Business

The East African Community (EAC) is now successfully asserting itself as a regional trading bloc. Trade volume may have increased but dreams of monetary union are still far-fetched.

"Between 2005 and 2014, trade within the East African Community (EAC) increased by 300 percent," Dirk Smelty, business consultant with the Tanzanian Chamber of Commerce, Industry and Agriculture told DW.

Kenya, Tanzania and Uganda formed the EAC in 2000 and introduced a customs union five years later. Burundi and Rwanda joined the union in 2007.

The customs union is promoting trade and is going from strength to strength. The EAC reported that in 2005 Kenya recorded imports worth $3.5 million (3.8 million euros)and exports valued at 5.8 million dollar. By 2014 imports had doubled to $6 million and exports tripled to $18.3 million.

Uganda also doubled its exports in the same period and its imports nearly tripled. Tanzania however made the biggest leap by quadrupling its exports. Trade in Rwanda and Burundi however remained low.

The three driving forces: Kenya, Uganda, Rwanda

According to Smelty, trade within the EAC is mainly benefiting countries with stronger economies including Kenya, Uganda, and Rwanda. "Kenya as an economically strong country also has the strongest interest in improving exports and regional cooperation," he said.

The same applies to Uganda. President Yoweri Museveni maintains close ties with Kenya's leader Uhuru Kenyatta. Rwanda is the third driving force in the union but the landlocked nation has no access to the sea. By promoting regional infrastructure development, the EAC can help Rwanda overcome this obstacle.

But much more is at stake than trade. "We have to emphasize that the region shares a common language," economist James Shikwati said. He heads the not-for profit organization Inter Region Economic Network in Nairobi.

Shikwati's organization has been lobbying regional leaders to facilitate free movement in the region. "EAC citizens can now move freely," he said. He also said investors are now broadening their horizens. "Companies think now of the 148 million East Africans when they make their business plans," Shikwati added.

Tanzania is moving ahead

How is Tanzania coping? Even though the country has stable economic growth of around 7 percent, it has not made many strides in integrating its economy. "Tanzania is a special case," Shikwati said. "As a result of its socialist past, the state still has a major say on how companies should expand."

Hence Tanzania is still rather careful about backing liberal economic policies. However, the new president, John Magufuli, is signaling interests in greater cooperation with other nations in the region.

Meanwhile, many EAC projects remained unfinished. "They get stuck on logistics and infrastructure," Smelty said. There are not enough railroads and highways. But over the past year development in this sector has started to gain momentum.

There are currently ten rail projects in progress including a railway connecting the Kenyan port city of Mombasa with Uganda's capital Kampala. An oil pipeline will run from Uganda to the port of Lamu in Kenya. There are also five large-scale road construction projects.

Common market in sight

In the meantime, however, the EAC has its sight set on a much bigger project. Since 2010, the union has been working on the creation of a common market and currency.

In March 2016, South Sudan became the sixth member of the EAC, which now comprises nearly 150 million citizens. But South Sudan is unstable and Burundi too is deep political crisis.

Therefore, a monetary union is likely to remain a distant hope for the six EAC members, who individual markets are still very nationally oriented.

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Elangwe Pauline

13.Apr.2016

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Residents of Douala will soon enjoy one of their long-awaited development projects. Work on a section of the Boulevard de la République in Akwa Nord in the port city is expected to be completed by June this year. The Director of the Military Engineering Corps, Col. Jackson Kamgain, made the disclosure during a visit on April 8, 2016, to the site by the Government Delegate to the Douala City Council, DCC, Fritz Ntone Ntone.

Already, 10 per cent of the work has been executed. According to men of the Military Engineering Corps, one of the two lanes of the road will be surfaced with tar by the set date. Presently, the corps is working almost round-the-clock in order to finish the lane before downpours resume. Persistent downpours have in the past slowed down the rate of work. The stretch where work is going on is an extension of the Boulevard de la République. The project was prompted by regular gridlocks that plagued the area at all times of the year.  

Among the eight projects the Government Delegate and the City Council delegation visited, the three in Nyalla, Akwa Nord and Japoma, are being handled by the Military Engineering Corps. At PK10, 60 per cent of work on the Hysacam dump site has been executed. The project consists in creating an access road from the entrance to the dump so that waste is can be dumped further inside and away from the road. DCC technicians recommended that the road be expanded to allow for two trucks to bypass easily.

The delegation also made a stopover at Youpwe where four secondary roads are being rehabilitated. Over 90 per cent of the work has been done. Presently, concrete walls on gutters are being laid, which is the most difficult stage according to site technicians. The rehabilitated roads are expected to boost activities at the Youpwe Fresh Fish Market and the Sawa Beach Project that is expected to kick off soon. Those travelling to and from Manoka in Douala VI Subdivision are also expected to benefit from the public works projects.  The delegation also visited other project sites in Bonanjo, such as Government Primary School “Petit Joss,” where renovation is complete.

(CT)

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Elangwe Pauline

12.Apr.2016

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Compliance control operations carried out before the shipment of goods imported in Cameroon have been entrusted to the Swiss companies SGS and Intertek International UK, specializing in control, audit, analysis and certification of products, official sources said on Monday.

According to the Ministry of Industry, Mines and Technological Development, the signing of this contract will boost the implementation of the Conformity Assessment Program before the shipment of goods imported in the Republic of Cameroon (PECAE), which was launched last year. This mechanism, the authorities said, will reduce the arrival in Cameroon of imported products which do not meet the standards in force.  

The program provides, among others, the issuing of licenses to specializing structures established in exporting countries. Under the terms of the agreement, it will be up to SGS– which has already been working at the port of Douala for twenty years– and to the British company Intertek International, to conduct, at the exporters’ costs, beforehand compliance controls before the shipment of goods to Cameroon, a country that has no modern laboratories to monitor compliance of goods.

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Elangwe Pauline

12.Apr.2016

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Cameroon, the powerhouse of the  Cemac zone, will gain most from the decision taken on 6 April 2016 by BEAC, to drop by 50% the levels of the minimum reserves applicable to banks in this community of six countries: Cameroon, Congo, Gabon, Equatorial Guinea, Chad and the Central African Republic.  

Indeed, out of the FCfa 500 to 600 in ready cash this decision from the central bank will release to commercial banks, over 20% will be taken in by banks established in Cameroon. According to Alphonse Nafack, MD of Afriland First Bank, who commented on this topic in the pro-government daily newspaper, about FCfa 200 billion in additional liquidity will be released to Cameroonian banks, if one takes into account the volume of minimum reserves available in the coffers of the central bank as at end 2015.

As a reminder, in order to compensate for the problem of the decrease in bank deposit in the Cemac zone, in a situation of generalised drop in export revenues, BEAC decided on 6 April to loosen the grip of the minimum reserves on the banks, to enable them to have more liquidity to finance the sub-regional economy.

(BIC)

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Elangwe Pauline

11.Apr.2016

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"The paving stones are solid and cheaper than typical paving slabs"

Pierre Kasoumloum got the idea for the slabs from childhood memories.

 

As kids, we would collect plastic cups and melt them in the wood fires used to heat our homes during the winter. We'd mix the melted plastic with water and shape it into small balls. We had a game of rolling them along with sticks.

In Cameroon, huge quantities of plastic bags and packaging are thrown away. One day, about 15 years ago, I was thinking of this childhood memory and I came up with the idea of mixing sand into melted salvaged plastic to make a solid, durable material. I imagined using it to make paving slabs.

With the aid of an investor, I was able to carry out tests in a lab and create a formula that resulted in solid enough slabs.

There are several steps to production. The plastic serves to bind the materials together. But before you can use it, you have to separate out any plastic containing chlorine because it becomes toxic if it's chemically altered. The rest is then melted in a vat over a wood fire. You then add sand and mix it. Then, you pour the mix into a mould and let it dry for 15 minutes.

This is the plastic waste used to make paving stones. Vats in which the plastic is melted. Employees pour the mix of plastic and sand into vats. ... and the final result. (All these photos were taken and sent to the Observers by Benjamin Ambela, who works for the French start-up Djouman. The organisation promotes sustainable innovation in Africa and is now actively supporting the paving stone initiative.) As an added bonus, these 'eco-friendly' paving slabs are cheaper than the classic model. According to Pierre Kamssouloum, one square metre of slabs each around 5 centimetres thick costs 3,500 CFA francs [Editor's note: 5.35 euros], whereas the same quantity of cement slabs costs 5,000 CFA francs. Cameroon's handball federation used the new material to pave the courtyard outside of their headquarters. But the initative also includes a social project.  

I got started the business in Yaoundé in 2008. Over the years, I've expanded my initiative to Burkina Faso, Sierra Leone, Nigeria, and Cameroon, with the support of NGOs. Every time I open a new business, I do my utmost to employ and train local street children. We help them find some stability and stop them sleeping rough. Today, we have 15 employees, and we've been training another 20 young people with the help of an NGO set up by former footballer Roger Milla.

We had even more kids in our training programme to begin with, but, unfortunately, many of them lost their enthusiasm. It's not always easy. We get a reasonable number of orders, but often our clients don't pay, and if they do, they often pay late. That creates financial problems. Right now, we are still hand-making these paving stones. I'd like to get the production line semi-mechanised. But for that, I'd need some 7 million CFA francs of investment.

In June 2015, the initiative did get a big help helping hand from 'Coeur d'Afrique', the NGO set up by the legendary Cameroonian footballer Roger Milla. The NGO now takes care of the company's young trainees. It has also launched public awareness campaigns in two schools in Yaoundé, encouraging schoolchildren to collect, sort and recycle plastic in their neighbourhoods. Pierre Masoumloum has used three tons of plastic waste collected by these children. Over time, the NGO hopes to teach some 2,500 young people how to sort and put plastic waste to good use, something that could bode well for any future projects spearheaded by the Cameroonian entrepreneur.

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Elangwe Pauline

11.Apr.2016

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The press conference that ended the Ministers of Finance’s meeting in Yaounde, Saturday, April 09, left reporters on a fix.

All the questions asked by reporters during the press conference moderated by Cameroon’s Minister of finance, Alamine Ousmane Mey, at the end of the Ministers of Finance meeting of the Franc zone received answers but the question remains whether or not the answers really tied with the expectations of pressmen. This explains why reporters were obliged to come back on some questions to try to force out answers that may satisfy their audience.

In all, six officials were on hand to clarify issues. These included; Michel Sapin, French Minister of Finance and Account; Francois Villeroy de Galhau, Governor of the Bank of France; Tiémoko Meyliet Koné, Governor of the Central Bank of West African States (BCEAO); and Lucas Abaga Nchama, Governor of the Bank of Central African States (BEAC) with Alamine Ousmane Mey, as moderator.  

Inter-changeability of the CFA

Why would someone with the CFA from the Central African sub region not freely change or use the same currency in West Africa which equally has the CFA as its currency? This is is an age-old question which has never had any convincing response from the officials of the two central banks.  

On what is really blocking the common use of the two CFA in the Franc zone, Governor Tiémoko said they have worked on it at the level of the two central banks but that the new economic dispensation and what he described as the risk involved made them to be more cautious. He however assured that they are working on several aspects in connection with the problem. “The mechanism will be put in place very soon”, he said.

In the same vein, the Governor of BEAC said their interest is to come out with a modern system that will avoid a situation where people will be travelling with huge sums in their wallets. This system will equally scale down possibilities of financing terrorist activities, he said. In other words, the whole idea of changing the two CFAs is retained and its only a question of time.

Independence of the CFA

The French Minister of Finance and Account, expressed surprised at the question whether or not France cannot liberate the CFA. “We cannot be freeing a currency that is free”, he replied, stating that his country has never had any intension of pinning down the CFA. France, according to him is out to ensure stability as well as convertibility. This explains why France is guaranteeing this convertibility through the famous “Account of Operations”.

This system of monetary operation has played to the advantage of countries of the Franc zone in the face of any economic crisis. “We are talking about guaranteeing monetary stability which enables such countries to bounce back easily during crisis”, he said. To the Governor of the Bank of France, the majority of African countries seem to have preferred to maintain the existence of the Franc zone.

 Account of Operations

The continuous existence of the Account of Operations in the Paris Bank remains a subject of controversy. As to whether part of the money or reserves blocked in the Paris Bank cannot be liberated at this time that countries of the Franc zone are undergoing the shocks of the drop in the price of extractive raw material, the Governor of the Bank of France refused to see it as a real issue.

The Account of Operations, he said, is not a financing mechanism that is favourable to France or the Euro zone but a guarantee. He dismissed fears on the remuneration accruing from it, stating that it is sensibly higher than the interest rate in the Euro zone. 

Disappearance of the French Franc

Pressmen continue to question why the French Franc which served as backing for the CFA should disappear and the latter continue to exist. This, they questioned has played to the disadvantage of the CFA imposing a rather fixed exchange rate to the Euro. “No participant raised the issue of exchange rate and if it was not raised, it means it is not an issue”, Francois Villeroy de Galhau said.  To the French Minister of Finance, the main problem now is how to mobilise revenue in the face of the present economic dispensation.

Cameroon Tribune

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Elangwe Pauline

11.Apr.2016

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