East African Community, Last year in June 2019, Congo (DRC) applied for admission to join the East African Community (EAC).
With a population of approximately 81 million people, Congo holds almost half of the population of the EAC member states and thus it presents a huge market. However, despite the country sharing its borders with five of EAC partner states South Sudan, Uganda, Rwanda, Burundi and Tanzania, EAC’s trade with the DRC is significantly low. In fact, the combined exports of all the East African Community partner states into the DRC, does not match that of South-Africa to the Congo.
According to trade data, most of the imports from the DRC are sourced from China (31.2%), South Africa (15.8%), Zambia (13%), Belgium (5.4%) and India (5.3%).
A report by the East African Business Council (EABC) in collaboration with GIZ Creating Perspectives Project dubbed, “The opportunities for trade in the Democratic Republic of Congo reveals that the value of goods imported in the DRC in 2019, stood at US$ 6.6 billion.
East African Community exports to the DRC in 2018 stood at US$855.4 million, representing 11.5% of total DRC imports with Rwanda’s exports to the country standing at $337.4 million, Uganda $204.3 million, Kenya $149.8 million, Tanzania $144.9 million and Burundi at $18.9 million. The study reveals China is the top exporter to the country commanding a share of 31.2%, followed by South Africa at 15.8 % and Zambia 13%.
EABC CEO, Dr. Peter Mathuki has therefore called upon EAC partner states to fast-track the admission of DRC into the regional bloc noting that it sources for goods that the EAC can ably supply, from very distant markets.
“DRC will benefit from the larger EAC Common Market and Common External Tariff framework. It will also have access to sea ports of Mombasa and Dar es Salaam at competitive rates. Their huge population of 81 million people also provides a vast opportunity for SMEs from the EAC region,” Dr. Mathuki said.
The study finds that non-tariff barriers have hampered business translating to high cost of doing business in the DRC.
“EABC being the apex body for the private sector in the region will play a critical role in advocating for ease of doing business in the DRC which will in turn lower cost of doing business, making DRC competitive, as we prepare to join the African Continental Free Trade Area (AfCFTA),” Dr. Mathuki said.
The study shows some of the potential trade opportunities that Congo DRC’s large market presents that SMEs in the region can tap into. Among the niche areas include in the textile clusters particularly those handling clothes made from cotton; processed foodstuffs such as raw cane sugar and sugar confectionery; food preparations such as tomato sauce, vinegar and baking soda; plastic and rubber among others.
According to Dr. Mathuki, in light of the COVID-19 pandemic this year, the EABC has focused on analyzing new market opportunities for SMEs geared to drive business recovery. Increased access to trade and market opportunities within and outside the region is vital to mitigate the impact of the pandemic on businesses.
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The application to join the EAC is a signal to businesses in the EAC to strategically and operationally prepare to tap into the lucrative DRC market.
Data from the EAC secretariat shows that Burundi, Rwanda, Tanzania and Uganda are covered by the EU’s Everything But Arms initiative, under which all products from Least Developed Countries except arms and ammunitions have preferential access to the EU market. Together with other sub-Saharan African countries, the EAC Partner States also qualify for duty-free access to the US market under the African Growth and Opportunity Act, with the exception of Burundi whose eligibility has been revoked with effect from 01 January 2016.
Products from EAC countries can access various markets in the developed world through the Generalised System of Preferences (GSP), which offers preferential treatment to a wide range of products originating from developing countries.
Membership in the African, Caribbean and Pacific States and the GSP enables products from Partner States to qualify for preferential tariffs on exports to member countries. Burundi is also a member of the Economic Community of Central African States, which aims at establishing a Central African Common Market.
In 2011 the EAC signed framework agreements with the USA and China with the aim of boosting and promoting commodity trade, exchange visits by business people and co-operation in investment among others.