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The pillars that will deliver trade dividends within EAC

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The pillars that will deliver trade dividends within EAC


East African Business Council (EABC), CEO Peter Muthuki. NMG PHOTO

Peter Mutuku Mathuki took over as the secretary-general of the six-nation East African Community (EAC) bloc on April 25, pledging to deliver a “stronger and more formidable” trading bloc at the end of his five-year term. Dr Mathuki (right) is not new to regional integration issues.

He served in the East African Legislative Assembly (EALA) for five years to 2017 before taking reins as chief executive of East African Business Council (EABC) — the regional business lobby for private sector — from October 2018 until his latest appointment. He spoke to Business Daily.

HOW HAS YOUR EXPERIENCE AT THE LEGISLATIVE ARM OF THE EAC AND LATER AS A CHAMPION OF PRIVATE SECTOR INTERESTS PREPARED YOU FOR YOUR NEW ROLE?

I have gained experience and a sound understanding of regional politics and its effects on regional integration, business and individual countries.

Having worked in different capacities under the umbrella of the EAC, I am well aware of the opportunities that are available for exploitation, as well as the challenges that the Community and individual partner States face.

I will use my experience, and valued partnerships that I have picked along the way to work towards creating a more integrated and stronger Community that is able to withstand the challenges to come.

ONE OF THE BIGGEST THREATS TO REGIONAL INTEGRATION IS ON-AND-OFF DISPUTES AMONG MEMBER STATES WHO SOMETIMES RESORT TO ERECTING TARIFF AND NON-TARIFF BARRIERS (NTBs). HOW ARE YOU GOING TO ADDRESS THIS CHALLENGE?

My preferred approach would be to prioritise the full operationalisation of the EAC Elimination of Non-Tariff Barriers (NTBs) Act, 2017 and the establishment and full operationalisation of the EAC Committee on

Trade Remedies to handle persistent trade disputes in the region. I will also focus on strengthening the capacity of the National and Regional Monitoring Committees on the resolution of NTBs to identify and resolve any imposed NTBs.

The removal of NTBs is expected to drive intra-regional trade to at least 30 percent in the short-term from the current 15 percent. My target is to have it grow to more than 50 percent by the end of my tenure.

WE HAVE LARGELY SEEN INDIVIDUAL MEMBER STATES ENGAGE TO RESOLVE DISPUTES BETWEEN THEM, WITH LITTLE INVOLVEMENT FROM THE EAC SECRETARIAT. HOW DO YOU PLAN TO HANDLE THIS?

My aim is to strengthen the Secretariat to better support Partner States in trade negotiations and in operationalising mechanisms to unlock disputes among themselves. The EAC Elimination of NTBs Act, 2017, shall facilitate the resolution of persistent NTB and force Partner States to refrain from imposing new ones.

The mechanisms to report and resolve NTBs, as stipulated in the NTBs Act 2017, include compensation where the Council (of Ministers) finds that the imposing Partner State caused unnecessary trade loss to the affected Partner States as shall be determined by the Committee on Trade Remedies. It is my goal that this Committee is established and empowered to deliver on its mandate.

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My other key area of focus on this is to strengthen the available dialogue with Partner States through their established National Monitoring Committees and the Regional Monitoring Committee on the resolution of non-tariff barriers — where such exist — and other inconsistent laws that frustrate intraregional trade and investments.

KENYA, BEING THE ONLY LOWER MIDDLE-INCOME COUNTRY IN THE BLOC, HAS RECENTLY FOUND ITSELF ISOLATED WHEN NEGOTIATING FOR INTERNATIONAL TRADE TREATIES WHERE ITS EXPORTS WERE FACING INCREASED TARIFFS IN ABSENCE OF A DEAL. CASE IN POINT WAS THE RECENT POST-BREXIT DEAL WITH THE UK AND BEFORE THAT IT WAS WITH THE EU BACK IN 2016. WHAT IS THE LONG-TERM SOLUTION TO THIS?

The EAC has an obligation to implement all the provisions of the EAC Treaty, its protocols as well as decisions and directives from the EAC policy organs.

In terms of the EPAs (economic partnership agreements), the EAC Summit has provided guidance whereby partner States that are ready to implement the agreement should go ahead and do so.

Therefore, it is expected that within the confines of the EAC Treaty, we have solutions to fast-movers like Kenya.

On a sustainable basis, however, all EAC economies will be assisted to grow to middle-income status through harmonised economic policies.

When each of the EAC partner States has something to sell to the new negotiated markets on a competitive basis, negotiation and implementation of trade preferences will be a very welcome idea to all the partner states.

WHAT PRACTICAL SOLUTIONS ARE YOU BRINGING ON BOARD TO UNLOCK THE LONG-STANDING STALEMATE AMONG EAC MEMBERS OVER THE COMMON EXTERNAL TARIFF (CET) FOR THE BLOC?

The finalisation and comprehensive review of the common external tariff and its uniform application in the bloc is long overdue. One of my priorities is to work with the Secretariat and partner States to fast-track the process by the end of this year. We will do this by ensuring that all member states focus on its conclusion for the purpose of promoting local industries and products in each of the partner states.

Despite a legal framework for standards in place, there have been cases where goods from one member State has been subjected to double testing and standardisation, and that means increased cost of doing business.

The Standardisation, Quality assurance, Metrology and Testing Act 2006 provides a framework for mutual recognition of test certificates and product certification marks. There is a need for capacity building in all the partner States to adopt and implement the mechanisms in place to enhance intra-EAC trade. It is also necessary to deliberately engage with the private sector, development partners and regulatory authorities, including national standards bodies. This will help to, among others, adopt risk-based standards development and conformity assessment to address the issues of unnecessary costs and burden to the traders in this area.

HOW DO YOU PLAN TO RESOLVE THE PERSISTENT RECURRENT BUDGET CHALLENGES at THE SECRETARIAT?

This is an issue which has affected the performance of the Secretariat in the past. Going forward, we plan to address this by encouraging partner States to make their remittances on time and coming up with sustainable solutions to those that may be facing challenges in doing the same. We shall also revisit the alternative financial mechanism once proposed so as to enable EAC to collect its own expenditure money from taxes on imported goods.

WHAT LEGACY WOULD YOU LIKE TO LEAVE BEHIND?

The focus of the EAC has been and continues to be regional integration among partner States. It is my goal that by the time my tenure draws to a close, we will have a stronger, more formidable Community that benefits all its citizens politically and from a business perspective.

The Community is also expanding, Somalia has applied to join the bloc and we are fast-tracking deliberations with the hope of reaching a conclusion later in the year. The DRC is also in the process to join the Community. Our plan is to work to create an EAC that becomes a global player of repute while meeting the needs of its citizens.

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Business

East Africa celebrates top women in banking and finance

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The Angaza Awards for Women to watch in Banking and Finance in East Africa took place Online via Zoom on 8th June 2021.

The event was set to celebrate the top 10 women shaping banking and finance across East Africa. The 2021 Angaza Awards, which will be a Pan-African Awards program, was also announced at the event.

Key speakers at this webinar were Dr Nancy Onyango, Director of Internal Audit and Inspection at the IMF; and Gail Evans, New York Times Best Selling Author of Play Like a Man, Win Like a Woman and former White House Aide and CNN Executive Vice President.

Dr Nancy Onyango advised women to deep expertise in their fields, spend time in forums and link with key players in that sector.
“Gain exposure with other cultures by seeking for employment overseas and use customized CV for each job application,” said Dr Onyango.

According to Gail Evans, women should show up and be fully present in meetings and not be preoccupied with other issues.
“Be simple and avoid jargon. Multi-tasking only means that you are mediocre Smart people ask good questions in a business meeting. Most women face drawbacks due to perfectionism, procrastination and fear of failure, said Evans.

She advised women to play like a man and win like a woman, be strategic, and intentionally make their moves to get to the top.

“For us to pull up businesses that have been affected by effects of COVID-19 pandemic, we need to re-invent business models, change the product offering and make more use of digital platforms,” said Mary Wamae Equity Group Executive Director.

Mary Wamae emerged top at the inaugural Angaza awards( East Africa) ahead of other finalists.

While women continue to excel in banking and finance, the number of that occupies top executive positions is still less.

“There is a gap for women occupying C suite level and it continues to widen in the finance sector. At entry level, there is still an experience gap for women,” said Nkirote Mworia, Group Secretary for UAP-Old Mutual Group.

She said that at the Middle Management level, women do not express their ambition. For this reason, UAP-Old Mutual has developed an executive sponsorship program to help women get to the next level.

Mworia added that most women hold the notion that top positions in management have politics and pressure.
“One needs leadership skills and not technical expertise to get to the top,” said Mworia.

According to Catherine Karimi, Chief Executive Officer and Principal Officer of APA Life Assurance Company, women need to focus on the strengths and natural abilities that they already have.

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“Take risks and raise your hand to get to the high table. Find mentors along the way and develop your own brand and not compare yourself with others Focus on your strengths because it will make you move faster in the career ladder,” said Karimi.

Lina Mukashyaka Higiro, a Rwandan businesswoman and chief executive officer of the NCBA Bank Rwanda since July 2018, has three lessons for women who want to excel in banking and finance.
“Always spend at least 20 minutes each day reading, seeking genuine feedback from other staff members and widen your network,” Higiro told the webinar.

Women picked for Angaza awards

Mary Wamae, Executive Director, led this year’s Top 10 Women in Angaza Awards, Equity Group (Kenya)(2)Catherine Karimi, Chief Executive Officer, APA Life Insurance Company (Kenya)(3)Lina Higiro, Chief Executive Officer, NCBA Bank (Rwanda)(4)Elizabeth Wasunna Ochwa, Business Banking Director, Absa Bank (Kenya)(5)Joanita Jaggwe, Country Head of Risk and Compliance, KCB Group (South Sudan)(6) Millicent Omukaga, Technical Assistance Expert on Inclusive Finance, African Development Bank (Kenya)(7)Emmanuella Nzahabonimana, Head of Information Technology, KCB Group (Rwanda)(8)Judith Sidi Odhiambo, Group Head of Corporate Affairs, KCB Group (Kenya)(9)Rosemary Ngure, ESG & Impact Manager, Catalyst Principal Partners (Kenya) and(10)Pooja Bhatt, Co-Founder, QuantaRisk and QuantaInsure (Kenya).

The Kenyan Wallstreet, a financial media firm, partnered with Kaleidoscope Consultants to raise awareness of seasoned women shaping and influencing the sector through their organizations.

The Angaza Award criteria included assessing the applicants’ area of responsibility and contribution to firm performance. Professionals in Banking, Capital Markets, Insurance, Investment Banking, Fintech, Fund Management, Microfinance, and SACCOs were invited to submit their applications or nominations via the Kenyan Wallstreet Award Web page.

ALSO READ: Angaza Awards Top Finalist; Mary Wangari Wamae

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IFC in New Partnership to Develop Affordable Housing in Mombasa County

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NAIROBI, Kenya, Jun 14 – International Finance Corporation, a member of the World Bank Group, has signed a new deal in support of affordable housing in Kenya.

The corporation has partnered with Belco Realty LLP, to develop a mixed use affordable living complex that will consist of 1,379 residential units and over 4,500 square meters of retail and commercial spaces in Kongowea, Mombasa County.

Together with the Kenyan firm, IFC says the partnership will help meet surging demand for housing in Kenya.

Under the agreement, IFC will help identify suitable international strategic partners to invest equity of up to $12 million, or Sh1.3 billion in Belco and to provide the company with the necessary technical support to develop the project.

The development, known as Kongowea Village, will be developed to foster inclusive and affordable community living within the city.

Jumoke Jagun-Dokunmu, IFC’s Regional Director for Eastern Africa says the project, which will be located on eight acres within the heart of Mombasa city, will aim to be a catalyst for wider city regeneration.

The project will be developed to meet IFC EDGE certification requirements and will incorporate the latest technologies in passive cooling, energy efficiency and water conservation to support sustainable urbanization.

 Kongowea Village is expected to create 1,160 jobs and business opportunities during the three-year construction period and many more after completion of the project within the themed retail arcade.

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 “Access to quality housing is a growing problem in Kenya and across Africa,” said Jumoke Jagun-Dokunmu, IFC’s Regional Director for Eastern Africa.

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“Developers often target the high end of the market, but this project is aimed squarely at the lower-income bracket. Helping Belco identify the right partners for this project is expected to attract more developers to Kenya and other parts of Africa to help meet rising demand for housing.”

 IFC‘s engagement with Belco will help Kenya support its rapidly growing and urbanizing population by increasing access to affordable housing. The problem is similar across most of Africa, where population growth and demand for quality housing are combining to outstrip supply.  We are pleased to partner with a company such as Belco that is committed to contributing to solving this challenge,” said Emmanuel Nyirinkindi, IFC‘s Director for Transaction Advisory Services.

 IFC’s partnership with Belco is part of its broader strategy to support better access to affordable housing in Kenya.

In 2020, IFC invested $2 million in equity in the Kenya Mortgage Refinance Company (KMRC) to help increase access to affordable mortgages and support home ownership in the country.

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Uganda focuses spending on defence, energy and transport sectors

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By BERNARD BUSUULWA

Defence, energy and transport sectors ate big while allocations to fiscal stimulus programmes and settlement of domestic arrears received “humble pie” in Uganda’s budget blue print for financial year 2021/22 in an attempt to steer economic recovery through additional investments in ongoing infrastructure projects.

The works and transport sector was allocated Ush5.1 trillion ($1.4 billion) for integrated transport infrastructure investments with a provision of Ush400 billion ($113 million) meant for road maintenance works in an arrangement intended to benefit current road construction projects in the Albertine region as the country ramps up preparations for commercial oil production anticipated to commence in 2023.

“The huge allocations made to the transport sector are meant to speed up construction of the road network in the Albertine region and facilitate initial production of first oil by international oil companies. A combination of increased expenditure on these projects and early investments done by the oil companies will indirectly expand economic activity and boost the economy in the short term,” said Dr Albert Musisi, Commissioner for Macroeconomic Policy at Uganda’s Ministry of Finance, Planning and Economic Development.

The defence and security docket received Ush6.9 trillion ($1.95 billion), an amount that secured a lion’s share of the country resource envelope meant to bankroll planned military operations in South Sudan and in the Eastern Democratic Republic of Congo (DRC), a mineral rich trade hub that borders parts of Western and Northern Uganda and also accommodates the Allied Democratic Forces rebels, a terror group hostile to the Ugandan government.

So far, Ugandan troops are reported to have entered parts of Eastern DRC in preparation for a military offensive but the duration of this military campaign remains unclear. A portion of the defence budget allocation will be spent on construction of 30,000 housing units for military personnel.

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The energy sector was allocated Ush1.1 trillion ($310.9 million) for infrastructure development, with Ush622 billion ($175.8 million) provided for expansion of rural electrification programmes. This budget allocation seemingly promises sweet opportunities for energy industry contractors and modest financial relief for Umeme Ltd, which is owed more than Ush200 billion ($56.5 million) in unpaid bills incurred on subsidised power connections done in rural areas since 2018.

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In comparison, budget allocations made to the judiciary rose from Ush199 billion ($56.2 million) in 2020/21 to Ush377 billion ($106.5 million) in 2021/22 in a drastic move intended to support recruitment of new judges, enhancement of judicial officers’ salaries and allowances, construction of new courts and purchase of new courtroom equipment among others. The High Court judicial circuit is served by roughly 80 judges compared to a targeted requirement of 150 judges.

In contrast, a sum of Ush103 billion ($29 million) was allocated to the Uganda Development Bank (UDB) in additional capital meant for lending to distressed small businesses affected by the Corona virus pandemic following widespread business closures that have affected thousands of Small to Medium Enterprises(SMEs) since last year.

Around Ush400 billion ($113 million) was allocated towards payment of domestic arrears during financial year 2021/22 compared to Ush773 billion ($218.4 million) spent on clearing domestic arrears in the current financial year. The total value of accumulated domestic arrears is estimated at Ush3 trillion ($847.9 million) to date, according to government records.

“The new budget is mainly guided by historical thinking and not a Covid-19 pandemic planning mindset. This explains the increased budget allocations made to the transport and energy sectors which are supposed to cater for ongoing infrastructure projects inspite of changing economic realities,” argued Dr Fred Muhumuza, a local economist.

The overall resource envelope for financial year 2021/22 is estimated at Ush44, 778.7 billion ($12.7 billion) while the tax collection target was raised from Ush19 trillion ($5.4 billion) in 2020/21 to Ush22.445 trillion ($6.3 billion) for 2021/22, according to Ministry of Finance data. Total domestic borrowing is projected at Ush2 trillion ($565.2 million) during 2021/22 while total public debt stood at $17.69 billion by end of May 2021. The economy is projected to expand by three percent in 2020/21 and is forecast to grow by 3.3 percent in 2021/22.

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