THE EAST AFRICAN COMMON MARKET PROTOCOL

Count down to the East African Common Market

The Heads of State of the EAC Partner States acceded to the East African Common Market Protocol which is expected to be implemented from July 1, 2010 following ratification in all partner states.
The EAC Common Markets Protocol provides for:

 Free movement of Goods
 Free movement of Persons
 Free movement of Service
 Free movement of Capital
 Free movement of Workers
 The right of Establishment
 The right of Residence

In view of the enhanced market of about 130 million people, the EAC integration process should spur more growth in investments in the region.

SMES-EA wish the partner states good luck and urge them to do more in terms of ensuring widespread sensitization of their Citizens on the provisions of the Common Markets Protocol and opportunities.

Are the Small and Medium Enterprises (SMEs) based in the EAC region ready to avail themselves of these opportunities???

The present economic situation in the region dictates that residual labour market entrants have no alternative but to find their way as micro entrepreneurs, casual or regular employees, or apprentices into the urban or rural informal sector activities. Over the period between 1980 and 2000 the MSE sector (majority based in the informal sector) employment increased at an average rate of 12% yearly giving the highest sub-sector growth in the region.

The MSE sector consists of a wide variety of small enterprises employing less than 10 and in most instances less than 5 workers. They operate with little or no capital at low levels of productivity and often out of temporary structures. Few of the micro entrepreneurs have the qualifications normally associated with their trade; many find themselves in circumstances which make it difficult for them to abide to the code of professional ethics and to adhere strictly to Governments’ rules and regulations and, as a result are liable to law enforcement measures, including penalties, which translate to loss of business. Due to their informality, they do not generally qualify for Government services and subsidies as available to the larger enterprises.

Surveys consistently show that between 30% and 70% of all MSE sector employment in the region is in commerce and that the majority of traders are women. The remaining percent mostly men are being referred colloquially and officially as Jua Kali (Hot Sun)/ Nguvu Kazi (Work is strength) workers, and are involved in a variety of manufacturing and repair activities and in productive services such as metal fabrication, carpentry and joinery, textile, radio/electronics repair, hairdressing, motor vehicle, photography, herbal derivatives, chemical etc.

Although, some positive measures have been put in place to address some of the MSEs problems, limited access to know-how continues to be a major obstacle for the sector. Most of them, whether just starting or long established, lack skills or the information they need to be more profitable. They require advice on market opportunities, appropriate technologies, product diversification, quality control, occupational health and safety, and Business Development Services. The sector is characterized by horizontal growth and very few grow vertically.

Business competition in the MSE sector is often very intense particularly where many entrepreneurs produce and sell the same products. In order to increase incomes and create room for new arrivals, it is essential to address the issue of limited product diversity through marketing research, diversification, improving product quality, design and marketing.



Richard N. Muteti
Director, SMES-EA East Africa
Regional Project Manager, CISO-East Africa
CEO, KNFJKA