By A correspondent, Arusha:
Manufacturing and processing sector in Arusha Region and other parts
of the country so far has not benefited from the implementation of the
East African Community Common Market Protocol (EACCMP).
At least that is the preliminary finding by a researcher, Mr
A.D.Massaga of Alpha Associates and MBD Consultants. He is looking at
the implementation of EACCMP with a special focus on the manufacturing
sector on behalf of Tanzania Chamber of Commerce Industry and
Agriculture (TCCIA Arusha).
The Protocol on EACCMP entered into force on 1st July 2010, following
ratification by all five Partner States: Burundi, Kenya, Rwanda,
Tanzania and Uganda.
According to the researcher, this means Tanzania has got an uphill
task to make sure the manufacturing sector benefit more from the
implementation of the protocol, else even the existing industries can
be run over.
The researcher says Tanzania should work hard towards reducing and
minimize existing economic imbalance as well as increasing the
manufacturing industry base. “This is in order to have balanced
players in the field to create strong competitiveness,” he says.
He notes Tanzania has two pharmaceutical industries while Kenya has
more than ten pharmaceuticals manufacturing Industries, and in such
instances by virtue of fair play, Tanzania is on the receiving end in
as far as the two partner states are concerned.
Local brands have to compete with international brands and thus needs
a lot of support. To compete, he says Tanzanian manufacturing sector
must be very innovative and it needs assistance on technical aspect.
According to Mr Massaga, local manufacturers need to up their stakes
as some produce products that can compete internationally but release
them in local market only.
He lamented that most shops stock imported goods. He wonders where
does locally produced goods go?
He calls on for a progressive move towards preparing the manufacturing
sector, especially where Tanzanians can do well.
Mr Massaga said ongoing data collection regarding challenges facing
Tanzania business community through the implementation of the EAC
common market protocol reveal that most of Tanzania business community
doesn’t have a clear understanding of the protocols.
“The Tanzanian business community in Arusha is generally not aware of
the East African Customs union protocol which is the entry point of
Common Market protocol, as well as the East African Common Market
protocol itself. It’s very difficult for a person to realize benefit
from unknown thing,” he comments.
According to the researcher, to date there is no significant benefits
accrued or realized through the introduction and implementation of the
EACCMP, in the area of manufacturing and processing sector Tanzania
can be proud of in Arusha, Kilimanjaro, Manyara, and Singida,
regions, he said.
The researcher said that East African Customs Union Protocol had
provisions for bringing a fair playing ground during the
implementation of EACCMP (transitional period) that has lapsed without
Tanzania having taken advantage of it.
For example (The East African Customs Union protocol) Part “D” deals
with trade liberalization ,Article “10” discussing Internal tariff and
Article “11” discuss Transitional Provisions on the elimination of
Internal tariff ,Article 12 discussing Common External Tariff, and
Article 13, discuss None Tariff barriers, Mr Massaga notes.
He adds that the provision of Article 11 subsections 2(a) and (b)
together with subsections 3 (a) and (b) this should read with sub
section 4, 5, and 6.
“Article 11 of the EACCUP provides for Tanzanian and Uganda goods to
enjoy ZERO tariff rates for her goods exported to Kenya, while the
some article provides for Kenyan goods imported into Uganda and
Tanzania to be TAXED,” he says.
According to Mr Massaga the reason behind of Internal Tariffs
elimination for Tanzania products as provided in ACT and other charges
of equivalent effects were done progressively under the principle of
asymmetry, aiming at addressing the economic imbalance that existed or
that could be made worse following the implementation of the Customs
Union.
Another reason of introducing this temporary protection was to enable
Uganda and Tanzania to adjust to the effects of removal of internal
tariffs and recover some losses in revenue. The temporary protection
arrangement was designed to allow producers in Tanzania and Uganda
sufficient time to restructure their operations to face increased
competition from Kenyan imports. Thus Tanzania and Uganda maintained
internal tariffs on selected imports from Kenya to be removed
gradually in five years. The program of elimination of internal
tariffs started in 2005 was accomplished in 2009 when full
implementation of the Customs Union started.
He says the economic imbalances is still huge with manufacturing
Industries like East African General tires and Kilimanjaro machinery
tool not operating contrary to expectation before the transition
period elapsed.
“The big challenge is when Tanzanian economic imbalances will be
realized in order to be competitive,” he says.
The researcher noted that now that the protection was over goods from
Kenya are flowing in Tanzania without paying import duty.
According to Mr Massaga the business community In Arusha region is not
aware of the opportunity available within the common market; hence
it’s not prepared for competitions
“Another challenge is that the manufacturing and processing sector has
no enough manufacturing and processing industries capable to produce
competitive products,” he said. Most of the products in the region are
semi processed or in form of raw materials.
At the same time, Mr Massaga said Tanzania does not have a
competitive manufacturing industry.
“We are relatively big producers of oil seeds but we don’t have
products in shelves of renowned supermarkets to compete, with other
products from outside the country, our findings brought us to
understand that even the large selling companies process oils products
in form of crude oil, which even TBS does not allow or give
certification for consumption because does not meet the
standards.(e.g.-Sunflower oil products from Manyara and Singida
regions) and are exported without specific labels to selected
destination!!!! …… Why? He posed.
At the same time the Financial institutions in Tanzania are not ready
to support manufacturing industries e.g, no special incentives given
to manufacturing in order to promote the sector.
“ Bank loans interest rates are un- approachable irrespective of many
of our local banks portraying the image of having abundant moneys for
enterprises, but none have access!!!! Why? He posed.
“ It is now high time to learn from our peer neighbors how have they
managed to support these sectors? What has happened to our immediate
neighbors? Why are they having the upper hand in manufacturing sector?
Why their products are competitive?
The researcher is of the opinion that Tanzania Manufacturing and
processing sector must be build based on local Tanzanian not wholly
dependent on foreigner investors.
“My views are foreign investors should be taken with a view of
bringing the technology and skills while ownership of the business
remain on hand of Tanzanians,” he says.
.
He also says that Tanzania manufacturing industry will prevail if the
mindset of the government officials will look at Tanzania local
business.
End