Experts outline factors undermining market potential in East Africa

Dar es Salaam. Experts have argued that poor implementation, lack of harmonisation of policies, and bureaucratic inefficiencies continue to undermine East Africa’s market potential.

This comes despite the fact that 13 years ago, the East African Community (EAC), Southern African Development Community (SADC), and Common Market for Eastern and Southern Africa (Comesa) envisioned a tripartite free trade area that would create a seamless regional business environment.

However, despite the agreements, the business environment has continued to block good flow of goods, according to experts.

The EAC’s integration process dates back to the signing of the cooperation treaty in 1999, which became legally binding in 2000.

The bloc outlined a roadmap for economic integration, beginning with the Customs Union in 2005, followed by the Common Market in 2010. The Monetary Union, which was expected to be operational by 2024, has now been postponed to 2031 due to slow implementation.

According to East African Legislative Assembly (EALA) Member Machano Ali Machano, the region has had well-structured policies and agreements, but the biggest challenge lies in implementation.

He expressed this concern in an interview with The Citizen during a forum organised by University of Dar es Salaam Business School (UDBS) whose them was “Unlocking the EAC Market Potential: A Strategic Forum for Tanzania’s Logistics Stakeholders”.

Mr Machano noted that customs harmonisation between EAC and SADC has never been achieved, making it difficult to establish a truly unified trade area.

“The real issue is implementation. We have great policies, excellent agreements, and strong commitments, yet the execution remains a major challenge,” he said.

A specific concern lies in container shipping costs. Experts say that shipping a container from China to the Port of Mombasa is often cheaper than transporting that same container from Mombasa to Dar es Salaam or vice versa.

“The inefficiency in our logistics systems is a direct consequence of inadequate investments in ports, roads, and airports. These need to be modernised to facilitate faster clearance and movement of goods,” Mr Machano added.

Tanzania Truck Owners Association (Tatoa) chairman Elias Lukumay pointed out that despite the EAC being a unified market, taxation and customs duties remain highly fragmented, with every member state having its own taxation.

“Currently, VAT rates differ significantly across Kenya, Uganda, and Tanzania. This lack of harmonisation distorts trade and puts businesses at a disadvantage,” he said.

Additionally, weighbridge regulations and tariffs also vary across countries. Trucks transporting goods from Tanzania face different weighbridge charges when entering neighbouring countries, leading to unpredictable costs for logistics companies.

This inconsistency, Mr Lukumay added, forces traders to seek alternative, often inefficient, longer routes that bypass bureaucratic hurdles.

Another critical issue is the conflicting policies between EAC and SADC. Many businesses in Tanzania rely on SADC markets for trade, yet regulations between the two blocs frequently clash.

For instance, Mr Lukumay said, transporting heavy cargo from South Africa to the Democratic Republic of Congo (DRC) via Dar es Salaam’s port is far costlier and slower than using ports in other SADC nations due to the misalignment of trade policies.

“This policy misalignment is making it harder for Tanzanian businesses to benefit from our own ports.”

One of the key criticisms of the EAC trade framework is the bureaucratic hurdles in addressing trade barriers.

The EAC Treaty mandates the elimination of non-tariff barriers (NTBs), but the protocol to operationalise this mandate has been sluggish.

Mr Machano emphasised that trade decisions are often tied up in layers of government bureaucracy, from principal secretaries to ministers and even heads of state.

This slow decision-making process delays urgent trade reforms and adds layers of inefficiency.

“If trade matters continue to be handled through endless paperwork and bureaucratic chains, it’s no surprise that businesses find it hard to operate efficiently,” he said.

Experts believe that governments must actively engage the private sector to unlock the region’s market potential.

“There needs to be a shift in government mentality. Policymakers should allow more collaboration with the private sector, which understands market dynamics better,” said Machano.

The acting Dean of the University of Dar es Salaam Business School (UDBS), Dr Patrick Mbwile, said resolving these issues requires a multi-stakeholder approach.

“This forum is about bringing together experts in the logistics sector to discuss solutions. The EAC market holds immense potential, but governments must prioritise implementing agreed-upon policies,” he noted.