The government of Ethiopia needs to harmonize it financial rules and regulations with the rest of African countries in order to unlock intra-Africa trade potential, a UN offcial said.
The fact that a Kenyan businessman or businesswoman can’t repatriate his/her profit after trading in Ethiopia, like an Ethiopian can do after doing business in Kenya, is the major problem for the small size of trade between Ethiopia and Kenya after the two countries have hugely invested in road network that linked the two countries, according to Dr. Mukhisa Kituyi, Secretary General of the United Nations Conference on Trade and Development (UCTAD).
“Today Ethiopia can export anything to Kenya. The problem is the trade won’t grow if Kenyans can’t export to Ethiopia. The Kenyans can’t export to Ethiopia because they have to go the central bank to apply to get permission to take their profits out of Ethiopia. But in Kenya, the government doesn’t come in. Bring in your goods ad take your profits out,” he said, applauding the visa on arrival for all Africans decisions taken by Ethiopia, Kenya and Rwanda.
Stressing on the potential of regional trade, Dr. Mukhisa Kituyi, who was the former Minister of Trade and Industry of Kenya, indicated that Uganda is the most important trading partner of Kenya more than Germany, UK or China.
“The question is how you harmonize this exchange control vis-à-vis you are neighbor. These are some of the issues the political leaders have to address. This is by far the most important issue why Ethiopia is not a member of the free trade area of Common Market for Eastern and Southern Africa (COMESSA)…Unless people who sell things to Ethiopia can get their money out, the only investors who are coming to Ethiopia are manufacturing something in Ethiopia for export market. So that they don’t go to the government for their money, they make their money abroad where they sold their products,” he said.
“But for regional integration, they [member states] have to legalize
in between the members for moving goods and services, which also means the repatriation of profits to the neighboring country. That remains the key challenge in unlocking the potential of trade between Nairobi and Addis Ababa,” he said, stressing that it is time to replace the movement of goats and camels on the world class road linking Addis Ababa and Nairobi with moving cargos between the two countries.
Dr. Mukhisa Kituyi made the remark this morning in Addis Ababa, at the press conference that followed the opening of Africa forum for
national trade facilitation committees.
The 2015 World Trade Organization (WTO) report estimates that implementation of the Trade Facilitation Agreement (TFA) would bring greatest benefit to those further behind, with trade costs reducing o average 14.3% ad in excess of 16% for many Africa countries and Least Developed Countries.
Report shows that free continental trade in Africa is expected to
boost the value of intra-Africa trade by up to 25% in 2040, compared to a situation with no Africa Continental Free Trade Agreement (AfCFTA), which ratified by 11 Africa countries so far.
For the AfCFTA to go fully operational by next March, it needs
ratification by 50% of the countries (22), which signed the deal last
March in Kigali.
Annex to the AfCFTA, TFA aims to simplify and harmonize international trade procedures and logistics to expedite the processes of importation, exportation ad transit as well as expedite the movement, clearance and release of goods, according to Ingrid Cyimana, Chief of staff at the UN Economic Commission for Africa, who addressed the forum this morning.