Harmonized standards can sharpen EAC competitive edge
Standards are a vital element in trade, because they help business interaction and access to markets in the economy.
Standards and compliance can also encourage trade by providing valuable information about product requirements or consumer preferences which all add to competitiveness.
A standards regime helps open-up markets. It allows customers to compare offers from different suppliers, making it easier for smaller and younger enterprises to compete with larger and stronger companies.
They also give small and medium size enterprises (SMEs) a competitive advantage by enabling them to compete on a level playing field with bigger enterprises internationally and to increase market share.
With a total population of about 146 million people, the East African Community (EAC) offers fertile ground for companies to do business. By doing so, this leads to economic growth generated by higher levels of intra-East African trade. The EAC has developed East African Standards to harmonize requirements governing quality of products and services across the Community.
Companies rely on these standards and their own conformance to increase efficiency, reduce costs, and boost sales of their products and services. Implementation of common standards has put the EAC at the fore front of competition policy in sub-Saharan Africa. It is foreseen that through harmonized standardization and compliance, any trade barriers encountered during the exchange of goods and services within the EAC is limited or avoided altogether.
On the other hand, compliance with strict standards of regulations can often be expensive for companies. However research points to the fact that such costs pay off in the long run. In the EAC the need for standards is evident with the increase in the number of new harmonized standards, testing costs and reduced testing times as reported among the EAC Bureau of Standards.
In Kenya, those who have complied to GLOBALGAP for instance, have been able to grow superior produce, increase their exports as well as participate in better business practices. Kenya has also registered an increase in the number of products certified and also improved access to formal markets at both domestic and international level.
More government testing laboratories, improvement of infrastructure, increasing financial support for monitoring agencies and strategies to raise awareness on the importance and procedures for compliance, are amongst some of the strategies Uganda has taken to increase efforts of compliancy. In Uganda, the testing costs and testing time have reduced by 71 per cent (from $350 to $100) and 58 per cent (from 19 days to eight days) respectively.
Currently Rwanda is implementing automated online system that ensures increased efficiency by reducing the time taken to process application for certifications and other conformity assessment services.
However, there are policy and practice constraints of standards in the region which need to be sorted out by all the EAC states to ensure implementation and compliance to improve competitiveness
The East African countries, just like many other African countries, are confronted with numerous challenges in improving the capacity to meet production and quality standards. With mutual recognition of the marks, a significant platform for reducing costs of doing business and trading across borders (East African partner states) will allow the products that have been tested in the country of origin to be accepted by an importing country.
Similarly, there is need to harmonize and work towards creating a regional standards centre. This can provide support in all the EAC countries, making sure the service, product or facility is maintained to meet the same standard. A mutual recognition of quality marks can also bring immense benefits for all the EAC countries. It should be noted that a close similar initiative of the Harmonization and Conformity Testing Programme supported by TradeMark East Africa was launched to support standards bureaus in addressing some regional issues on standards.
The EAC states through their respective agencies need to make it a priority to engage all stakeholders especially the SMEs in the design and implementation of harmonized standards within the states. SMEs play a vital role in standardization, however, they are usually hindered by a number of dynamics.
These barriers include a lack of awareness of standards relevant to their business, a perception that they are more relevant to large enterprises and a lack of human (technical) and financial resources to both develop and make use of standards. As a result, participation by SMEs in the standardization process (accessing information, participating in committees, implementing and using standards) is usually low, relative to their importance within the economy.
Standards are usually developed by experts and always mirror the background and interests of the companies they represent. In order to have SMEs background and interests properly reflected in the process of standards development, it is important to ease the participation of experts from SMEs in this process. It’s also important to employ the bottom-up approach by involving local councils, district leaders all through the development process of by –laws and ordinances as part of the initial process.
Because participation by SMEs in standardization is lower than desirable, there is a risk that published standards do not fully take account the needs or interests of SMEs. This explains why few SMEs use or implement relevant standards fully and effectively. As a result, SMEs and the economy more widely, are not fully reaping the benefits offered by standards and may even have unnecessary requirements placed on them.
The EAC governments therefore need to increase budget allocations specifically for the promotion and engagement of all stakeholders in the standardization process. Particular attention should be paid to the sectors of economic importance for the regional economic gains in order to ensure their continued competitiveness.
Where standardization policies do exist they often do so under the pretense of unclear technical language and ambiguous definitions leaving room for inconsistencies and varying interpretations of what is to be expected.
This diminishes the negotiating power SMEs have for their products. Informing and raising the capacity of SMEs to put into practice proper modes of business so as to be more competitive in the market is important. We need to be concerned with not only the quality of product, but that stakeholders have the power of self-determination so as to position themselves within the regional market.
The Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI) is a regional non-governmental organization founded in 1996.
SEATINI-Uganda is the regional coordinating office for East Africa and among other things, monitors developments in the area of trade, tax and related policies and practices to ensure that these processes generate favourable environment which can be utilized to achieve equitable and sustainable development at national, regional and global levels.