about the
behavior of other individuals. Hence, an actor makes a calculation about how to exploit an
outcome according to his or her likings, but also deliberates the probable behavior of other
actors and behave deliberately according to the latter as well (The Prisoner’s Dilemma)
(Taylor & Hall, 1996). Politics can thus be demarcated as a set of collective action dilemmas,
where actions that are done in order to exploit a consequence for an individual can, when
done by many individuals, become collectively sub-optimal. Institutions are what structure
relations between actors and it is through the former that the number of possible alternatives
and as something that endures to exist if it offers more benefits than any alternative would.
and be more of a given game form in which actors’ act. The latter way of understanding
28
possible courses of action for the actors (the Median Voter Theorem) (Shepsle, 2008). The
Shepsle highlights how actors can push for a change of institutions, in line with standpoint of
(Shepsle, 2008).
The further substance of an institution can also be understood otherwise by diverse Rational
its impartially stern rules, whereas other outline it as a collective set of guidelines or norms
unstructured. The structured institution is sturdy and does not change much over time. It is
and unstructured institution is defined as more unspoken and less formalized but does still
alarm practices with encouraged patterns. Norms, within a legal system, that are not scripted
The structured institution entails well-defined actors (e.g. politicians) that have
comparatively clear likings (e.g. office preferences or policy preferences) and the actors act
according to institutional rules. Following from this are clearly indirect outcomes (Shepsle,
2008). An unstructured institution does not offer as firm a basis to study as a structured such.
Nevertheless, the main idea when studying this from an RCI viewpoint is the logic of
collective action. A collective action should be unspoken as something that would mean a
good public result, but something that can be expensive for the individual members of the
collective, meaning that individuals have an inclination for wanting to free ride, i.e. not
donate. The individual donations can also be of only trivial importance to the public good. To
29
meet this problem, there is a need to reward the individuals who contribute to the public good
norm or convention that deals with the problem of free-riding by offering rather of a payoff
plan like what is called “take turns” or “tit for tat” (Shepsle, 2008).
eminent from other social science tactics by its attention to real world empirical questions, its
historical alignment and its attention to the ways in which institutions structure and shape
political behavior and consequences. Historical institutionalism is the toughest of the three
streams to describe because it comprises so many diverse researchers and so many diverse
methodological tactics. It assumes that institutional rules, restraints, and the replies to them
over the long term guide the behavior of political actors during the policy-making process.
Historical institutionalism blends the quantitative analysis of the rational choice stream with
the idea- and culture-based thought of the sociological stream. It comprises an varied group
Central assumptions
The Historical Institutionalism (HI) is a theory that stresses institutions as the object that will
clarify the responses of change (or non-change). It is not personalities that mostly will mark
consequences, and it is moreover not here and now that is the most stimulating subject of a
study. It is rather when longer periods of history are being studied that answers to big
question can be found (Sanders, 2008). The dominant assumptions of HI concern how human
political connections are controlled by institutions, where the latter is “the formal or informal
30
actions, practices, norms and agreements entrenched in the organizational structure of the
However, it is the institutions that structure the communal behavior and that produce
characteristic results. The emphasis of HI is hence the construction, upkeep and adjustment
of institutions (Sanders, 2008). The structuralist viewpoint of HI does further on mean that
the individual is professed as an entrenched unit, where the institutions, i.e. norms and so
forth, comprise the filters through which the understandings of the individuals are made and
therefore also the constructions of action. The institutions do therefore disturb the
Institutions, including the institution of the state, is not to be observed as neutral among other
institutions, but rather as containing of diverse interests that all can affect certain results
(Durić, 2011). The institutions, including structures et cetera, are human creations.
Nevertheless, the expansion of the institutions is, conferring to HI, reliant upon the related
features of the certain condition. The design of and the initial decisions about the institution
is hence distressing its development. This is called path dependency, i.e. the idea of the
development of institutions being marked by the history of the institutions (Taylor & Hall,
1996; Sanders, 2008). The same functioning forces will not produce the same outcomes in
context A as in context B. The outcomes of a force (a reform or any action) will i.e. be reliant
on the historical landscape in which the institution occurs, where diverse historical
landscapes offer diverse sets of possible development paths. The path dependency structures
31
Within the paths of development diverse groups can gain combined power, e.g. trade unions
or specific parties can gain much effect in a certain institution. According to the Historical
Institutionalism the comparatively strong effect of some groups can be understood by looking
at the historical growth of that certain institution with its certain context (Sanders, 2008).
Hence, the standpoint of HI does stress how the development of institutions can dispense
power unequally among diverse social groups and therefore how the growth of institutions
The path dependency is unintended and hard to change (Durić, 2011). Nevertheless, when a
path changes comparatively much it can often, according to some Historical Institutionalists,
be sketched back to a so called critical juncture, i.e. a main and external event that disturbs
the present political order. This is nevertheless a disapproved idea that not every Historical
Institutionalist agrees on. It is hard to contend what causes a critical juncture, except for
economic crises and military conflicts. Besides, a focus upon exclusively critical junctures as
a way of generating change may disregard the course of incremental steps (Taylor & Hall,
The Historical Institutionalism does also stress the relationship between institutions and
ideas. Institutions are therefore not the only variable that might have causality with political
disturb the institutions (Taylor & Hall, 1996). Institutional change can therefore take place
even if it is a minority with diminutive means to attain change that wants it. Even if a change
in a path is wanted by many, it can nevertheless be hard to bring about because of the path
dependency. Another viewpoint of the fight of a certain path may be the costs that are related
32
with change against non-change, where the loyalty usually is viewed as less expensive than
The literature above has reviewed literature on the origin of European trade and factors that
has boosted its intra-regional trade, intraregional trade in Africa with an examination of
factors that has contributed to the trade in the region and factors that led to the reduction of
trade in the region. The literature further reviews intra-EAC trade progress. The research gap
is hence identified.
Additionally, to explain the independent and dependent variable of this study, rational choice
institutionalism and historical institutionalism theories are found to be the most appropriate.
33
CHAPTER 3: METHODOLOGY
3.1 Introduction
This chapter presents the methodology that was used to attain the study’s objectives and to
answer the research questions. It offers a depiction of the research design, sources of data and
the techniques for data collection and analysis. The chapter also inspects the ethical
Bryman and Bell (2007) defined research design as an overall plan that proposals a
framework for the choice of data collection methods and data analysis procedures. The study
employed a case study research design. The study used qualitative research design with a
case study approach. A case study is an approach in research that emphases on gaining an in-
depth understanding of a unit or event at a specific time. Willig (2008) noted that case studies
are not considered by the approaches used to collect and analyze data, but rather its focus on
a unit of analysis: a case. This study therefore focused on the East African Community to
assess the factors influencing trade diversion in intra-regional trade despite the decrease of
trade barriers. The unit of analysis was the EAC member states from which the intra-regional
34
3.4 Data Collection Methods
Secondary data method was used in this study. Both qualitative and quantitative methods
were used.
The secondary data required for this study was longitudinal data on EAC intra-regional trade.
A longitudinal study is a research design that encompasses repeated observations of the same
variables over extended periods of time, often many decades. The study made use of archival
data from 2010 to 2017 on intra-regional trade in EAC. The researcher used the EAC and
EABC trade reports among others, to find out the actual products which have seen major
contraction in the intra-EAC trade using Kenyan top commodity exports to the EAC member
states as a case study. The data obtained was used to answer the research questions of the
study.
The data analysis used was content analysis where verbal data is categorized for the purpose
of classification, summarization and tabulation. The approaches used was descriptive and
interpretative.
Use of secondary data is in itself, a highly ethical practice. It maximizes the value of any
35
study findings and therefore, greater transparency of research procedures and integrity of
research work. But the value of secondary data is only fully realized if these benefits
outweigh the risks. Hence, the researcher aimed at ensuring that the data used in this study
did not cause harm or distress to the readers and also the researcher endeavors to avoid
biasness during the analysis of the study where the researcher can be prompted to offer their
Data was collected from different sources. The researcher that the sources were credible by
compiling data from East Africa Business council (EABC), EAC secretariat, Kenya National
Bureau of Statistics (KNBS), UNCTAD, WTO, World Bank Doing Business Report among
others that are global trade data for individual countries and all world trade organization,
Chapter three has described the research methodology that was employed in the study. The
chapter has outlined the research design, sample and population under study, research
methods, data analysis method and ethical considerations considered for the study. The next
chapter, Chapter Four provides the research findings as per every objective of the study and
36
CHAPTER FOUR: ANALYSIS AND FINDINGS
4.1 Introduction
This chapter presents the results attained from data analysis as well as the interpretation and
Regional trade denotes to trade which focuses on economic exchange mainly between states
of the same region or economic zone. Regional trade integration is a significant pillar of trade
and investment policy in the EAC states. The objective of the study was thus to determine the
factors leading to the low intra-regional trade in EAC with a focus on the decline of Kenyan
37
4.3 Why are Kenyan exports experiencing trade contraction in intra-EAC regional
trade integration
Kenya has upheld a positive trade balance within the EAC over the years. Nevertheless, the
surplus has been slowly deteriorating since 2011 from Ksh 110.3 billion to Ksh 88.8 billion
According to Kenya National Bureau of statistics (KNBS) (2017), this was due to amplified
imports of agricultural products, including cereals and sugar to meet local demand. The
deteriorating excess in the trade balance is also mainly accredited to consolidation of the
38
manufacturing sector in the other partner states due to the window of protection provided
during the early stages of execution of the Customs Union. Kenya exports edible oil, fabric,
food, animal products, tobacco and cement to the region, but the growing push by local firms
to set up subsidiaries in East Africa has seen a deterioration in the supply of these goods. The
main drop in exports was recorded in cement, which dropped to $7.6 million, from $25.6
million in 2015.
Cement manufacturers blame the deteriorating volumes on the production of cheap imports,
while the entry of Dangote Cement into markets like Tanzania compounded the difficulties as
the firm presented a 40 per cent price cut on its products. Worries over adulteration of the
state’s petroleum products saw its exports to neighboring nations drop to $13.9 million, from
$20 million in the third quarter of 2015. British American Tobacco company on the other
hand, accused the Tanzanian government of striking higher local content requirements for
exports, leading to Kenya’s exports reducing to $23 million last year, from $38.6 million in
2015. Edible oil exports to the EAC dropped to $11.9 million from $12.4 million. Salt also
dropped to $9.89 million from $13.69 in the third quarter of 2015 (Gicobi, 2017).
Joseph Kosure, the head of the bilateral Trade Division at the Ministry of Foreign Affairs and
International Trade when interviewed by The East African said that the drop-in numbers
could also be ascribed to firms setting up shop in traditional export markets, resulting to
some drop-in orders from Kenya. According to Kosure, firms like Bidco and General Motors
have established footprints in Uganda hence resulting in a drop in Orders (Olingo, 2017).
39
4.3.2 Non-tariff barriers
There are tenacious limitations and non-tariff barriers imposed on Kenyan products intended
for export in the region. Between 2014 and June 2016, 17 new actions were presented in
Community Secretariat, (2016). According to the East African Community Common Market
Scorecard (2016), in 2016, Tanzania more than increased the number of non-tariff barriers
(NTBs) it imposed on its regional partners. On the other hand, Kenya more than doubled the
number of barricades and Uganda noted the highest submission rate. Tanzania’s NTBs rose
from seven to 24 and Kenya’s amplified from to 23, putting into doubt the two states’ vow to
easing intra-EAC trade. The scorecard which examines the movement of capital, services and
goods designated that the EAC member states are ratifying laws and enforcing guidelines
that go against the spirit of the Common Market Protocol. EAC member states have either
passed new laws, revised guidelines or are in the course of doing both, which leads to a
negative impact to some of the provisions of the EAC Common Market Protocol (Kenya
In addition, Tanzania has already endorsed the Fisheries Institute Bill, 2016 and the
Agricultural Institute Bill, 2016, which require mandatory local partnerships. The Medical,
Dental and Allied Health Professionals Bill, 2016 is still in parliament. It suggests additional
permission by the Medical Council and a restricted practice license for non-residents. The
state also enforced the Immigration (Amendment) Regulations, 2016, which requires EAC
nationals to buy $250 passes to engage in business, their profession or assignments. On the
other hand, Kenya restricts professionals in the law and engineering sectors from practicing
within its territory. For instance, the Advocates Act, Cap 16, Section 11 (Amended 2012)
40
restricts advocates from other EAC partner states from Kenyan courts unless accompanied by
if at least 51 per cent of the shares in the firm are held by Kenyan citizens (Olingo, 2017).
According to Kenya National Bureau of Statistics (2017) data, Kenya’s exports to the EAC
region dropped by the largest margin in three years in the third quarter of 2016, to $275.7
million from $380.3 million in the first nine months of 2015. According to the data, all states
in the region cut their imports from Kenya. The drop in the exports was attributed to
infringement in key market segments by Chinese products, local factors like taxation, new
competing industries in export markets and unpredictability in South Sudan all donated to the
trade down turn. Goods from China, some of uncertain quality, have flooded the market,
making the Asian giant the major exporter to the region. The KNBS figures display that
imports from China rose to $935.4 million in the third quarter of 2016, from $909.8 million
over the same period the preceding year, making it the top source of imports in the Asian
region. Moreover, disapproving taxation actions such as value added tax, industrial
development fee as well as the railway development fund make Kenyan manufactured goods
five per cent more expensive than imports from COMESA and SADC countries (Anyanzwa,
2016).
According to Anyanzwa (2018), Cheaper imports from Asia, Europe and the US are eating
into East Africa’s intra-regional trade, with Kenya formerly providing 90 per cent of
medicine in the EAC is losing out to India. According to the 2017 report on EAC’s
competitiveness, India is exporting mostly hefty petroleum and medicine to the region while
China is retailing an extensive range of manufactured goods plus clothes and footwear, and
41
telecommunications apparatus. Furthermore, China, Japan, South Africa and India have taken
up an advanced market share in the region for iron and steel products than the EAC partner
states put together. This has affected Kenyan exports to the region as China and India
Reluctance by individual East African Community (EAC) states to entirely open their borders
is hurting trade and development of local manufacturing firms. East African Business
Council acting chairman Jim Kabeho argued that imperfect harmonization of trade rules by
the six EAC states has hurt growth in regional trade. Some EAC states are still initiating non-
tariff trade barriers at official borders such as rejection to identify certificate of origin for
some goods, more than seven years after the Common Market Protocol was imposed on July
1, 2010. Individual states do not want to give away their authority to the common market.
Kenya and Tanzania, for example, endure to disagree partly over certificates of origin at the
Namanga border. The Kenya Association of Manufacturers has blames the Tanzania Food
and Drugs Authority’s for demanding that some of the products from Kenya be registered, re-
labelled and retested. The distrust among EAC states, Mr. Kabeho said, has provided room
for an influx of cheaper goods accessible in the region into the bloc, mainly from China and
Multiple membership of the EAC member states is another main subject distressing Kenyan
exports to the region. For example, Tanzania membership in SADC affects Kenyan exports
42
as it now trades more with South Africa than Kenya. This has donated to the weakening of
4.4 Why is intra-EAC trade still low despite the reduction of trade barriers
According to the east African secretariat website, NTBs were the major weakness to full
achievement of the objectives of the Treaty for Establishment of East African Community in
2011. The World Trade Organization, of which all five EAC states are members, defines
NTBs as red tape or ‘various bureaucratic or legal matters that could comprise interruptions
to trade while The EAC describes NTBs as ‘administrative and technical requirements forced
by a Partner State in the movement of goods. While several NTBs may be clearly
protectionist, the popular seek to meet a settled governing objective, such as food safety or
product safety.
There are mutual reasons for NTBs such as safeguard to health, safety and security of human
beings, animals and plants against environmental pollution, protection of home industries
and consumers, safeguard national security and to safeguard against revenue loss. According
to Society for International Development report 2012, (SID 2012) while there may be a
accord that standing NTBs should be eradicated, there is contract on how to meet valid
regulatory objectives in a less trade-restrictive manner. Many NTBs are entrenched in more
application of rules and bureaucratic staff often coupled with low staff morale.
Establishing formal notification requirements has been a crucial step towards monitoring
NTBs. In retort to the NTB challenge, the EAC Secretariat formed its first quarterly report in
43
August 2011, highlighting the position of reduction of NTBs. The reporting device was first
impelled by the East African Business Council in 2005. (SID 2012). The EAC’s August 2011
quarterly report on the subject stated that Tanzania led the region in being a main source of
reported against it from the region. The states singled out as being the most affected by NTBs
The general consequence of non-tariff barriers (NTBs) in the EAC region, like elsewhere, is
that they effect in suspensions and augmented costs, which eventually hamper the free
movement of goods and services. And according to many analysts, the decrease of NTBs is
much more significant for increasing regional trade than tariff liberalization. An analysis by
Kaititibie and Gulan. (2012)) validates that the decrease/decrease of NTBs in maize and beef
trade in the East African region has important positive welfare insinuations. According to the
study, entirely eliminating or even expressively dropping the present NTBs in maize and beef
trade would upsurge EAC maize and beef trade, with Kenya and Tanzania importing more
maize from both Uganda and Tanzania. Out of the understanding of the negative impact of
Within the EAC, consistency or absence of it can be seen by the occurrence of NTBs that
states levy on products from other member states. To the degree that NTBs result from
thoughtful rules and events, their presence in many ways indicates trade policy
inarticulateness. Though EAC states have over the years conveyed the reduction of policy
and process related NTBs, accomplishment has been restricted (Wild & Han 2010).
44
One of the most worrying NTBs within the EAC has been transit measures. The grave matter
here is the absence of coordination of guidelines concerning axle loads and vehicle technical
stipulations within the EAC, which makes overload control supervision difficult. The
opposing axle weights would mean, for example, that a truck from Tanzania transiting
through Uganda must strip off excess cargo to avoid financial penalties. There are also
limitations in the states on gross vehicle mass, which means that certain types of vehicles
cannot transit through some states. A linked problem is the poor implementation of related
rules and guidelines across the EAC region, owing to insufficient institutional volume and
stern integrity issues ascending among public officials who operate weighbridges. This
In addition, the prevailing framework for monitoring NTBs is not only unsuccessful but does
not deal with ad-hoc administrative cases which ascend in the course of cross border trade.
This is because it takes long to constitute the committee meetings or for respective revenue
According to SID (2016) as cited by Ligami (2017), the report pointed fingers at Tanzania as
the state with the highest number of NTBs in the region. For instance, to register any product
in Tanzania, one is required to pay $2,000 against other states in the region charging $1,000.
After registration, Tanzania stresses the same price for renewal after every five years besides
an annual retaining fee of $300.According to the report, that was obtainable to the EAC
2017, the Tanzania Food and Drug Authority (TFDA) registered injectables and other
products per pack size and treats each pack as a product by itself. In other states in the world
including the other EAC states, manufacturer’s register all products as one but highlight all
45
the presentations on the same certificate. Kenyan exports to Tanzania are subjected to
verification three times — at the manufacturers grounds, and the trucks have to pass through
ICD for full verification at the border. This consumes time and is costly for Kenyan
exporters.
Rwanda on the other hand reported a biased charge of $300 by Tanzania on tourist vehicles
from Rwanda entering the Tanzania national parks. Burundi on its part criticized of the cargo
charges for transit trucks in both Kenya and Tanzania. The Mombasa County Government in
Kenya charges Ksh6,000 ($60) per transit cargo truck and $5 for transit trucks waiting to
load cargo in the parking yard every day, while Tanzania charges $4.37 for every cargo truck
However, Tanzania conveyed that the Kenya Revenue Authority takes up to seven days for
physical inspection and endorsement of admissions for Tanzania Breweries Ltd (TBL)
deliveries at the border and the Kenya Bureau of Standards conducts double checks on
products approved by the Tanzania Bureau of Standards and TFDA. There are manifold
eminence checks for export products in Kenya that in some cases can mean up to 21 days
delay,” said the report, adding that Kenya raised the EAC rules of origin and levies duties on
TBL products by insisting Redds and Castle Lite beer are manufactured in South Africa
Pursuant to the Kenya Excise Act 2015, the KRA presented tax stamps or printed codes on
beer and keg manufactured or imported with manual application, which increases the cost to
$5.5 per half liter and also introduced conditions for excise decrease that hamper TBL beer
exports to Kenya. The other NTBs reported in the report are that Rwanda, charges am
arbitrary fee of between $21 and $24 to transporters and importers transporting goods to
46
Rwanda from Uganda. The fee is institutionalized, and no receipt is delivered. Uganda
reported that its transporters are complaining of being stopped by the Kenyan police after
passing weighbridges. The police then demand weighbridge certificates and extort up to $100
According to Hill (2011), EAC states belong to numerous economic groupings or sub-
groupings that sometimes compete, conflict or overlap amongst themselves rather than
complement each other. This adds to the burden of coordination and harmonization and is
numerous regional integration initiatives, counting the COMESA, SADC, the IGAD, the AU,
and the CBI). While Kenya and Uganda belong to COMESA; Tanzania belongs to SADC,
while all EAC member states are members of AU and IGAD. Different CETs in different
trading blocs obscure the administration of the EAC CET, which needs that the member
torn between contending regulations and commitments and hence end up having to offer
more time and resources on managing regional integration rather than participating in it. This
is a real source of policy irregularities as states deal with multiple loyalties. It also obscures
differ, importers can choose to import products under any regime. The differing rates prompt
many importers to declare their imports under the lowest tariff regime, which has led to huge
trafficking and customs fraud. Losses arising from fraud and other “spillages” have been
Differences in tax regimes by member states of EAC economic bloc effect in alterations and
have negative impacts on cross-border business activities. They upsurge the cost of
compliance and affect choices made by investors with respect to where to participate and
where to source finance. The alteration in domestic tax rates such as excise duty and VAT
rates decodes into diverse prices and costs to consumers for similar items (Kombo & Delno,
2011).
Delays by member states in harmonizing their tax regimes also cause imbalances in cross-
border trade. Although the EACCM was launched back in 2009, the main taxes distressing
the business community, such as value added tax (VAT), withholding tax and excise tax, are
yet to be fully harmonized. Rwanda and Uganda charge VAT at the rate of 18 percent, Kenya
charges 16 percent, and Tanzania, 18 percent. While Kenya and Tanzania offer tax incentives
for investors, Uganda and Rwanda do not. Similarly, companies functioning in the export
dispensation zones (EPZs) in Kenya and Tanzania are excused for the first ten years from
income tax and withholding tax on payment to non-residents, but this is not the case in
Uganda. There is therefore a discernment in Uganda that the EPZs and the related tax
According to an EAC Secretariat report as cited by Ayieko (2013), the sustained interruption
by East African Community partner states to harmonize their tax regimes caused inequalities
in cross-border trade. The report, shaped by the EAC Secretariat to assess the application of
the trading bloc’s Customs Union, exposed that, the predominant inequalities in the region’s
tax have caused alterations in intra-trade among the EAC partners. According to the report,
although the Customs Union was launched in 2005, the main taxes distressing the business
48
community such as value added tax, withholding tax and excise; the definition of tax laws,
valuation events and dates of execution divisions were all not being coordinated.
The report argued that, these differences in the tax regimes effect in misrepresentations and
have a negative influence on cross-border business activities. The report says, they upsurge
the cost of compliance, affect the choices by investors with respect to where to capitalize and
where to source finance. The modification in VAT rates, in effect, translates into diverse
prices and costs to consumers for related items. This is an inconsistency of the goals of the
EAC Treaty since no effectual distribution of resources is certain. The Treaty for the
founding of the EAC, in distinguishing the role of tax coordination in East Africa integration,
specifies that the partner states will assume to blend tax policies (Ayieko, 2013).
Anyanzwa (2016), Unfavorable taxation actions such as value added tax, industrial
development fee as well as the railway expansion fund make Kenyan industrial goods five
per cent more expensive than imports from COMESA and SADC states, according to the
survey. This makes the other member states to desire to trade with other states than Kenya.
Industries are fascinated to a region by size of the market and by the protection of rights
granted under the common tariff within the regional economic block. There is a higher rate of
industrial growth in Kenya than in the other states. This is varying hastily, nevertheless, as
the other EAC states, through improvements and sound macroeconomic management, are
attracting generous foreign investment. In recent times, it has been Tanzania that has
controlled the EAC states in enticing foreign direct investment (FDI) (Wasilwa, 2016).
49
According to the World Investment Report 2012 by UNCTAD, Tanzania’s FDI stood at
US$377 million in 2006, equated with Uganda’s at US$307 million, Burundi’s at US$290
million, Kenya’s at US$51 million and Rwanda’s at US$15 million. FDI into Tanzania has
mostly gone into the mining and extractive sectors, which is not only capital exhaustive, but
blockages, energy shortages and trade are deficiencies to the free flow of goods and services
within EAC region that reduction potential benefits. Transport is still a key obstruction of
regional trade and is affected by inconsequential and unpaved links, inadequate and
disappointing rail networks. The EAC transport network is composed of the two transport
corridors; the northern and the central transport corridors. The Northern Corridor has the
port of Mombasa in Kenya serving as the lifeline for Uganda, Rwanda and Burundi, ending
in the city of Bujumbura. The Central Corridor has the port of Dar es Salaam as a key hub for
imports, exports and trade for Rwanda, Burundi and the eastern part of the Democratic
Republic of the Congo. The benefit with the Central Corridor is its two distinct paths; one
runs in Burundi through numerous main cities and towns, while the other in Rwanda goes
SID (2012) forecast that the traffic forecast for both the Northern and Central Corridors (the
two main corridors in the region) would overcome present capacity. Demand on the main
routes (highways, ports and railways) will upsurge by a factor of four from 24 million tons in
50
2015 to 100 million by 2030 at the ports. The roads would obtain 80 per cent more traffic by
2015 and four times more by 2030. The railways will have to lodge 6.5 million tons in 2015
and 18 million in 2030. According to the Society for International Development (SID) report
on state of East Africa 2012, the region’s total road network in 2008 was 183,178 km, of
which 91 per cent was unpaved, while only 9 per cent was paved.
4.4.6 Corruption
According to the World Bank Doing Business Report (2018), corruption and exploitation of
power can delay the development of the business market. It can have adverse costs on the
business climate and economic activities by growing the costs of doing business, hence
discouraging private sector confidence. Excessive costs together with incompetent actions
dishearten people from registering and transactions, steering them instead into the informal
land market. Corruption in land management can have a direct negative impact on business
operations.
Corruption is a critical issue with inferences on the welfares and prices of regional trade and
integration in the EAC. There is alarm that widespread corruption particularly along the main
trading routes is not only hindering trade flow but also corroding possible benefits (SID
2012). Transparency International (TI) surveys show widespread corruption within the EAC
common market. The TI corruption perception index (CPI) summarizes the discernment of
corruption as seen by business people and state analysts. The index ranges from 1 (corrupt) to
10 (clean). Between 2005 and 2008 Kenya was professed to have the highest level of
exploitation in East Africa, until that discernment was moved to Burundi with a score of 1.9.
After a dip between 2005 and 2006, Rwanda’s CPI score improved gradually to arise
meaningfully ahead of its East African neighbors as the least corrupt state in the region by
51
2010. Tanzania peaked in 2007 with a CPI of 3.2, its highest over the past five years, but has
faded since then due to several recent high-profile corruption outrages. I bribery index shows
the most unethical institutions in the Region and those most prone to bribery.
According to the TI bribery index report (2011) almost all institutions tangled in corruption
are in law enforcement, revenue collection and the judiciary, and seven of the ten institutions
cited as the most corrupt were from Burundi and Uganda (SID 2012). These institutions play
a key role in the enablement of trade and their being professed as corrupt may affect the
According to the East Africa Bribery Index 2017 published by Transparency International
Chapters in East Africa, as cited by Oduor (2017), bribery is still widespread in spite of
efforts to reform public institutions and educate citizens on the significances of corruption.
The East African Bribery Index (EABI) is an annual survey that seeks to record bribery
practices of citizens while looking for public services. Since 2010, the survey has been
conducted in Kenya, Uganda, Tanzania, Rwanda and Burundi. The public services surveyed
by the index include security services (the police), judiciary, medical and health services,
local government services, utilities (water and electricity), registry and licensing services
(civil registration and business licensing), education, tax and land services.
In the region, the police in Tanzania, Kenya and Uganda, the judiciary in Uganda, and the
police in Rwanda took the top five positions as the most bribery-prone institutions. The
uppermost probability of bump into bribery was documented in the police services across the
region; 71 per cent of defendants in Tanzania, 69 per cent in Kenya, 67 per cent in Uganda
and 29 per cent in Rwanda interrelating with the police were asked (implicitly or explicitly)
or presented to pay an inducement to get the services they were looking for (Oduor, 2017).
52
The study presented an upsurge in the size of bribe, with the main rise in Kenya (189 per
cent) documented in medical and health services, rising from Ksh881 in 2014 to Ksh2,542 in
2017. The major bribe in Kenya was noted at the judiciary at Ksh14,083 followed by
Ksh12,360 paid for tax services and Ksh8,956 paid for land services. The professed level of
corruption endures to upsurge; 83 per cent of the defendants labeled the current level of
corruption in Kenya as high, associated with 81 per cent who held a similar view in 2014.
Only 10 per cent labeled the level of corruption as medium, with 4 per cent describing it as
Absence of penalty of persons tangled in corruption and the sense that corruption is the norm
are among the explanations accredited to the high perception level of corruption in EAC.
Most respondents in Kenya (62 per cent), felt that the government was not doing enough to
fight corruption, noting that cases were still widespread and that no action was being taken
contrary to the corrupt. While it is easy to blame the government of not playing its role, 55
per cent of those interviewed designated that they had not taken any personal enterprise in
the fight against corruption. Only 3 per cent reported corruption or have openly spoken out
against corruption. This calls for communal accountability and civic-led action towards
lost as “unofficial” exceptions and trafficking triumph in the EAC borders. The
implementation of a common market also results to decrease of tariffs and customs duties
against member states, and also calibration of tariffs against non-members. This results to
plant inspectors, bankers, brokers, quality assurance, weights and measures and standards
institutes, health, and port authorities to mention but a few. For actual border point
facilitation, it is perilous that all these agents with changing roles work in tandem. This is
diverse agencies, an importer must present diverse documents to each one and a lot of time
and money are wasted. Measures to seal revenue losses and to blend border measures are
The study encountered several limitations, but this did not affect the quality of the research.
One of the limitations the study experienced was that there was not enough time and
resources to correct primary data as was the desire of the researcher. Hence, the study was
only limited to secondary data sources. As a result the research may be affected by the
scholars’ biases and the limitation of previous studies and the reports relied in the study.
5.1 Introduction
This chapter presents the summary of findings, conclusions arrived at and policy
54
5.2 Summary of the Findings
The study was guided by one major objective namely to examine the factors that explains the
low intra-EAC trade for the period between 2010 and 2017 with a focus of Kenyan exports.
Kenya’s earlier dominance in EAC has been upended by more powerful forces.
Unfortunately, the government seems to run away from this reality. First, after an extended
period in which Kenya was the main supplier of various manufactured goods to the other
EAC member states, they too have seen the growth of their own industries. The neighbors
can now also manufacture household goods such as cooking oil, margarine, cosmetics,
processed milk and sugar which used to be imported from Kenya. This has seen
However, the presence of international investors cannot be ignored who are largely
responsible for Kenya’s trade lose in the EAC region. China and India are majorly
responsible for the decline of Kenyan exports into the EAC region. China’s entry into Kenya
has been even tectonic, with the Asian country taking up 34 per cent of Kenya’s import bill
while India accounting for 18 per cent, bring their total to 52 per cent. The fact is that
Kenya’s old and rickety factories have been no match to efficient manufacturers in China and
India who have churned out an assortment of products that are five times cheaper and better
quality than Kenya’s. Chinese manufacturers have not only beaten their Kenyan counterparts
Several Kenyan manufacturers have crumbled under the heavy weight of cheap Indian and
Chinese products which have flooded the market, putting tens of thousands of jobs on the
per cent to 7.5 per cent, even as China’s imports into Kigali increased almost ten-fold from
2.4 per cent to 18 per cent. Imports from India also rose five times from 2.1 per cent to 10 per
cent. Additionally, India’s imports into Uganda accounted for 20 per cent of Kampala’s total
import bill while China’s accounted for 16 per cent. The two Far-East countries had eaten
into Kenya’s pie leaving Nairobi with a small share of 9.7 per cent. The exception is the war-
torn Burundi where the share of imports from Kenya went up from 5.1 per cent in 2000 to
2015. But even here, China’s and India’s foray have been significant. Share of imports from
India into Burundi went up from 3.5 per cent to 11 per cent while China’s grew from four per
cent to 13 per cent. This is a graphic visualization of how China and India have in the last 10
years voraciously eaten into Kenya’s trade pie across the region, leaving it with crumbs.
In addition, although the East African Community has been one of the success stories of
Africa’s elusive trading blocks, divergent political interests have frustrated the fine operation
of common market protocol which is supposed to allow for easier movement of goods and
services, labor and capital. Tanzania, for example, went against the EAC Protocol and
introduced work permit of around $3,000 (about Sh300,000), a decision that might have hurt
Kenyan industrial exporters have set up shops in the export markets hence leading to a drop
of orders from Kenya. There are persistent restrictions and non-tariff barriers imposed on
Kenyan products destined for export in the region. This discourages Kenyan export traders
from exporting their products in EAC because it is time consuming and costly.
EAC member states have not fully opened their markets as required by the customs union
treaty. Partial harmonization of trade rules by the six EAC states has hurt expansion in
56
regional trade. Some EAC countries are still erecting non-tariff trade barriers at official
borders such as refusal to recognize certificate of origin for some goods. EAC member states
are reluctant to surrender their authority to the common market. EAC member states are
suspicious of each other and this has resulted to the influx of cheaper goods available in the
region into the bloc, largely from China and India. This has affected Kenyan exports to the
region as China and India products seems to be more convenient financially the Kenyan
products.
Despite the decrease of trade barriers in EAC to allow the free movement of goods, people
and services, non-trade barriers remain a predicament to the EAC intra-regional trade. NTBs
leads to delays and increased costs, which ultimately hinder the free movement of goods and
services. Existence of NTBs in the region signifies trade policy inarticulateness. Though
EAC countries have over the years negotiated the decrease of policy and procedure linked
NTBs, success has been limited. The existing framework for monitoring NTBs is not only
ineffective but does not deal with ad-hoc administrative cases which arise in the course of
cross border trade. This is because it takes long to constitute the committee meetings or for
issues.
Multiple memberships are another key problem to the EAC intra-regional trade. EAC
conflict or overlap amongst themselves rather than complement each other. Their focus is
usually torn between competing regulations and commitments and thus end up having to
devote more time and resources on managing regional integration rather than actually
57
participating in it. This is a real source of policy inconsistencies as countries grapple with
Disparities in tax regimes by member states of EAC economic bloc result in distortions and
have negative impacts on cross-border business activities. they increase the cost of
compliance and affect decisions made by investors with regard to where to invest and where
to source finance. The variance in domestic tax rates such as excise duty and VAT rates in
essence translates into different prices and costs to consumers for similar items. Delays by
member states in harmonizing their tax regimes also cause imbalances in cross-border trade.
Kenya was the main industrial state in the EAC and one of the major trading partners of all
EAC member states. However, its role has been undertaken by foreign investors who are now
exporting more industrial products to the other EAC states than Kenya. EAC member states
prefer trading more with the foreign investors than Kenya because their export products are
shortages and trade are impediments to the free flow of goods and services within EAC
region that reduce potential benefits. Transport is still a major bottleneck of regional trade
and is affected by disjointed and unpaved links, inadequate and underperforming rail
networks.
Corruption is a critical issue with implications on the benefits and costs of regional trade and
integration in the EAC. Rampant corruption especially along the major trading routes is not
only hampering trade flow but also eroding potential benefits. Bribery is still rampant despite
efforts to reform public institutions and educate citizens on the consequences of corruption.
58
Lack of punishment of persons involved in corruption and the sense that corruption is the
norm are among the reasons attributed to the high perception level of corruption in EAC.
A substantial proportion of revenue that would reflect as benefits of integration is usually lost
as “unofficial” exemptions and smuggling prevail in the EAC borders. The adoption of a
common market also leads to removal of tariffs and customs duties against member states,
and also standardization of tariffs against non-members. This leads to loss of revenue in
5.4 Conclusions
Several factors ensue to the low intra-EAC trade in the region. These includes: competition
products by foreign investors products, partial harmonization of trade rules and states
There is a slightly heavier concentration of industries in Kenya and this has contributed to
slow removal of trade barriers by some member states due to desire to protect domestic
industries thus negatively influencing cross-border regional trade. Poor infrastructure which
includes transport and telecommunication in member states hampers the regional trade.
Multiple memberships do not directly influence regional trade in the EAC since all member
states are committed towards full regional integration. Delays in the harmonization of tax
59
regimes has led to moderate negative influence on regional trade. Non-tariff barriers are still
being imposed by some member states and this negatively influences the regional trade.
The inferences of this findings are that although a lot of progress has been done towards
required. This is especially so in the areas of addressing NTBs, harmonization of tax regimes
5.3 Recommendations
The admission of cheap imports into the region has worn the attractiveness of products in the
EAC region, taking up a large share of its markets. For this reason, it is significant for EAC
member states to stiffen current ties with their EAC allies and therefore bank on their shared
identities and interests to negotiate better markets access for their priority products under
The member states should work towards complete elimination of non-tariff barriers to ease
regional trade. Member states should realize that opening the borders will ultimately lead to
domestic industries. There should be a mechanism of not only monitoring NTBs but also
laws to deal with members who sustain them at the expense of other member states.
The member states should develop a common plan for infrastructure that will ease movement
of goods and people. They should also consider giving up their international airports, ports,
railways and weighbridges to be managed by and for the common benefits of the EACCM.
60
The member states need to channel more resources and more investments towards
Member states should accelerate coordination of tax regimes as this will decrease the trade
imbalances, tax evasion schemes like trafficking as their will be no inducement to avoid
Member states should push through their pledge to full integration and focus more on
building the EAC rather than spreading their energies on multiple trading blocks.
There is need to reinforce the capacity of numerous institutions of governance to deal with
the unescapable problem of corruption. EAC member states should have a clean bill of health
to increase public confidence. There is also the urgent need to impeach those tangled in
corrupt practices both for deterrence as well as punishment value. Additionally, institutions
should be encouraged and supported to set up internal integrity management initiatives. This
could include setting up grievance resolution mechanisms for citizens to report any bribery
incidents they encounter or service delivery charters outlining the services offered, the
amount of time taken, and fees charged to access the services. Technology is an enabler of
transaction time and minimize the human interface that facilitates bribery. According to the
East African Bribery Index 2017, Huduma Centres, in Kenya which have positioned
technology to manage customer and service processes, documented the least bribery
incidents among the institutions listed. This would go a long way in helping institutions to
fight corruption and advance service delivery even for the other EAC member states.
61
There is need for the formation of rapid response units within the ministries of trade in
member states to facilitate “faster and more effective” means of dealing with cross border
trade hitches. In addition, this will permit the national NTB monitoring committees to deal
EAC member states should contemplate abolishing their multiple memberships to evade
divided attentions and fully oblige to assimilating in EAC and accomplishing the laid
For overlapping membership, a long-term solution is for the EAC member states to justify
their involvement in RTAs. The suggestion to create a larger free trade area (FTA) bringing
together SADC, COMESA and the EAC may help in finding a lasting solution.
In the context of the EAC, it is significant that the member states address weaknesses in their
customs and revenue administration, border control, and transit arrangements to decrease
losses on customs revenue collection. Also significant are matters of efficacy at border
points. Measures to seal revenue losses and to blend border measures are therefore critical in
The study suggests that further research should be carried out on the factors influencing the
low intra EAC trade with a focus on exports from the other EAC member states namely;
Uganda, Tanzania, Burundi, Rwanda and South Sudan. The study has established that EAC
has not fully reached its potential hence it is important to further investigate the factors
62
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