East African Business Council AN ENTERPRISE PERSPECTIVE TO BIC REFORM Presentation by Mr Hirji Shah at the GTZ Workshop Mount Grace County House and Spa, Magaliesburg, Gauteng, South Africa May th, 2006

2 Overview Political will at the national and regional level Private Sector concerns What can we do? Concluding remarks

3 My 3 perspectives on BIC reform There is political will about Private Sector reform agenda although the political reality is different. The Private Sector has concerns that range from governance issues to corruption, customs administration and administrative barriers, hampering reforms. Business Associations are an important agent in creating an impact to reverse the trends.

4 My first point – Political will at the national level  Good governance is key. The Police raid at the East African Standard, a leading media house in Kenya drew varied reactions.  Investors want an environment where the rule of law is respected which means: 1) decentralized political activity, 2) accountable and responsible government, 3) respecting human rights, including free press, permitting open exchange of ideas.

5 At the regional level – East Africa  Governments in East Africa proclaim that Private Sector is the engine of growth.  The EAC Customs Union created a large market of about 90 Million people. But business people face major problems of tapping into the market, as well as face cross border trade issues and unnecessary roadblocks.  EABC continues to lobby for speedy integration processes to enable business to take place and to access the regional markets without any barriers and delays.

6 Private Sector concerns  We have found out through the Business Climate Index Survey carried out by EABC with support of GTZ in 2005 and covering 600 companies in East Africa that: the three top Non-Tariff Barriers (NTBs) are related to: (1) Corruption (2) Customs administration (3) Infrastructure

7 What can we do to accelerate reforms ? Business associations are key in lobbying for reform change. Three areas of EABC’s work in reform change: First, Top level lobbying EABC delegation met with Kenya’s President Mwai Kibaki, and President Yoweri Museveni separately, and later met with the three Presidents jointly to discuss relevant issues including that of SMEs. Three months later, the East African Development Bank (EADB) created a financing facility for SMEs. Second, the Customs Union: EABC & EAC jointly carried out information campaigns in 5 cities in East Africa. Their concerns were taken, however nascent towards reforming BIC.

8 What can we do ? Third : the Monitoring Mechanism on NTBs EAC & EABC will soon pave the way for a Monitoring Mechanism of NTBs which seeks to minimize the impact and eliminate NTBs which business people experience in the course of their trade.

9 The role of business associations Development partners’ support for Business Associations at the regional level is an investment with a high return. 3 Years ago, EABC was a one-man Secretariat and an income from Member subscriptions of USD 19,000. Thanks to the support from GTZ, EABC has to date tripled its Membership & quadrupled its income. It has run successful lobby campaigns during the EAC Customs Union negotiations. If development partners like GTZ are interested in supporting change in business environment, there are many ways, ranging from research to institutional support.

10 Concluding remarks The business environment can be changed at relatively little cost, provided there is political will. Businesses need to get into partnerships for joint implementation of policy changes. Business Associations are an important agent in creating an impact to reverse the trend. I believe that the Public-Private sector dialogue is key.

11 Thank you for your attention! East African Business Council P.O. Box 2617, Arusha, Tanzania Office Tel./Fax: