DR Congo entry to EAC 'a game changer to intra-regional trade'
| Mar 29th 2022 | 5 min read
The Democratic Republic of Congo has officially joined the East African Community (EAC) today adding its more than 90 million market population to the regional trading bloc.
The populous Central African country was today admitted as the seventh member of the East African Community during an Extra-Ordinary Summit of the Heads of State held virtually.
EAC Secretary General, Peter Mathuki in a report released by the secretariat on Sunday noted that by DRC joining, the community will open the corridor from the Indian Ocean to the Atlantic Ocean, as well as North to South, hence expanding the economic potential of the region.
DRC shares borders with five of the partner states- Tanzania, Burundi, Rwanda, Uganda and South Sudan.
Seen as the key facilitator of DRC’s admission to the bloc, Kenya- which currently chairs the East African Community has in recent days intensified its investment interests in the populous country with the private sector deploying trade delegations to Kinshasa, Lubumbashi, Goma and Mbuji Mayi.
The Kenyan, DRC governments in partnership with the Equity group convened a 14-day business trade mission in the mineral-rich country between 29th November and December 13, 2012.
This mission highlighted trade and investment opportunities in DRC which was part of the governments’ agenda of fostering regional trade and driving business growth by unlocking opportunities in East and Central Africa.
Ex-COMESA Secretary-General and former African Union Deputy Chair, Amb Erastus Mwencha tells the Standard that President Uhuru Kenyatta assumed the role of chief diplomat in rooting for Kinshasa. Kenyatta is the chairperson of EAC.
Amb Mwencha further calls DRC’s entry in the bloc as progressive saying it is aimed at achieving regional integration.
‘’This is what we want. Neighbours and Africans traded together. We have a lot that we can offer each other’’
Kenyan firms that have expressed interest in the DRC include Jubilee Insurance, Equity Bank and Kenya Commercial Bank (KCB), which have started a plan to enter the country through the acquisition of an existing lender.
According to Equity, through the trade fair, Kenyan corporates /SMEs (Small and Mid-size enterprises)/entrepreneurs got an opportunity to exhibit what they offer and partner with their counterparts in DRC, who similarly showcased their business offerings and sought to partner with Kenyan entrepreneurs.
The Africa Development Bank projects that the DRC’s real GDP was expected to grow by 3.3 per cent in 2021 and 4.5 per cent in 2022- despite Covid-19 shocks- driven by higher prices for major mining products, such as copper and recovery in both consumption and investment.
Interestingly, it is not only Equity Bank that has seen potential in DRC. The Kenya Commercial Bank has also jumped on the bandwagon.
In August 2021, the KCB Group announced plans, as part of its expansion in Africa- to penetrate the DRC through the acquisition of an existing lender.
Jambo Jet ambitious plan to penetrate the route as a low-cost airline has worked for them. In November 2021, the airline increased its flights to three times a week, citing an increase in demand from passengers.
Kinshasa has the most robust regional interconnectivity in the region making it favourable for cross border trade.
The country has 11 major economic transport corridors that facilitate trade flows in the region while connecting with Central Africa, Southern Africa, and a part of East Africa.
Amb Macharia Kamau, Permanent Secretary at the Ministry of Foreign Affairs describes DRC as an important country in its own right with a deep cultural and historical connection to Eastern Africa through its people and politics.
‘’These connections predate the colonial era by thousands of years as many of the Bantu people who settled in this region including, Kenya, emanated from the Democratic Republic of Congo’’ the PS told the Standard
He says the joining of DRC to the trading bloc is significant because it will open up social, economic and cultural opportunities for the people of DRC in East Africa and for East African people in DRC.
Though DRC is now torn between four regional trading blocs, the Economic Community of Central African States, Common Market for Eastern and Southern Africa, the Southern African Development Community and the East African Community, Amb Mwencha argues that there is no implication of the resource-rich country quadripartite memberships in her trade performances.
‘’This is what we want, in fact it will help in harmonizing trade among regional trading blocs now that DRC is a member of other two communities,’’ says the Ex-COMESA Secretary-General.
However, he stresses those Regional Economic blocs are different in focus since they range from purely market/economic integration to socio-political cooperation agreements.
Among the current six East African Community member states, only Tanzania is not a member of the Common Market for Eastern and Southern Africa (Comesa).
The foreign PS told the Standard in an interview that ‘Intra-regional trade is bound to be enhanced. He argues that already the eastern DRC relies on East African ports and Kenya and Tanzania in road networks for its connection to the outside world.
‘’This connectivity including that of commerce will intensify with the joining of the DRC to the community,’’ notes the Kenyan Foreign Affairs Permanent Secretary.
Despite having eight Regional Economic Communities that are the building blocks of the Continental Free Trade Area, African countries have to a large extent not exploited opportunities to trade with each other.
Asked why this is the case, the former African Union Commission Deputy Chair and Ex-COMESA Secretary-General is not shy to say that Africa’s intra-regional trade lies well below that of other regions of the globe such as Europe, Asia and North America because continental countries are yet to exploit their latent potential in trading among each other.
‘’There are various factors that have constrained efforts towards successful African economic integration, ranging from persistent non-tariff barriers to overlapping membership to economic blocs, political upheaval, weak interdependence of trade systems, and homogeneous primary commodities,’’ says Amb Mwencha
He further argues that complex and often conflicting trade rules, incoherent external policies, poor connectivity and limited availability of information on trade opportunities remain a big challenge.
‘’In Europe, they transport their commodities using train. It is effective, fast and cheap. Look at us. The road network is still a challenge’’
African countries are also exploring closer ties between regional trade blocs through the proposed Tripartite Free Trade Area, which brings together three business regional blocs of COMESA, EAC and SADC.
Objectives of TFTA are to promote economic and social development of the region, create a large single market with free movement of goods and services, and boost intra-regional trade.
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