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Zawya
a day ago
- Business
- Zawya
EAC harmonises tax on alcohol, differ on fuel and tobacco
The East African Community (EAC) has agreed to harmonise excise duty to be levied on alcohol, amid a push by the International Monetary Fund. But they disagreed on excise duties on tobacco and other nicotine products, non-alcoholic beverages, and fossil fuels. The bloc is looking to create a more unified market, reduce smuggling and prevent distortions caused by differing excise duty rates. The move approved by EAC Council of Ministers in 2019 but is yet to be fully implemented. Currently, the EAC Tax Policy and Tax Administration Sub-Committee, with support from the IMF, is conducting harmonisation of excise duty on alcohol, tobacco, non-alcoholic beverages, and fossil fuels.'The IMF experts analysed the tax data submitted by the partner states and recommended a range of possible minimum rates for each product for consideration by the Tax Policy and Tax Administration,' said Frank J Dafa, Manager of Trade in Goods at the East African Business Council. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (
Zawya
07-04-2025
- Business
- Zawya
The huge cost of conflict to East African economies
Kenya, Uganda, Rwanda and Tanzania are relatively politically stable. But they have endured hard knocks on their economies due to recent conflicts in neighbouring Democratic Republic of Congo, Sudan and South Sudan. Private sector players in the region are warning that no one will be safe as long as the neighbourhood is in war, reflecting how trade connections between these countries are at risk. Conflicts have disrupted the flow of goods, food security, and caused human displacement, all of which add a burden to the economies.'Kenya, Uganda, Tanzania and Rwanda are the most affected by the wars, as their goods are the most exported to both South Sudan and in Goma, eastern DRC. It is, therefore, in the interest of the EAC to ensure that these conflicts are resolved,' said John Lual Akol Akol, chairperson of the East African Business Council (EABC), the lobby for the private sector in the East African Community.'The DRC is the major country which imports goods from Kenya, Uganda and Tanzania. And if it is not stable like we are seeing now in eastern Congo, it will affect the economic growth in the region.'Eastern Democratic Republic of Congo is the most significant destination of goods and services mainly supplied by Kenya, Rwanda, Uganda, Burundi and Tanzania. Read: EAC adopts new levies on 'high risk' products to curb unscrupulous tradersThe presence of troops from various countries, including Belgium, Uganda, Rwanda, DRC forces and the withdrawing Southern African forces in the region heightened tensions among key actors, raising concerns that the situation could escalate to engulf more countries. The capture of Goma and Bukavu by the rebel group M23 disrupted trade routes and economic activity in the region, which are the main consumers of East African goods in the DRC. Kenya's main exports to the DRC include iron and steel, tobacco, wheat flour, confectionery, sugar, and milling products, most of which ends up in eastern Congo. Tanzania has also expanded its exports to the DRC, increasingly competing with Kenya and Uganda for market share. Businesses in the DRC are facing liquidity crises, and the flow of goods from neighbouring countries like Kenya, Rwanda, Uganda, and Burundi has slowed or been diverted. Banks, airports, and important trade routes remained closed. Now, the Northern Corridor is reeling under goods, with Mombasa port registering increased volumes of cargo destined for South Sudan, some of which has been diverted from Port Sudan. The Northern Corridor Transit and Transport Coordination Authority (NCTTCA) said the conflicts have disadvantaged South Sudan traders, forcing them to use longer routes to deliver goods. NCTTCA Executive Secretary John Deng said the corridor is being strained, as goods which were being handled by Port Sudan have been diverted to Mombasa port due to the war in Sudan.'Mombasa port is benefitting from the number of cargo being diverted to the Northern corridor, but South Sudan traders who have been using Port Sudan, are enduring high cost of transportation of goods because of the tension,' Dr Deng said in Mombasa. This week, the Sudan government asserted that an earlier ban on Kenyan tea to the country was still on, despite President William Ruto insisting that the commodity was still accessing the Sudanese market. Port Sudan termed Dr Ruto's statement that trade between two countries was still on despite the ban 'inaccurate.'"Sudan's Ministry of Trade and Supply issued a decree suspending all imports from Kenya in line with Sudan's national interests. This decision has been fully implemented and since then, no Kenyan products including Kenyan tea have been imported into Sudan remains firmly committed to upholding this trade policy as part of its sovereign economic and diplomatic considerations," said a statement from the Sudanese embassy in Kenya. Some 207 containers of tea destined for Sudan are stuck along supply chain, with exporters potentially losing $10 million. East African Tea Trade Association (EATTA) Managing Director George Omuga has appealed to Nairobi to engage Sudan to allow buyers a window of at least one month to clear the teas already dispatched to that country to mitigate the losses to Kenyan traders and farmers. Read: Sudan blocks Kenyan goods as AU rejects 'parallel' government bidSudan is ranked among the top 10 markets for Kenyan tea and the standoff could mean a decline in exports to Sudan, impacting trade. Kenya exports various commodities to Sudan, including tea, food items, and pharmaceutical products. Before the current hostilities, Sudan bought about $37 million in Kenyan tea. On March 14, Sudan suspended all imports from Kenya in protest after the paramilitary Rapid Support Forces, who were fighting the country's army in a two-year civil war, formed a parallel government in Nairobi. Meanwhile, government of DRC has lost significant revenues to the rebels, with a December 2024 UN report saying that the M23 had generated nearly $800 million in taxes on the production, trade, and transport related to the coltan mines around Rubaya since April 2024. Further, former UN investigator Jason Stearns claimed that Rwandan mineral export revenue had doubled over two years on this crisis in eastern Congo. This growth includes a jump in gold exports despite Rwanda not being a major gold producer. Meanwhile, the tension in South Sudan continues to disrupt trade with Kenya and Uganda, and Kampala is poised to lose a lot if the crisis does not de-escalate. In January, 2025, Uganda's exports to South Sudan were $55.9 million, a 54 percent increase from the previous month, surpassing Kenya as Uganda's top export market. Last year, Kenya exported $227 million to South Sudan. But now the flow of goods has been disrupted by the tension in Juba between President Salva Kiir and his deputy Riek Machar. Akol Akol notes that East African economies performed well in 2023/2024, but the economic indicators for this year point to a shift.'With the war in DRC and now South Sudan, we can't predict the exact growth this year. Similarly, South Sudan is not stable in terms of the business and also the political conflicts which are now going on. Investors are appealing to leaders in South Sudan not to escalate the war. We still have some hope because President Salva Kiir is committed to peace,' he said. In South Sudan, efforts by Kenya through former prime minister Raila Odinga have yet to yield the desired results. Read: Why Raila's mediation in Juba hit bumpsBut President Kiir this week met with Uganda's Yoweri Museveni, a meeting expected to bear fruit in rescuing the 2018 peace deal that has held South Sudan in relative calm, until this year. Trucks transporting goods and fuel from Kenya's Eldoret depot have been stuck at the Malaba border.'We are not comfortable transportation of goods from Mombasa to Juba. There are too many roadblocks on the way to Juba. The other day fuel from Eldoret was diverted by rebels, putting our drivers at risk,' said David Masinde, president of Long Distance Truck Drivers in Africa. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (
Zawya
02-04-2025
- Business
- Zawya
East African economy projected to register marginal growth in 2025
The economic growth of the East African region is projected to rise to 5.7 percent in 2025, increasing from 5.1 percent in 2024, a sluggish climb owing to reduced international aid and conflict. The report, which was jointly presented by the East African Business Council and RSM Eastern Africa consulting firm, attributed it to the growth in public infrastructure investments and in the services sector. The RSM Eastern Africa & East African Business Council (EABC) Outlook 2025 report reveals that in 2024, agriculture, manufacturing and infrastructure investments performed well across the East African Community (EAC) partner states. The report reveals that the economies of Kenya, Tanzania, Uganda, Rwanda and Burundi showed resilience despite global challenges, high inflation rates, the war in Ukraine, the 2024 floods, Israel Hamas conflict, and Donald Trump's re-election among other negative factors. The report was unveiled on Tuesday during the 'CEO Roundtable Meeting on East African Integration and Economic Outlook 2025' organised by the EABC in partnership with Kenya Private Sector Alliance (Kepsa), and the Kenya Association of Manufacturers (KAM).'The East Africa's economic growth has been driven by public infrastructure investments. Globalisation is declining as countries turn inward and aid flows decrease. Governments need to provide necessary incentives and an enabling environment for the private sector to lead economic growth,' said Ashif Kassam, executive chairman, RSM Eastern Africa Consulting Ltd.'Infrastructure investments of $44 million in 2024 boosted intra-EAC trade by 13.4 percent to $74.03 billion. Investments are set to rise further in 2025.'The report analysed the performance of each EAC partner state based on a number of sectors including agriculture, infrastructure investments, manufacturing, agro-processing, services and tourism, among others. The report reveals that in 2024, Kenya's agriculture grew by 3.0 percent, contributing 22.4 percent to the Gross Domestic Product (GDP) and employing 40 percent of the population. Read: Kenya's special economic zones to attract more FDIsIn 2025, it is projected to grow by 3.5 percent, with GDP contribution at 21 percent and employment at 41 percent. Manufacturing grew by 3.2percent in 2024, contributing 9.2 percent to GDP and 456,000 jobs. In 2025, it is expected to grow by 3.5 percent, with GDP at 9.5 percent and jobs at 500,000.'Kenya's economy showed resilience in 2024, with a GDP growth rate of 4.6 percent despite facing several challenges. This growth was driven by strong performances in agriculture, services and the tourism sector,' said Mr Kassam.'Kenya's real GDP growth is projected to remain strong at 5.2 percent. Kenya's share of tax to GDP is at 11.5percent, inflation is expected to go down to 6.5 percent and saving to GDP at 13.5percent.'Various projects in East Africa are poised to transform the region's economic landscape. Tanzania's Bagamoyo Deepwater Port is expected to become a major hub for maritime trade, facilitating greater connectivity and economic growth. Tanzania's agriculture sector grew by 4.2 percent in 2024 contributing 28 percent to the GDP and employing 65 percent of the population. Projections for 2025 indicate a growth of 4.5 percent with the sector's contribution to GDP expected to rise to 29 percent and employment to 66 percent. In Uganda, the agriculture sector contributed 24.1 percent to the GDP in 2024. However, growth in the sector remains steady at three percent due to government support in irrigations, mechanisation and agro-processing. Exports of coffee, fish, tea and maize remain strong. In Burundi, agriculture remains the backbone contributing around 40 percent of the GDP. The sector is dominated by smallholder farming, with coffee and tea making up the largest exports. Despite the growth, the private sector members drawn from all the eight EAC members, by 50 business leaders, raised concerns over high cost of doing business sustainability - particularly electricity and transport. They also raised issues of climate change to access the European Union market, intellectual property rights to scale-up digital tech businesses, consolidating laws and enforcement agencies to reduce regulatory compliance burdens.'Tax budget proposals and consultations should involve and be harmonised with a wider range of private sector stakeholders at sectoral, national, and regional levels and combating illicit trade, including counterfeits and substandard goods,' said Mr Kassam. On the global scene the return of Trump poses both risks and gains.'The return of Trump to the White House in 2024 has disrupted economic alliances. For Eastern Africa, with all its rich untapped valuable resources, this is the time to reinvent itself rather than retreat,' said Mr Kassim.'As the world grapples with the implications of America's inward turn, Eastern Africa must make sense of this uncertainty. It is a make or break for the region,' he said."For businesses and investors, the path forward demands a proactive and informed approach of the region's shifting dynamics.''For the record, East Africa countries did well in the last two years, 2023 and 2024. But the economic indicators for this year paint a different picture. The war in DRC and also South Sudan is on and off because of the political turmoil facing the country now, we can't project the growth,' said Akol. Read: Kenya posts slowest Q3 economic growth since Covid pandemicMr. Akol also called for the liberalisation of air transport services, finalization of trade in services liberalization, and full implementation of EAC commitments by new Partner States.'Intra-EAC exports have grown from 17 percent of total exports in 2017 to 21 percent in 2023, reaching $6.3 billion in 2023, but the share of intra-EAC trade to total trade continues to stagnate at 15percent,' said Mr Adrian Njau, Ag EABC executive director.'Governments of EAC Partner States should fully implement commitments of the Common Market and Customs Union. The EAC's trade has a potential of $1.9 billion under the AfCFTA market.'Ms. Miriam Bomett, head of policy, regulatory advocacy & legal operations at the Kenya Association of Manufacturers (KAM), called for the implementation of the CET, the reduction of production costs for manufacturing, and the enhancement of cross-border trade through regulatory reforms and efficiency improvements. Ms Rita Kavashe, managing director of ISUZU East Africa, stated that sourcing inputs from across the region has facilitated the development of an integrated East African motor vehicle industry, fostering regional integration. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (
Zawya
10-03-2025
- Business
- Zawya
How M23 war has disrupted East Africa trade with Congo?
The M23 rebel group's offensive in eastern Democratic Republic of Congo may be causing one of the region's worst humanitarian crises. But businesses are also feeling the effects of the war, with closed banks, diverted goods and confusing customs decisions. Since January, more than 3,000 people have died and another 600,000 uprooted from their homes, fleeing the violence that broke out between M23 and the Congolese army. In cities M23 controls, the economies have been severely disrupted and the banking system has ground to a halt. In Goma, North Kivu Province, the provincial branch of the Congolese central bank and all lenders shut doors due to insecurity and the state authority has relocated services to a safer town. Business leaders in the DRC are now complain of serious liquidity crisis, especially since Kinshasa controls banking operations, while the flow of goods from Kenya, Rwanda, Uganda, Burundi into Congo has slowed or been diverted.'Here in Bukavu and Goma, there is almost no business going on. Banks have closed as well as Goma airport affecting the importation of goods from Uganda, Kenya, Rwanda Tanzania and other places,' said Mapendo Bienv, DRC's member of the East African Business Council, who is based in Bukavu, the capital of South Kivu Province. And the general situation in North Kivu is currently that of bedlam. M23 has set up a parallel administration in Goma, installing a governor, two vice governors, a mayor and a number of burgomasters (mayors). But the parts of the province still in the hands of the Congolese army also have a governor, Major General Evariste Somo Kakule. He has vowed to reorganise the province, in anticipation of a possible assault to recover the territories lost to M23.'They [the M23] are targeting minerals in addition to government posts, the army, police, and state enterprises,' says Amadee Fikirini, Life Peace's Country Director for Congo, based in Bukavu. Rubaya produces 1,000 tonnes of coltan annually—half the DRC's output. Other areas of M23 control are rich in cobalt and lithium, which are critical to electric vehicle batteries. The region is also rich in gold, which is reportedly the key source of revenue for the M23. Customs clearanceThe M23 control of the territory around Goma has also affected the intra-EAC trade. In Goma, the governor installed by the M23 imposed a new trade policy, including loosening of restrictions on closing hours of the border with Rwanda, allowing more time for business. Previously, Congolese traded with Rwandans only during the day at their common land border after Kinshasa authorities ordered, in 2022, that the border with Rwanda should close at 3pm. The new M23 administration extended the business hours to 10pm. The effect, however, is beyond Congo's borders. This week, Uganda said it was closing operations at several border crossings into eastern DRC to zones now controlled by M23 rebels, potentially locking out not only its exports but those from Kenya and South Sudan, whose exports transit through Uganda. On Tuesday, Uganda stopped clearing goods destined for Bukavu via its Katuna border and those destined for Goma via Cyanika, a move that has seen cargo destined for DR Congo pile up at the borders and remain in several warehouses in Uganda. Since 2022, Uganda had, in fact, taken precautions in areas controlled by the rebel outfit. Other closed borders this week include Ishasha River, Busanza, Kyeshero and Bunagana. These points cannot clear goods destined for eastern DR Congo. Trade routesThe closures affect not only Uganda but most of the East African Community (EAC) member states whose goods have been transiting via Uganda. These countries can now only export via Rwanda, where the goods can then be re-exported to Goma and Bukavu, but this is a longer distance. Kenneth Ayebare, chairman of the Uganda Cargo Consolidators Association, said trucks going to Gisenyi in Rwanda near Goma, now have to go through Kigali, which is a longer and more expensive route. But it is the only option.'The Cyanika border is nearer to Goma,' said Mr Ayebare explaining that since 2022, the Uganda side of the border has been active, but the DR Congo side has been closed since M23 captured the Bunagana post. It is about 92 kilometres from Cyanika to Goma. The distance from Katuna to Goma via Kigali is about 240 kilometres. Asadu Kigozi Kisitu, the Uganda Revenue Authority (URA) the acting Commissioner for Customs, told The EastAfrican on March 3, 2024 that it's now internationally recognised that Goma, a final destination to the Cyanika border, and Bukavu, a final destination of Katuna, are no longer under the control of the DR Congo central government.'There is no recognised government in areas controlled by the M23 rebels. We deal with governments. As a result, DR Congo Customs informed us that the lack of control has led to significant revenue losses of goods destined for Goma and Bukavu,' he said. Exports to DRCEastern DRC is a lucrative market for nearly all EAC member states, including Rwanda even though it has existing tensions with the Congolese government. Uganda trades more with DRC than any other neighbour, with two-way businesses reaching $2 billion in 2024. Over the past three years from 2022, the Bank of Uganda data shows that Kampala's export earnings to DR Congo have been steadily growing, from $176.63 million in 2022, reaching $180.78 million in 2023, before settling at an all-time high of $197.29 million in the 12 months to December 24, 2024. Kenya's export earnings in trade with DR Congo, in the past 33 months to September 2024, reached $459.1 million in September 2024, with Nairobi being one of the key sources of petroleum products for eastern DRC.'Eighty percent of the trucks on the Goli-Bunia route are fuel truckers,' said Joseph Omwasa, a Kenyan truck driver, who had spent over a week at Goli. He told The EastAfrican that he feared attacks by armed militia. Uganda had, since June 2022, when M23 rebels took control of the Congolese side of the Bunagana border, slowed clearing goods destined for DR Congo via the crossing. It's estimated that Uganda used to collect over Ush500 million ($136,000) in revenue from the Bunagana border annually. The rebel takeover of Bunagana has also affected business at the Ishasha border post in Kanungu district of western Uganda.'DR Congo is a huge market not only for Uganda and the whole East African Community,' says Julius Byaruhanga, Director of Policy and Business Development Private Sector Foundation Uganda, a Kampala-based business lobby. Rwanda's export earnings to DR Congo hit $489.3 million from January 2022 to September 2024, National Institute of Statistics Rwanda trade data shows, despite the political tension between the two countries. Agencies' confusionFor the Congolese government, the confusion emanating from its agencies has not helped the uncertainty. On Wednesday, it backtracked on a move to impose import duty on goods from regions controlled by M23, the result of an overnight public outcry. The Congolese General Directorate of Customs and Excise (DGDA) of North Kivu said on Wednesday that it had reversed the decision that would have considered all goods coming from Goma, Bunagana and Ishasha, areas occupied by the M23 rebels, as new imports subject to tax. Jean-Louis Bauna, Deputy Director General of the Customs Department, described the letter from his department in northwest Kivu as 'a forgery.'He argued the 'customs legislation applies in full throughout the national territory.'Read: DRC rescinds tax directive on M23 zones after backlashThe backtracking, however, came after intense social media commentary concerning the move, which had been communicated to neighbouring countries of Uganda and Tanzania. Some critics argued the country risked getting divided into two if the directive is implemented. Congolese authorities under Kinshasa, administering North Kivu Province, have been based in Beni since the capital Goma was taken over by the M23, backed by the Rwandan army. The M23 have operated the Congo River Alliance (AFC) led by Corneille Nangaa, a former President of the Independent National Electoral Commission. Nangaa is calling for the overthrow of the government of President Felix Tshisekedi, unless he agrees to dialogue about their grievances. Paul Kayembe, director of the North Kivu DGDA, denied the decision had even been contemplated to tax the M23 zone. Instead, he blamed it on 'the work of ill-intentioned people trying to discredit him' and pointed a finger at 'Rwandan' manipulation. What we learnt, however, was that the government, in attempting to rescue revenues lost to border points in M23 zone had tried to re-tax the goods. It backtracked following the controversy it generated. A number of people including prominent Congolese personalities had protested against the decision to impose a customs duty inside the country's territory, thus creating a virtual border. Sources within the DGDA confirmed to The EastAfrican that the new tax memo was indeed genuine. A DGDA technician explained on condition of anonymity that 'customs posts in rebel-occupied areas have already been suspended from the computerised customs system, which enables automated management of customs procedures.'Since the M23 took Goma, the Congolese government has been taking economic measures to corner the parallel administration set up by the rebels.'We have placed our main hope on the EAC-SADC mediation process; maybe it could help unlock the current impasse,' said Mr Bienv, DRC member of the East African Business Council, in an interview with The EastAfrican.'The EAC/SADC council of ministers is expected to meet in a fortnight and deliberate over the crisis in eastern Congo as per the directive of the joint Heads of state summit,' said Rebecca Kadaga, Uganda's Minister for East African Community Affairs.'The meeting is set to receive a report from chiefs of defence to discuss the agenda on ceasefire and re-opening of the Goma airport as arrived at by the heads of state.'The Dar es Salaam summit sought to bridge regional differences by bringing the two blocs together. It called for an immediate ceasefire and direct talks with the M23 and other non-state actors. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (
