EAC nations need to be committed to the EAC Treaty and its integration objectives in order to profit from DRC’s admission.
For EAC states to benefit from DRC’s admission into the EAC, a comprehensive commitment to the EAC Treaty and the integration aim is required to overcome state conflict/trade conflicts and arbitrary border closures.
The EAC stands to benefit from DRC’s accession in various ways: DRC shares borders with five of the six EAC member states and fits the EAC Treaty’s geographical proximity criterion.
Second, the DRC’s commercial potential is supported by a common language, Kiswahili, which is spoken by half of Congolese and is East Africa’s official language; this will accelerate business transactions. Third, the DRC has an 81-million-person population, which broadens the commodities market for the EAC members, including access to labor.
While the preceding gains normally accrue to the bloc, it is vital to stress how Uganda may utilize this admission to increase its trade flows, notably bilateral trade with the Democratic Republic of the Congo.
According to the Economic Policy Research Center, DRC’s total formal imports from Uganda have stayed steady at 3.1 percent of overall imports during the last decade.
This is owing to the fact that DRC’s major imports are high-value manufactured products that Uganda cannot produce competitively, such as electronics, machinery, vehicles, and pharmaceutical items.
In 2018, they were predicted to account for 40 percent of the DRC’s entire import expenses. Products like lime, cement, iron, and steel, for which Uganda has established a reasonable production capacity, continue to command a low market share of DRC imports of 5.1 and 0.84 percent, respectively. This has had an adverse influence on Uganda’s total trade revenues from its commerce with the Democratic Republic of the Congo.
However, based on geographical proximity and pre-existing bilateral commerce, an analysis of the anticipated economic repercussions of free trade with DRC predicts that Uganda is projected to expand its official exports to DRC by $60.4 million.
The most important benefits will be realized in the export of processed food and beverages, including sugar, palm oil, broken rice, sweet biscuits, and wheat flour, as well as metal and mineral commodities.
As a result of the dominance of food and beverages in the manufacturing sector, trade liberalization with the DRC presents an enormous opportunity for Uganda to invest in and transform the agricultural sector to higher value-addition/agro-industrialization in accordance with the Third National Development Plan (NDP III) (NDP III). This should be in conformity with regional and international product requirements.
Metals and minerals exports to the DRC are projected to expand, notably iron and steel, cement, and petroleum products. This will require considerable private sector investment to reduce supply-side limits, as well as subsidization of manufacturing expenditures like electricity tariffs and taxes.
Uganda continues to struggle with insufficient technical developments in order to generate high-value manufactured items such as electronics, equipment, and cars.
However, by leveraging recent developments in the automotive industry through the Kiira Motors partnership (Kiira EV) and the mobile phone manufacturing facility in Namanve Industrial Park, it may position itself as a re-export/assembling hub to sell these items in the long future.
Nonetheless, in order for Uganda and other EAC states to benefit, comprehensive commitment to the EAC Treaty and the integration aim is required to overcome state conflict/trade conflicts and arbitrary border closures.
The adoption of regional legal norms, as well as political will, are crucial for allowing a market-driven economy that enables trade to flow.