The presidents of <
Their meeting came after finance ministers of the three countries presented their budget estimates on
The EACU Protocol is expected to be signed by the three heads of states on
In the Nairobi meeting, the three presidents agreed to peg the maximum applicable East African Community (EAC) common external tariff at 25% while other category of goods will be charged 10%, and the other will attract a 0% rate.
Zero tariff will be applied on raw materials, essential drugs, plant and machinery, and agricultural input capital, while 10 per cent will be charged on semi finished products and 25% on finished products.
In understanding the importance of economic growth through industrialisation, the heads of states decided to set a zero tariff rate on raw materials as this would make East African products competitive in the international market. The zero tariff will also enable East Africans to afford their own products.
The same applies to plant and machinery for industrial production as additional costs to the capital input like customs charges and other taxes would only pass the burden to the consumer through product costing and hence make the products uncompetitive and have a negative impact on the East African economy.
East Africa is also prone to diseases like malaria, TB, cholera and Aids.
With the exception of Kenya whose economy is relatively higher than Tanzania’s and Uganda’s, the general purchasing power of the people is very low. It is therefore good for the heads of states to consider the plight of their nationals and resolve to have essential drugs for HIV/Aids patients.
Currently, anti-retroviral imports are unaffordable to many due to high import taxes. That makes the war to combat the disease fruitless.
The EACU is also determined to eliminate internal tariffs among the three countries, and the process is intended to be gradual until 2008 when it is set to be zero. This is a prelude to the formation of an East African Common Market, and eventually a common currency.
Presenting his 2003/04 budget estimates, Tanzanian finance minister Basil Mramba said the Customs Union would enlarge the East African market, increase trade, attract investments for the three East African countries and ultimately stimulate development of the peoples of these countries.
But for the success of the common market formation, other factors like power tariffs need to be addressed. Tanzania appears to have the highest power tariff rates compared to Kenya and Uganda.
Tanzania charges US cents 12 per Kw while Kenya and Uganda charge between US cents six and seven per Kw. At the same time, Tanzania surpasses other two countries in its Value Added Tax (VAT) of 20 per cent while other East African countries charge lower than this.
After signing of the EACU Protocol, Tanzania, Kenya and Uganda will have also to deliberate on the possibility of harmonising VAT tax and look into the question of power tariff in order to arrive at common applicable rate. This will facilitate competitiveness of the countries’ products at the common market, and this should lead to the formation of the common currency.