East African entrepreneurs need a level playing field in the new Common Market

The regional integration of the East Africa community is finally here. With the promise of trade barriers falling, for East African entrepreneurs this bodes well in a common market of 130 million people.

After the collapse of the East African Community in 1977 due to political wrangling, there is a renewed sense of hope of expanded trade in a wider market. So far the revamped East African Community has set about the arduous task of harmonizing regulations to take into account the need to boost cross-border business and investment.

The Doing Business in East Africa 2010 report however indicates significant issues  concerning the capacity of the member-state entrepreneurs to compete on a level playing field with each other. Despite the efforts at harmonizing laws pertaining to business and coalescing tax policies, internal barriers to enterprise will affect the number of entrepreneurs competing on the common market.

For instance the ease of venturing into enterprise is easiest in Rwanda with 2 procedures and a registered business in 3 days. Compare this with Kenya and Tanzania with 12 procedures and the business registered in 34 and 29 days respectively.

Then there is the crippling cost of starting a business where in Burundi the cost is 151.6% of income per capita in comparison with Kenya or Tanzania where the cost is 37%. And even though Kenya leads in facilitating licensing with 11 procedures for the entire region, the process is still time consuming. It takes 120 days Kenya and 143 in Uganda compared with the rest of member states where the process of procuring business licenses takes well over 200 days.

It is hoped the streamlining of tax revenue collection will facilitate cross-border enterprise. However the problem of enforcing contracts continues to act as a barrier to profitable trade. Where in Rwanda it takes 260 days to resolve contractual disagreements; in Burundi the process takes a whopping 832 days! Thus there still remains a lot to be done so that all East African entrepreneurs can truly benefit from the Common Market.

Read the Doing Business East Africa 2010 report here