EAC to release inaugural Industrial Competitiveness Report 2017
East African Community Secretariat; Arusha, Tanzania; 24 July 2017:
The East African Community Secretariat has prepared the 1st regional Industrial Competitiveness Report 2017, which will be released to the public in October 2017.
The inaugural Industrial Competitiveness Report (ICR) 2017 is the result of collaboration among selected experts from the EAC Secretariat and Partner States, from both public and private sector, trained by United Nations Industrial Development Organization (UNIDO) experts in selected courses and methodologies, including the UNIDO Competitiveness Industrial Performance Analysis, under the regional project Strengthening institutional capacities for industrial policy in the East African Community (EAC) and funded by the Republic of Korea.
Addressing a stakeholder workshop convened to discuss the findings at the EAC Headquarters on Thursday 20th July 2017, the EAC Deputy Secretary General (Finance and Administration), Hon. Jesca Eriyo said the Report was one of the analytical output stemming from the EAC-UNIDO Programme for Strengthening Institutional Capacities for Industrial Policy Management, Monitoring and Evaluation.
Hon. Eriyo reiterated that the Community had made tremendous progress in its integration roadmap and that the market enlargement arising from the Common Market had created immense opportunities for doing business in the region but more importantly, opportunities for increasing production, diversification of economic base, realization of economies of scale; and finally opportunities for accelerating industrialization in each Partner States and EAC region as a whole.
The Deputy Secretary General, who represented the Secretary General, Amb. Liberat Mfumukeko at the occasion, said that in the EAC Region, the capacity and performance of the public sector that deals with industry related matters was generally low, and as a result, implementation of industry related policies and strategies had in some cases been inadequate, constrained by a number of factors, including inadequate industrial governance systems as well as weak monitoring and evaluation frameworks.
She noted that other issues that need to be addressed to foster and sustain industrial growth include inadequate capability to design, implement and monitor policies and strategies; challenges to enhance private sector participation; and inadequate systems for collecting, processing, storing and dissemination of industrial information, among others.
The EAC official commended the Government of Korea for financing the programme and UNIDO, who is the implementing partner.
Addressing the same workshop, the EAC Deputy Secretary General in charge of Planning and Infrastructure, Eng. Steven Mlote decried the huge amount of resources that the Community is losing in exporting raw materials, leading to the loss of job and investment opportunities. He reiterated the need for the region to work together in developing the manufacturing sector rather than competing against each other.
The EAC Principal Industrial Economist, Mr. George Ndira said industrialization should be a concern for the EAC Secretariat and it (Secretariat) should continue advocating for industrialization as it is the surest way to lift Partner States’ economies from the dependency syndrome and help in pulling millions of the population from abject poverty.
Mr. Ndira, who was representing the Director for Productive Sector, said the ICR is a compass to assist the region in monitoring our progress towards the goal of economic transformation and diversification. “This workshop is an opportune moment for all us to understand where we are and how much distance we are yet to cover to get to a stable state for long-term economic prosperity” noted the EAC Principal Industrial Economist.
While presenting the findings of the EAC Industrial Competitiveness Report 2017, Mr. Andrea Antonelli from UNIDO’s Research and Industrial Policy Advice Group, said the main objective of the Report was to provide a compass to policy-makers, the private sector, and generally a wider audience of stakeholders interested and/or involved in industry on the broad direction of the industrial development trajectory of the EAC.
He said the Report was also intended to provide evidence-based, shared and implementable policy recommendations for the EAC and Partner States’ policy makers; and to generate further awareness on the importance to coordinate economic development activities in the EAC around a common goal to enhance industrial/manufacturing development.
“Specifically, the study was to provide a useful diagnostic tool for the EAC Secretariat as an important input to review its Industrial Policy and Strategy; act as a monitoring tool to assess progress against EAC and national industrial development targets and present a list of agreed indicators for EAC harmonized industrial performance assessment; among others” affirmed the UNIDO official.
The report, which will be launched and availed to the public in September/October 2017, states that Manufacturing Value Added (MVA) and manufacturing trade growth rates sustained by the EAC in recent years stand above global average but only around average of Sub-Saharan Africa.
However, these growth rates fall short of some of the targets set in the EAC Industrialization Policy and stand below similar Regional Economic Communities in Sub-Saharan Africa including ECOWAS.
The same growth rates of the manufacturing sector have not kept pace with the service sector, thus insufficient to impress that acceleration needed to achieve the structural change targets set in the regional and in most national industrial policies/overarching development plans.
The report argues that an important cause and at the same time consequence of this limited performance lies in the disconnected fabric of the industrial sector in the EAC Partner States, impressing only weak backward and forward linkages among manufacturing subsectors as well as with non-manufacturing sectors of the economy. Strong interlinkages would strengthen the economy and foster a more robust industrialization process.
On the other side, the past 10-15 years have shown signs of upward convergence among Partner States both in terms of MVA and manufacturing trade values, particularly with Tanzania, Uganda and Rwanda growing significantly faster than their regional role model, Kenya.
The EAC regional market proves to be one of the most dynamic markets in the world and hence provides a great opportunity for regional firms to expand.
While in most cases EAC manufacturing firms managed to increase their intra-regional exports in certain dynamic sectors, this did not happen at the pace and extent needed to match the EAC demand growth, thus resulting in the EAC losing market shares particularly against emerging economies such as India (pharmaceuticals, heavy petroleum), China (iron and steel products and fertilizers) and Malaysia (Fixed vegetable oils).
The above findings call for renewed efforts to boost the manufacturing sector in the region and in Partner States and should not discourage the latest emphasis placed by many Partner States in this important common endeavour.
The comments received during the stakeholders workshop is expected to enrich phase two of the regional program on “Strengthening Institutional Capacities for Industrial Policy Management, Monitoring and Evaluation in the EAC region”.
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About the East African Community Secretariat:
The East African Community (EAC) is a regional intergovernmental organisation of five Partner States, comprising Burundi, Kenya, Rwanda, Tanzania and Uganda, with its headquarters in Arusha, Tanzania.
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