The cost of doing business in the East African Community (EAC) has dropped by 20 percent since November 2013, thanks to the implementation and subsequent signing of the Single Customs Territory (SCT) in Kampala on January 1, 2014. When fully implemented, the agreement will boost cross-investment and trade among the member countries, and should help the region’s economies grow by about 30 percent.

Confirming the game-changing agreement, John Njiraini, Commissioner General of the Kenya Revenue Authority, said that with implementation of the protocol, goods from Kenya will be able to clear customs in Uganda in just 40 minutes. Before the agreement, it took days.

“This means that prices of goods may go down in the long run for consumers as the suppliers are charged less. Time means money for many business people. Already the process has kicked off well in Kenya, Uganda and Rwanda, the countries that have signed the agreement so far,” Njiraini said.

Under the SCT, assessment of goods imported by traders from the three countries will only be conducted at the first point of entry and trucks weighed only upon crossing the border.

Revenue collection will also take place at the first point of entry and revenues will be remitted to the destination partner states, subject to some preconditions. All the roadblocks between Mombasa and Kigali will be eliminated and the weighbridges reduced from nine to three at most, meaning faster clearance of goods for traders.

Njiraini said that Tanzania and Burundi, the other two countries in the EAC, would sign the agreement within the next three months. South Sudan, currently not an EAC member state, is also expected to sign the agreement. Njiraini said that while the price of clothes, electronics and food stuffs will drop under the agreement, services will also become cheaper, and with less checks on goods at border posts, business practice will become more efficient.

“Issues such as health and banking costs are expected to go down as the economies in the EAC region continue to merge. We expect the single currency union to ease the pressure [on consumers] in the next two years once fully in place,” Njiraini said. 

“It’s true, more foreign investors will be attracted by the environment in the EAC, with all these burdens reduced. So far, the Chinese have invested more than $14 billion in health, education, technology, mining and aviation in the region. I cannot tell you that investments have gone up [throughout the region] since November, but they have improved by a margin of 3 percent in Kenya and Uganda since then,” he said, confirming that the process is already going well in Mombasa Port, especially in the importation of oil and fresh fruits.

“The [decreased] prices of fruits can be partly attributed to the quick clearance of the goods. Fruits have gone down in price by 10 percent,” Njiraini said.

Transporting goods from Mombasa in Kenya to Kigali in Rwanda is now taking nine days instead of 20 days, as there are less checkpoints and weigh bridges along the route.

Germano Mwabu, an economics professor at the University of Nairobi and a veteran World Bank economics consultant, said that economic growth in the region is expected to go up by the end of the year. “You can expect a combined Gross Domestic Product of more than $140 billion in five countries by the end of 2014 compared to the current $78 billion.” Mwabu said. “Kenya will be the biggest beneficiary with more than 70 percent of the region’s economy represented.”

Mwabu said that the biggest foreign investors since January have been Chinese, British and EAC members in the health, banking, manufacturing, food processing and clothing industries.

“The [Single Customs Treaty] meeting in Kampala brings many economic opportunities. The trade in agriculture products, goods and services is proving essential. In the next two years, we expect inflation to go down by 10 percent and the economies of the five member countries to increase. This will attract foreign investors as well who want to do business in a friendly environment,” Mwabu said.

The agreement also means that travelers now need just a national ID card to enter the member states and not a passport. Uganda, Kenya and Rwanda are already implementing this move as the other countries wait to sign the agreement in the next few months.

(Reporting from Kenya)