EAC boss says new common external tariff will benefit citizens | The new times
For more than a month now, tension has been mounting in the eastern Democratic Republic of the Congo, and in the region, after the resurgence of the M23 rebellion even as the country has taken a major step towards the membership of the East African Community (EAC). In addition to the difficulties encountered by the new member of the bloc, in May, the EAC ministers in charge of trade and finance adopted 35% as the 4th band of the common external tariff (CET) of the region. Implementation of the revised EAC CET begins on July 1.
In an exclusive interview with New Times’ James Karuhanga, EAC General Secretary Peter Mathuki, maintained a positive attitude while discussing the Congolese issue, among other common challenges. Mathuki insists that no matter how difficult the situation may seem, there is always a way out. Mathuki also spoke at length about the region’s revised common external tariff, stressing that it is ultimately meant to benefit the region’s common man.
After your first year in power and the admission of DR Congo to the bloc, what is the secretariat’s view of the state of eastern DRC?
As you well know, the Heads of State admitted the DRC and it became party to the Treaty on 8 April. I think that’s a huge advantage for East Africans. But again, as we do, we are aware that there are certain situations in the eastern part of the DRC. And the problems in eastern DRC, or any part of the EAC, are a challenge for all of us and we have to admit that.
A challenge in any part of the EAC becomes a collective challenge. I know, the Heads of State, at their level, have found a framework. The first time when they met on April 8, in Nairobi, they tried to see how best to solve this challenge. I am very confident that this will be done.
The situation is not supposed to be like this, but again, the fact that at the highest level the heads of state themselves are concerned about it and discussing it and have already set up a framework to talk about it, is something positive.
So that’s my expectation and it’s our hope that this will be resolved. But secondly, [there is] our own framework of the EAC mechanism to prevent and support such situations. We are going to put [measures] in place to ensure that we support and facilitate a very peaceful East Africa because it is in our interest.
But you must understand that no matter how difficult a situation is, there is always a way out. I firmly believe in it, because it can’t always be like that. And I look forward to a very prosperous East Africa.
With the spirit, energy and enthusiasm of the Heads of State, I am very confident that this regional bloc will not only be one of the most integrated in Africa, but in the world.
Does the EAC really understand the conflict in eastern DRC; for example, the resurgence of M23 group?
We can’t claim to be experts on this, but we know there is a situation. And there is a team following very closely. As it follows closely, using the mechanisms we have, we are trying to see how we can best circumvent it to complement what heads of state are doing.
But obviously our peace and security department is receiving information. And this information becomes useful for us to know how to intervene. And it is our prayer that with this information, we can see, identify or understand how to support the mechanism initiated by the heads of state.
How is the EAC Department of Peace and Security do, since from what we understand it is underfunded and possibly understaffed?
I wouldn’t say it’s underfunded. I would say that we have the resources and even the capacity to mobilize more resources to intervene in such circumstances.
Some situations may require an even higher number. And when it requires more people or resources, we can identify more experts to come and help us. But I think the ministry has the capacity to support us and advise us or give us information that could be useful in trying to intervene.
Finance ministers recently adopted an EAC CET of 35% for fourth band goods. What does this mean for the common man?
In fact, it simply means; made in East Africa by East Africa. This means that goods produced in East Africa are so protected; one, we increase our manufacturing capacity, we increase local production. In simple terms, this means that we consume what we produce in East Africa.
This means the capacity of East African countries; whatever they have, we produce it and we protect it so that it is not competed out of the market by goods coming from outside the region.
I think in simple terms that means we favor local production and local manufacturing. We encourage East Africans to do this; consume what we have. For example, now the crisis we are facing around the world. We hear that there is war between Ukraine and Russia and therefore we cannot get wheat…because of this the prices have gone up. Why can’t we produce our own? Why can’t we identify the incentives that can be offered to encourage local production?
We can’t do all this when the CET is at 30 percent?
What we’re saying is that we’re protecting more because the more we increase tariffs for goods that come in from outside, the more we’re saying; why can’t we buy ours? For example, wheat from Ukraine, when we rate it at 35%, and our own local wheat here at 0%, which is cheaper? It’s our wheat, which is duty-free!
Duty free means that everything we produce here is sold in East Africa and attracts zero percent. Thus, when the Council adopted 35% [revised CET] he said that for any good coming into East Africa that is fully processed or manufactured, we charge 35% because we want to produce our own. It has a direct impact on people’s lives because it affects the cost of production, the cost of living.
Second, it creates jobs for our young people. We really encourage more people to come and invest in East Africa and produce from here, instead of bringing finished goods because bringing finished goods means they are processed and made elsewhere and you create jobs elsewhere .
Job creation is good, many can be employed but the problem is: how much do they get paid? Considering, for example, the cost of living in the region and all that is happening outside, such as the Ukrainian crisis and affects us…
If, for example, we take the landmass in the newly created EAC [with entry of DRC]which spans almost five million square kilometres, and we say produce food, produce enough and use what we grow as raw material [for industry].
What this means is that; one, there will be food security. People will first be able to produce enough food for themselves. Food will be cheaper. Of them; because of the raw materials you don’t get from outside, it [local produce] will be much cheaper too.
And therefore, this means that eventually the cost of living will also be lowered. The reason things are expensive now is because we import everything, and once we import, by the time we clear everything, it’s very expensive, and we’re not even creating any jobs at all.
So I think we have to understand that the only sustainable way to create jobs is to produce locally. And with this crisis, it is high time to ensure food security in East Africa. And it is possible because we have the land and the labor. And three ; we have the market, close to 300 million people now.
What do you think of the decision to increase the CET to 35%, at a time when regional interventions have not resulted in an EAC industrialization policy?
Manufacturing is a process, unlike trading. Commerce is simply buying goods and selling them. What is the [new] The CET encourages production. Production means manufacturing; manufacturing means you have the ability to add value.
And therefore, whether it benefits one caliber of people or another depends because the private sector or the people who produce have to do it with the support of the government. Governments will provide the incentives and all kinds of environments needed to ensure business thrives.
The TEC is therefore not just for businesses. In fact, the CET is for the common man because we want local production. If it’s produced here and it’s cheaper, that means the municipality mwanainchi will be able to buy cheaper throughout East Africa.
The payoff is two-way as the producers will pay taxes and therefore the government is also able to deliver whatever it is supposed to deliver and the private sector produces and creates jobs and income.
Plus, it’s about being competitive. It will be in the interest of these business people to ensure that the price they set is competitive. You can’t get government incentives and support and then raise or raise prices more than expected.
If you do that, then you’re not doing business. It will be mass production and therefore the prices will remain low. This benefits the common man in terms of jobs, income and our whole economy in East Africa becomes sustainable. So the spirit is to buy East Africa, build East Africa.
We are informed that a retreat of heads of state on the common market is planned soon. Why exactly and when?
Until heads of state confirm their own timetable, you can only plan. The common market is the second pillar of our integration. We’ve had it for almost 20 years. It is high time to take stock and reflect on how well it is working and what needs to be done so that the common people in the region can better benefit from it.
It is high time to take stock, reflect and see what else we need to do or not do to make this second pillar of the Common Market work for the people of East Africa.
And therefore, the Summit or the Heads of State must have the opportunity to reflect and question themselves; where are we with the common market now? What’s not working? Why it does not work ? Can we do better? Can we change? And what aspects are we going to change? That’s what it means by just having a reflection with the top to look at it and eventually get everything back on track.