East Africa United

This most colourful of flags is not yet, to the best of my knowledge, widely recognised. It is the flag of the East African Community, comprising Burundi, Kenya, Rwanda, Tanzania and Uganda.

For most of the last year, the best newspaper in the region, the East African, has been running weekly updates on East African Community integration, culminating in the launch of the East African Common Market Protocol on 1st July 2010. This protocol will, we are assured,eliminate the vast amounts of restrictions and regulations often required to do business in the region. In addition to the elimination of trade barriers and border taxes, citizens of East Africa will be able to freely relocate within the community, bringing education and expertise where they are needed most.

However, these changes have not taken place overnight. Even the most optimistic among us recognize that it will take some time before the notoriously tight borders are opened and the pointless red tape eliminated. Conservative expectations are that the necessary legal and regulatory changes will not be implemented in full before 2015 (though given the funereal pace of change in public sectors everywhere this would be quite some achievement). Certainly, not much has yet happened on the ground, if my recent experience of the Malaba border crossing between Uganda and Kenya was anything to go by. Regional studies often highlight the high transaction costs of doing business in East Africa. What better example than a 5 km tailback of trucks on the Kenyan side of the border. Imagine the hidden costs of these delays! With the exception of a few thousand customs service and immigration employees, it is hard to see anyone opposing a borderless East Africa.

It will be particularly interesting to see how the agriculture sector as a whole – and in particular the seed sector – responds to a borderless environment. Regulations (and the effectiveness of regulators) in the seed sector vary widely among the members of the East African Community. In Kenya, regulations are tightly enforced by the Kenyan plant health inspectorate service (KEPHIS), to the extent that most imported seed, especially from other African countries, requires KEPHIS approval. Uganda, by contrast, has a weaker quality control environment for the production and importation of seed , and little or no organizational capacity to implement its rules and regulations. An efficient market would substantially remove the need for Kenyan-style regulation but at least for the time being small-scale farmers with little or no access to market information need the protection provided by a robust regulator. As a general point, harmonisation of standards is fine, as long as it is upwards.

Back to the excellent East African. This week's edition includes some articles on regional private equity, including a piece on African Agricultural Capital on the following link
http://www.theeastafrican.co.ke/news/EA%20agrobusinesses%20next%20stop%20for%20private%20equity/-/2558/964378/-/13pu1g5/-/index.html

In my (entirely disinterested) opinion, well worth a read!