The East African region currently has a number of opportunities to improve its position in international trade. In the past few weeks, the US has announced that it will provide $10 million to assist in the economic integration of the East African Community, a substantial Chinese trade mission has visited the East African Community headquarters, and the European Union has been negotiating towards an Economic Partnership Agreement.
Notwithstanding the progress that has been made to date in negotiations, there are numerous obstacles on the path to future prosperity. Closer integration of the East African Community is hampered by distrust and rivalry between member countries, as well as by practical matters such as the need to secure sufficient revenue. Because income taxes supply very little revenue, many African countries are reliant on revenue from import duties – revenues that they would be losing through closer economic integration or through free trade agreements with Europe or other countries or regions.
While in the past Europe has accepted duty-free imports from Africa without requiring African countries to reciprocate by accepting duty-free imports from Europe, the new Economic Partnership Agreements are unlikely to be so lenient. China is particularly interested in accessing natural resources from Africa, but also sees Africa is a large potential market for manufactured goods and services.