East African Nations Resort To Protectionism To Insulate Local Industries

KIGALI, Rwanda, 8 July (UrduPoint / Pakistan Point News - 8th Jul, 2021 ) �:Hit by the deadly COVID-19 pandemic and a lack of proper vaccine supplies, East African countries have resorted to protectionist measures to support local industries, increase employment opportunities and address economic slowdown.

In their recently adopted annual financial outlays, Kenya, Uganda and Tanzania have also proposed to borrow at least $15.88 billion to fund ambitious projects such as ports, railways, roads, and oil pipelines.

Comparing the budgets of East African countries, Fred Muhumuza, Uganda-based analyst and a lecturer of economics at Makerere University, told Anadolu Agency that all of them reflect growing deficits and debt implications.

The budget statements showed that these countries have retained the regional Common External Tariff (CET) rate of 25% and a duty rate of 10% for buses for rapid transport projects for one year.

The governments have also retained application of the regional CET rate of 10% and apply a duty rate of 25% for one year on cotton yarns, and a similar deal for new pneumatic motorcycle rubber tires to protect local manufacturers.

Among other measures to protect local industries, a duty rate of 35% has been imposed for one year on peanut butter to promote local small and medium enterprises.

"There is pressure to raise taxes in the middle of slow growth due to COVID-19 and global dynamics that may see growth reduce due to unilateralism and tension between the West and the East," Muhumuza said.

Kenya decided to tap into the credit markets to finance the budget deficit which stands at 976.2 billion Kenyan shillings ($9.04 billion) equivalent to 7.5% of the GDP. Tanzania is also increasing its borrowing up to $201.42 million, about half of which will come from external sources.