Brexit Threatens To Divide East African Community Cohesion

Brexit Threatens To Divide East African Community Cohesion

Kenya, the biggest economy in East Africa is considering trade deals with the European Union (EU) as a nation and not as part of the East African Community.

This follows Tanzania’s absence from the signing of the Economic Partnership Agreement (EPA) with EU, a trade pact that would give East African community members duty-free quota-free access for all exports to members of European Union.

The ceremony was to be held on Monday, July 18, 2016 on the sidelines of the United Nations Convention on Trade and Development (UNCTAD) that is ongoing in Nairobi, Kenya.

The five East African Community members; Kenya, Uganda, Tanzania, Rwanda and Burundi have until August 4, 2016 to sign the deal with EU.

According to The Star, this will help Kenya avoid duties of as much as 22 percent on its exports to EU members.

This comes following Britain’s decision to leave the EU after 40 years, which has left the much anticipated deal in serious doubt.

Britain’s exit (Brexit) may reduce capital inflows into East Africa, weaken exchange rates and damage economic stability in the region.

In June 2016, Tanzania expressed her reluctance to sign any deal and decided to wait and see what happens within EU following Brexit. Uganda also said it wants to delay signing the deal.

This has left the three other members; Kenya, Rwanda and Burundi at a loss, prompting the Kenyan government to consider trading with EU as an individual nation.

We would like to sign it together; the desire is that we sign it together. If we get to a stage where we can’t do that then we also have the right to make our own sovereign decisions”, Amina Mohammed, Kenya’s Foreign Secretary told Business Day Live.

According to Business Day Live, Kenya exported  $1.26 billion worth of goods to EU in 2015.

Kenya is not classified as a least-developed country and could lose all the benefits of duty-free and quota free access in her exports to EU, if the deal is not signed by October 1, 2016.

This will force a dip in foreign exchange earned from exports to EU, which is one of the key markets for Kenya’s agricultural exports.

Some of the country’s exports that might face taxes of up to 20 percent include the flower exports.

Kenya is racing against time in a bid to see the deal signed and prevent an imminent decrease in exports earnings to EU.