KUTOKA MAGAZETINI:Trade talk: Does Dar play nicely with SADC, EAC mates?

The President of United Republic of Tanzania,Jakaya Kikwete. PHOTO|FILE 

Dar es Salaam. Member states of the Southern African Development Community (Sadc) and the East African Community (EAC) are some of Tanzania’s major trading partners; official data shows, signaling the need for the country to foster its relations with the two blocs.

Tanzania’s exports to Sadc increased by 22 per cent to reach Sh2.33 trillion last year from Sh1.91 in 2011, according to official data from the National Bureau of Statistics (NBS).

Similarly, the country earned Sh956.7 billion from exports to EAC member states in 2012, a 49 per cent increase from the Sh641.6 billion registered in 2011.

A close analysis of the figures, however, indicate that Tanzania has a deficit when trading with Sadc member states where South Africa alone accounts for the lion’s share of exports to the rest of the 14-member bloc.

In the same vein, the country has a trade surplus when trading within EAC is well analysed.

This, according to the Economic and Social Research Foundation (ESRF) executive director, Dr Hoseana Lunogelo, is an indication that Tanzania’s future within EAC is bright.

“This means we export more and get relatively more foreign exchange trading with Kenya, Uganda, Rwanda and Burundi (EAC Bloc), while we import relatively more than what we export to Sadc countries, thus losing our foreign exchange earnings,” he said.

Gold, which is exported to South Africa, accounts for the largest share of Tanzania’s exports to Sadc.

The DRC, Zambia and Malawi are the only countries within Sadc where Tanzania sells its manufactured goods to.

On the other hand, Tanzania’s manufactured goods are sold in Kenya, Rwanda and Burundi – suggesting how proximity plays a role in fostering cross-border trade among African nations.

According to NBC data, Tanzania’s total exports to Sadc are mainly gold and cashews. A total of 501,344 tonnes of the two products were exported to the bloc last year. Analysts say Tanzania is better-placed in EAC than it is in Sadc. This, they say is based on the country’s geographical location as well as culture.

“Basically, we are positioned to trade well with both blocs but most of our opportunities are in the EAC,” said the CEO Roundtable of Tanzania Chairman, Ali Mufuruki .

That is because logistically, Tanzania’s exports to Kenya, Uganda, Burundi and Rwanda can be easy and less expensive than the same exports if directed to countries like South Africa.

If the level of economic growth for South Africa and countries within the EAC is put to consideration, he said, then Tanzania has no option but to go for EAC.

With a gross domestic product (GDP) of $400 billion, South Africa can only be compared to European nations. With a combined GDP of about $83 billion, East Africa does not have a country that is seriously a big brother. This gives Tanzanian firms a chance to do well within the region.

According to Mr Mufuruki, the EAC integration process was well planned. The asymmetrical system, employed during the first five years of implementing the Customs Union – which saw goods from Tanzania and Uganda entering Kenya with duty-free while those from Kenya were charged some specific duty rates – helped firms in Tanzania and Uganda to get prepared before those from Kenya started entering the two markets duty free.

During that time, Tanzania started exporting industrial goods and farm products to Kenya and Uganda.

“Though I am not sure if the same products are still dominating the list of Tanzania’s exports to EAC,” said Mr Mufuruki.

Apparently, this is why intra-regional trade among EAC member states has been on the increase since the customs union became operational in 2005.

Former Kenyan Vice President Kalonzo Musyoka told the meeting attended by media owners, publishers, editors and senior journalists from across the region as well as senior government officials in Nairobi in March 2011 that there was little contention that the single market arrangement has yielded benefits across the region.

“Todate, the intra-regional trade between the EAC partner states has increased exponentially. The latest estimates drawn from last year’s performance show a 49 per cent growth since the commencement of the Customs Union in 2005,” he said.

According to Mr Musyoka, Kenya, the strongest economy in the region, accounted for 61 per cent of the total intra-EAC exports. The share of the other EAC partner states’ exports to the region have also increased.

Uganda’s share went up from 13 per cent in 2005 to about 20 per cent in 2008 while Tanzania’s exports to Kenya rose from $ 95.4 million in 2004 to $ 208.9m in 2007, an increase of 54.3 per cent.

Mr Mufuruki who supports Tanzania’s membership in both the EAC and SADC as well as the proposed Comesa –EAC-SADC tripartite said what is important is for the country to look for export products for which it has a competitive advantage. Source: The citizen