506055
Today marks a new era with the launch of the East African Common Market Protocol- a single economic bloc within which factors of production, goods and services will move unhampered. The five partner states including: Uganda, Kenya, Tanzania, Rwanda and Burundi have a population of over 126 million people, which forms a wide market for the locally produced products.
This might be the time for small and mid-sized enterprises originally locked-out from accessing markets in other states because of the high costs involved in exporting, importing and establishing businesses in other partner states’ territories, to venture into those markets.
A single trading area eliminates barriers like complex and difficult national laws, high taxes, work permits, bureaucratic and discriminatory tendencies to give both small and big businesses a competitive edge in the region.
In an interview with Smart Money, the executive director, Private Sector Foundation of Uganda Gideon Badagawa says a common market will offer vast business opportunities and resources for SMEs in Uganda. “Uganda business will benefit from the market, skilled labour and capital,” he adds. The common market protocol allows for free movement of goods, labour, capital and services among others.
In all the five partner states, SMEs account for almost 90 per cent of employment for both skilled and unskilled labour. Mr Badagawa further argues that a single trading area will open a wider area of investment for domestic SMEs which would mean a wider market, increased revenue for businesses and stronger brand presence in the region.
The spokesperson Kampala City Traders Association Issa Sekitto, however, says despite the launch, the business community in Uganda will not compete favourably due to high production costs and infrastructural bottle necks. “Huge economies like Kenya will negatively impact us, Uganda factories will end up becoming warehouses for Kenyan companies’ goods,” Mr Sekitto laments.
Although Kenya companies seem to be zealous to the extent that they prepared for this opportunity in time by establishing and mobilising capital to invest in other countries in the region, such enthusiasm still lacks in Uganda up-to-date. A 2009 study dubbed: “An evaluation of the implementation and impact of the East African Community Customs Union”, revealed that Tanzania, Uganda, Rwanda and Burundi have since found it harder to invest to invest in Kenya.
However, Mr Richard Mubiru, a senior trade promotions officer at Uganda Export Promotion Board, urges businesses to broaden their scope of operation by adopting export led development strategies into the expanded market to stimulate efficient production capacities that will translate into improved export performance and economic growth. “Uganda has huge opportunities to tap from the common market if we focus our resources on the agriculture sector where Uganda enjoys a comparative advantage,” he said.
The commissioner production and social services, Ministry of EAC Affairs Ronah Serwadda says the business community should look out for opportunities and specialise in what they do best to reduce production costs and increase efficiency. “Business people should stop lamenting but instead look out for opportunities in the common market. We have a comparative advantage in agriculture which we can exploit to feed the entire region. ” Mrs Serwadda emphasises.
The business community in Uganda still faces numerous challenges including high costs of doing business due to high power tariffs, high interest rates, poor road and railway infrastructure and low risk and business management skills. They also still face challenges of inconsistence in maintaining quality and irregular supply of goods to satisfy market demand.
Mr Mubiru says the uncompetitive and less aggressive nature of Ugandan businesses compared to their Kenyan counterparts, calls for urgent measures to strengthen local brands, encourage creation of investment groups, efficient value chain networks and the development of franchising systems to boost entrepreneurial spirit in the country.
The common market is the second step in the integration process following a customs union which was fully realised in January this year, when import duty rate for goods produced within the region hit zero per cent.
The customs union also sought to allow for a common external tariff for goods coming from outside markets into the EAC. A single market space is expected to stimulate economic development, increase production efficiency, boost domestic and foreign investment, enhance employment and spur intra and extra-regional trade in the region through open trade.
Mrs Serwadda urges the businesses community to vigorously carry out market surveys to ascertain the types of products and population size of the target market in order to produce the right quantities to satisfy the target market’s demand. “We need to be competitive if we are benefit. We will benefit by seizing opportunities, but if we relax, we will automatically lose,” she adds.
Mr Sekitto asks the government to speed up policy and tax harmonisation to enable them compete in the region with big players especially from Kenya and also to protect consumers who will be forced to foot the high production in form of high commodity prices.
“Traders can survive under any circumstance but the consumer will suffer because all taxes incurred will be transferred to them in form of high prices,” he adds.
The minister of EAC Affairs Eriya Kategaya says the government is in the process of developing complementary SMEs policy to support small businesses and enhance Uganda’s competitiveness to support Ugandans to take advantage of potential benefits of the common market. He also advises Ugandans to identify market gaps within and outside Uganda which they should take advantage of.
Today marks a new era with the launch of the East African Common Market Protocol- a single economic bloc within which factors of production, goods and services will move unhampered. The five partner states including: Uganda, Kenya, Tanzania, Rwanda and Burundi have a population of over 126 million people, which forms a wide market for the locally produced products.
This might be the time for small and mid-sized enterprises originally locked-out from accessing markets in other states because of the high costs involved in exporting, importing and establishing businesses in other partner states’ territories, to venture into those markets.
A single trading area eliminates barriers like complex and difficult national laws, high taxes, work permits, bureaucratic and discriminatory tendencies to give both small and big businesses a competitive edge in the region.
In an interview with Smart Money, the executive director, Private Sector Foundation of Uganda Gideon Badagawa says a common market will offer vast business opportunities and resources for SMEs in Uganda. “Uganda business will benefit from the market, skilled labour and capital,” he adds. The common market protocol allows for free movement of goods, labour, capital and services among others.
In all the five partner states, SMEs account for almost 90 per cent of employment for both skilled and unskilled labour. Mr Badagawa further argues that a single trading area will open a wider area of investment for domestic SMEs which would mean a wider market, increased revenue for businesses and stronger brand presence in the region.
The spokesperson Kampala City Traders Association Issa Sekitto, however, says despite the launch, the business community in Uganda will not compete favourably due to high production costs and infrastructural bottle necks. “Huge economies like Kenya will negatively impact us, Uganda factories will end up becoming warehouses for Kenyan companies’ goods,” Mr Sekitto laments.
Although Kenya companies seem to be zealous to the extent that they prepared for this opportunity in time by establishing and mobilising capital to invest in other countries in the region, such enthusiasm still lacks in Uganda up-to-date. A 2009 study dubbed: “An evaluation of the implementation and impact of the East African Community Customs Union”, revealed that Tanzania, Uganda, Rwanda and Burundi have since found it harder to invest to invest in Kenya.
However, Mr Richard Mubiru, a senior trade promotions officer at Uganda Export Promotion Board, urges businesses to broaden their scope of operation by adopting export led development strategies into the expanded market to stimulate efficient production capacities that will translate into improved export performance and economic growth. “Uganda has huge opportunities to tap from the common market if we focus our resources on the agriculture sector where Uganda enjoys a comparative advantage,” he said.
The commissioner production and social services, Ministry of EAC Affairs Ronah Serwadda says the business community should look out for opportunities and specialise in what they do best to reduce production costs and increase efficiency. “Business people should stop lamenting but instead look out for opportunities in the common market. We have a comparative advantage in agriculture which we can exploit to feed the entire region. ” Mrs Serwadda emphasises.
The business community in Uganda still faces numerous challenges including high costs of doing business due to high power tariffs, high interest rates, poor road and railway infrastructure and low risk and business management skills. They also still face challenges of inconsistence in maintaining quality and irregular supply of goods to satisfy market demand.
Mr Mubiru says the uncompetitive and less aggressive nature of Ugandan businesses compared to their Kenyan counterparts, calls for urgent measures to strengthen local brands, encourage creation of investment groups, efficient value chain networks and the development of franchising systems to boost entrepreneurial spirit in the country.
The common market is the second step in the integration process following a customs union which was fully realised in January this year, when import duty rate for goods produced within the region hit zero per cent.
The customs union also sought to allow for a common external tariff for goods coming from outside markets into the EAC. A single market space is expected to stimulate economic development, increase production efficiency, boost domestic and foreign investment, enhance employment and spur intra and extra-regional trade in the region through open trade.
Mrs Serwadda urges the businesses community to vigorously carry out market surveys to ascertain the types of products and population size of the target market in order to produce the right quantities to satisfy the target market’s demand. “We need to be competitive if we are benefit. We will benefit by seizing opportunities, but if we relax, we will automatically lose,” she adds.
Mr Sekitto asks the government to speed up policy and tax harmonisation to enable them compete in the region with big players especially from Kenya and also to protect consumers who will be forced to foot the high production in form of high commodity prices.
“Traders can survive under any circumstance but the consumer will suffer because all taxes incurred will be transferred to them in form of high prices,” he adds.
The minister of EAC Affairs Eriya Kategaya says the government is in the process of developing complementary SMEs policy to support small businesses and enhance Uganda’s competitiveness to support Ugandans to take advantage of potential benefits of the common market. He also advises Ugandans to identify market gaps within and outside Uganda which they should take advantage of.
