Vision: “Deepen and widen East African integration for sustainable development  and improved livelihoods of all Kenyans” 

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REPUBLICOFKENYA

MINISTRYOFTHEEASTAFRICANCOMMUNITY

SPEECHBYHON.MUSASIRMA,MINISTERFOREASTAFRICANCOMMUNITYDURINGTHEFIRSTNORWEGIAN‐AFRICABUSINESS

SUMMIT,29THSEPTEMBER2011,OSLO,NORWAY

Hon.MinistersDistinguishedGuestsAllprotocolsObservedLadiesandGentlemen,IfeelhonouredtobewithyouheretodayforthisFirstNorwegian‐AfricanBusinessSummit.AllowmetoextendmysinceregratitudetothepeopleandGovernmentof theRoyalKingdomofNorwayfor thewarmwelcomeandhospitalityaccorded toussinceourarrival inOslo. I also take this opportunity to specifically thank the Ministry ofForeignAffairsandNorwegian‐AfricanBusinessAssociationfororganisingthisimportantSummit.Regional integration today attracts a lot of attention the world over. Itvaries inscaleandcharacter,anddiffers fromoneregionanother. Whilethere aremany aspects of integration, economic integration incorporateseffortstoformfree‐tradeareasthroughthecreationofcustomunionsandcommon markets, through coordination and implementation of jointinvestment,tradeandeconomicpolicies.LadiesandGentlemen, inAfrica, concretestepswere taken in the1970sand1980stobuildeconomicintegrationinstitutionsasafollowofthepost‐independence initiatives in 1960s. While the first generation of regionintegrationschemeswerepartlymotivatedbythepoliticalvisionofAfricanUnity, they also acted as the means to achieve import substitutionindustrialisation polices. While OAU efforts yielded dividends, importsubstitution largely failedbecause (i)nationalmarketswere to smallandtoopoor;(ii)highinputcostsaffectedtransformationandexports,causingforeign exchange shortages and over‐valued currencies; (iii) domestic

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monopoliesandtradeprotectioncontributedtopowerfulrent‐seekingand“nationalistic” lobbies, biased and organized against regional as well asglobal trade; (iv) token support by governments to regional integration;and (v) excessive emphasis on joint public investments as opposed tocreatingtrulyunifiedmarketsforprivateoperators.It was therefore foreseen that effective regional integration has a majorroletoplayinhelpingAfricancountriesaddresstheseandothercommonconcerns. in East Africa for example, Kenya, Uganda and Tanzania haveenjoyedclosehistorical,commercial, industrial,culturalandotherties formany years. Formal economic and social integration in the East AfricanRegion started with the building of the Kenya Uganda Railway between1897 and 1901, followed by the establishment of Customs CollectionCentrein1900,theEastAfricanCurrencyBoardin1905,thePostalUnionin1905,theCourtofAppealforEasternAfricain1909,theCustomsUnionin1919,TheEastAfricanGovernorsConferencein1926,TheEastAfricanincomeTaxBoardin1940andtheJointEconomicCouncilin1n1940.TheEast Africa (High Commission) Orders Council of 1947‐1961, the EastAfricanCommonServicesOrganisationAgreementsandtheTreatyforeastAfricanCooperationof1967madeprovision for the establishmentof theEast Africa High Commission, the East African Common ServicesOrganisation and the East African Community as successive jointorganisations of the three countries to administer certain matters ofcommon interest and to regulate the commercial and industrial relationsandtransactionsbetweenthethreecountries.LadiesandGentlemen,thisfirstEACdissolvedin1977afteronly10yearsof existence. However, the Treaty for Establishment of the current EastAfricanCommunitywassignedonNovember1999andenteredintoforceonJuly2000.TheRepublicofRwandaandtheRepublicofBurundiaccededto the EAC Treaty on June 2007 and became full Members of theCommunitywitheffectfrom1stJuly2007.Ladies and Gentlemen, today we have a functioning Community withstrong governance structures comprising of the Summit, Council ofMinisters, Committee of Permanent Secretaries, and the Secretariat. TheCommunityalsohasaCourtofJusticeandaLegislativeAssembly.WEalsohaveinstitutionsresponsiblefortheimplementationofspecializedprojects

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andprogramsasLakeVictoriaBasinCommission(Kisumu),LakeVictoriaFisheries Organization (Jinja), the Inter‐niversity Council of East Africa(Entebbe),theCASSOA(Entebbe)andEADB(Kampala).TodatewehaveaCustomsUnionProtocolwhichcameintoforcein2005andbecamefullyfledgedon1stJanuary2010.TheCustomsUnionhasledtothe elimination of internal tariffs, joint implementation of a CommonExternal Tariff, enforcement of the Rules of Origin, addressing theproblemsofnon‐tariff barriers. Consequently,wehave seen tremendousgrowthinintra‐EACtraderisingfromequivalentKshs79billionin2005toKshs122billionin2010.ForeignDirectInvestmentsflowsincreasedfromUS$ 683 million in 2004 to US$ 1.7 billion in 2009. Similarly, total taxrevenueshavealsobeenonanupwardtrendforallcountries.Ladies and Gentlemen, the East African Community is now a CommonMarket.TheProtocolestablishingtheEACCommonMarketwassignedon20th November 2009 and it came into force on 1st July 2010, followingratificationbyallthefivePartnerStates.ThisisthesecondstageoftheEACregional integration process, following the successful implementation ofthe Customs Union for five years. Under the Common Market, the EACPartnerStateshavecommittedtooperateasasinglemarketwiththefreemovement of free movement of goods; free movement of persons; freemovementoflabour;freemovementofservices;freemovementofcapital;rightofestablishment;andrightofresidence.Ladies and Gentlemen, the drive towards achievement of a MonetaryUnion is already underway. Lesson from what is happening in theEuropeanUnionprovideagoodbasisoflearningfortoenrichtheongoingprocessof themonetaryunionnegotiations.AMonetaryUnionwill allowfor a coordinated implementation ofmonetary policy for the Communitywith itsattendantbenefits tobothbusinessesandconsumers.With thesedevelopmentstheCommunitycanonlyhopeforabetterfuture.Ladies and Gentlemen, we have resolved to make EAC a singleinvestments and tourist destination. But genuinelywhy should invest intheEAC community? First and foremost, theTreaty establishing theEastAfrica Community seeks to, among others, enhance cooperation in

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investment and industrial development among the Partner States.Investing in the EAC provide market access to 133.5 million people, anabundant labour force which is also trained, mobile, skilled andenterprising.TheEAChascombinedGDPofUS$75billionwhich isquitebigbyanystandards,anaverageGDPpercapitaofUS$558.Theregionhasavibrantandupcomingcapitalandsecuritymarketwhereinvestmentcanraiseadditionalcapitalforinvestment.LadiesandGentlemen,whatthenaretheinvestmentopportunitiesintheEast African Community? The Community offers many investmentopportunities covering a wide range of sectors. Priority sectors forinvestmentwhichhavebeenidentifiedbutnotexhaustiveincludetourism,agriculture, livestock, fish processing, wholesale and retail, ICT/BusinessProcessOutsourcing, infrastructure,manufacturing, financial servicesandenergy/hydropower,oilandgas.Information and Communication Technologies: is one of the fastestgrowing sectors in the EAC region since the 1990s. Communicationinfrastructureandalsospawnedmanyinvestmentopportunitiesasseenbythe penetration of mobile telephony in the region. Investmentopportunities abound in data processing, incipient e‐business services,printing and publishing media and television, ICT infrastructure andtraining,provisionofinter‐net‐relatedhardwareandsoftware,broadbandinternetwireless services, provision of value‐added services in voice andimaging products, teleconferencing, business process outsourcing, andradiopaging,amongothers.Energy/hydropower,petroleum,oilandgas:The energy sector in theEAC countries has been restructured to encourage private sectorinvestments inpowergeneration, oil andgas explorationandprocessing.The EAC has developed an East Africa Power Master Plan and very twoyears, the Community organise petroleum Conference to showcaseinvestment opportunities in the sub‐sector such as power generation, oiland gas exploration and development and other renewable sources ofenergysuchaswindandsolarenergydevelopment.

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Mining: The EAC countries are also endowed with a variety of mineralresources,includingamongothers,gold,diamond,basemetals,gemstones,ironore,titanium,copper,nickel,vanadium,uranium,cobalt,tin,limestone,fluorspar, soda ash, diatomite, graphite, phosphates, silica sand andtungsten.LadiesandGentlemen,howdowetakethespiritofthespiritofthisfirstNorwegian Africa Business Forward beyond today. Considering theenormous business and investment opportunities in Africa, taking intoaccount that there are companies in Norway that desire to work withAfrica, and thehuge investments thatNorwayhasput in thecontinent insupport of human rights development, it is advisable that Norwayconsiders accreditation to the EAC Community and join the league ofcountriesthatworkcloselywiththeEAC.LadiesandGentlemen,despite themilestonesachieved, theEastAfricanCommunity integration faces some challenges. First, is the multiplemembership of various integration programs such as SADC, EAC andCOMESA. Implementing some of the gains we have made in EAC areconstrained because countries find themselves in several regionalgroupings. Thetripartiteprogrammethatbringsthe27membersofthethreeregionalgroupingsisworkingtowardssolutions.Second,arepolicy‐relatedconstraintsinareasasmacro‐economicpolicies,tradeandtaxpolicies,thelegalandregulatoryframeworks,andinvestmentpoliciesposesomechallenges.Weareyettofullyharmonizedthesepolicyareas.Accesstoaffordableinfrastructureasthecostofpowerandwaterservicesaremajorconcernstoinvestors.LadiesandGentlemen,inconclusion,IoncemoretakethisopportunitytoinviteyoutocomeandinvestinEastAfricachallengesareopportunityforinvestment.

ThankYouforlisteningtome.