The dynamic East African trade landscape poses a significant challenge to the growth of Small and Medium Enterprises (SMEs), primarily due to their struggle to meet international and regional standards. Despite earnest efforts by entities such as the African Organisation for Standardisation (ARSO) and the East African Business Council (EABC), SMEs continue to grapple with exclusion from lucrative opportunities, both within the region and in the expansive African Continental Free Trade Area (AfCFTA).
SMEs Encounter Diverse Challenges:
The primary obstacle faced by SMEs revolves around their difficulty in comprehending and precisely adhering to established product and service standards. This challenge intensifies amidst tariff and non-tariff barriers, coupled with a pronounced lack of easily accessible information on trade regulations. Consequently, SMEs confront a formidable challenge when venturing into cross-border engagements.
Identification of Gaps by ARSO:
ARSO, as the African Union standards body, has identified critical gaps across various sectors, including basic and general standards, agriculture, food products, building and civil engineering, textile, leather, and the automobile industry. SMEs encounter challenges in meeting stringent measures such as sanitary standards, health protection regulations, environmental guidelines, and technical specifications. This not only limits their access to regional markets but also hampers their entry into lucrative international arenas, notably the European Union.
Regional Economy: Focusing on Impact, Analyzing Trends, and Projecting the Future:
In the East African region, SMEs constitute a substantial portion of businesses, shaping up to 80% of the business landscape, generating an impressive 60% of jobs, and contributing approximately half to the region’s GDP. However, the failure to address their challenges in meeting standards, a prevalent issue, jeopardizes not only their individual growth but also poses a threat to the overall economic development of our beloved regions.
Standards in International Trade: Understanding the Role and Impact:
Hermogene Nsengimana, the Secretary General of ARSO, emphasizes the critical role that standards play in international trade, underscoring the importance of adopting good agricultural and manufacturing practices before entering the market. These standards ensure quality, safety, and compliance with regulations.
The Perspective of EABC:
John-Bosco Kalisa, CEO of EABC, acknowledges and supports the necessity for SMEs to adhere to standards. However, he expresses concern about the potential misuse of regulations as a mechanism of exclusion—a shield safeguarding individual markets. Historical examples, such as tit-for-tat trade blockades between countries like Kenya, Uganda, and Tanzania, highlight the urgent need to eliminate barriers. This action would not only streamline customs processes but also align rules of origin, facilitating seamless trade within both the East African Community (EAC) region and the AfCFTA territory.
A Collaborative Endeavor:
In a proactive move, ARSO and EABC have signed a Memorandum of Understanding (MoU) to collectively address these challenges. Their collaboration aims to identify and mobilize SMEs, with a particular emphasis on those led by youth or women, primarily within the agri-business sector. They also target other priority areas under the AfCFTA. The overarching objective is to enhance SME capacity over three years for adopting and implementing international and regional standards.