Achievements, Challenges and Prospects. Tanzania Country Level Knowledge Network (CLKNET) SUBMITTED TO: CLKNET. Investment Facilitation Manager

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1 THE CONTRIBUTION OF FOREIGN DIRECT INVESTMENT (FDI) TO LOCAL LABOUR ECONOMY: MARKET COMPETITIVENESS IN EAC AFRICA: WHERE DOES TANZANIA STAND? Achievements, Challenges and Prospects SUBMITTED TO: CLKNET THE CONTRIBUTION OF FOREIGN DIRECT INVESTMENT (FDI) TO LOCAL ECONOMY: SUBMITTED TO: Tanzania Country Level Knowledge Network (CLKNET) By: Achievements, Challenges and Prospects SUBMITTED TO: CLKNET John Glory Mathew Bildard - Mnali Moderator Investment Facilitation Manager Ag. Director of Investment Promotion TANZANIA INVESTMENT CENTRE Tanzania Investment Centre

2 Executive Summary This report has been prepared followed an Audience Forum No. 13 organized by Tanzania Country Level Knowledge Network (CLKnet) on the topic titled Labour Market Competitiveness in East Africa: Where Does Tanzania Stand?. The forum was held on 28 th November, 2012 at Tanzania Global Learning Agency (TAGLA) venue located in 7 th floor. The presentation was given by Dr. Abdullah H. Makame; Assistant Director of Productive Services at the Ministry of East Africa Cooperation while Ms. G. Bildard an Investment Facilitation Manager from Tanzania Investment Centre moderated the session. The forum attracted participants from Ministries, Departments and Agencies (MDA s), academic institutions, NGO s and private sector. The topic aimed to establish the position of Tanzania in the EAC region labour competition, opportunities and challenges while dialoguing on the way forward. The presenter begun by a brief background on concept of regional integration, reasons for the collapsed of EAC in 1977, tripartite commission, signing of the Treaty establishing East Africa Community in 1999 and key stages of the EAC integration that include customs union, common market, monetary union and political federation. Further he went on presenting about the EAC common market together with common market protocols and more emphasis was given on liberation of the labour markets in addition to other movements of persons liberalized by the protocol. Furthermore the presenter underscored the position of Tanzania in the labour market within EAC region. Lastly, it pointed out some challenges and provided a way forward while concluding the presentation. Soon after the presentation, participants were given opportunity to further discuss on the topic with a view to formulating policy recommendations. 2

3 1.0 The Concept of Regional Integration Regional Integration is a contemporary approach of economic and social survival. It aims at consolidating economies with the objective of creating solidarity which is believed that United We Stand but Separated We Fall. Globally, both developed and underdeveloped economies are engaged in Regional Integration. Regional Integration requires political will and goodwill as well as social engagement, awareness and acceptance of the process. 2.0 The East African Community that Collapsed in 1977 and the Tripartite Commission The Concept of Regional Integration in the East African Community has a very long history. In 1967 the three pioneering Partner States that is (Kenya, Tanzania and Uganda) established the East African Community, which unfortunately, due to a number of different reasons got defunct in The Heads of State of the pioneering Partner States decided to have an understanding that would lead to revival of the Community and ultimately established the Permanent Tripartite Commission. 3.0 Signing of the Treaty Establishing the East African Community The East African Heads of Heads of State through the PTC accomplished the crafting of the EAC Treaty, and had it signed in Membership of the Community consisted of three pioneers States, namely the Republic of Kenya, the United Republic of Tanzania and the Republic of Uganda. The Republic of Rwanda and the Republic of Burundi joined the Community in The rules of procedure and participation to the East African Community Regional Meetings/Activities are crafted in a way that aims to avoid the recurrence of

4 4.0 Key Stages of EAC Integration [Art 5(2)] 4.1 Customs Union The main objective of the customs union is to promote and facilitate inter and intra regional trade in goods and promote investments in industries so as to boost production and enhance standard of living regionally. Protocol signed in 2004 and came into force in 2005; with a transition period of 5 years. The Protocol has four major principles namely:- 1) Establishment of the EAC Rules of Origin Criteria. 2) Establishment of Common External Tariffs. 3) Internal Tariff Elimination AND 4) Elimination of Non Tariff Barriers. 4.2 Common Market This is the 2 nd stage of the EAC integration process. The Common Market Protocol was signed in 2009 and came into force in It offers four degrees of freedom that is:- 1) Liberalization of the Trade in Goods Markets; 4

5 2) Liberalization of the Trade in Services Markets; 3) Liberalization of the Labour Markets; and 4) Liberalization of the Capital Markets Liberalization of the Labour Markets (ART 10) Under the liberalization of the labour market the Partner States guarantee the free movement of workers, who are citizens of another Partner States, within their territories by ensuring non discrimination of workers based on their nationalities in relation to employment, remuneration and other conditions of work and employment. A worker shall have the right to be accompanied by a spouse and a child who shall be entitled to be employed as a worker or engage in any economic activity as a self employed. To enjoy this freedom, the worker should have a valid travel document, employment contract and enter through official border crossing where upon fulfillment of immigration requirements shall be issued with a pass valid for a period of up to 6 months for purpose of completing formalities for a work permit. Implementation of the free movement of workers is progressive in accordance with the schedule of commitment from each Partner States [Annex II of CMP] It was further presented that according to the schedule; the Republic of Kenya opened all categories of workers effective 2010 in the four major groups of: (1) Administrators and Managers; (2) Professionals; (3) Technicians and Associate Professions and (4) Craft and Related Trade Workers where the Republic of Uganda effective from 2010 opened all categories of workers in the following three major groups that is:- (1) Administrators and Managers (2) Professionals and (3) Craft and 5

6 Related Trade Workers. Effective in 2010, the Republic of Rwanda opened all categories of workers in two major groups: - (1) Professionals and (2) Technicians and Associate Professionals. Furthermore, the United Republic of Tanzania opened selected categories of workers in two major groups ranging from 2010 to 2015 that is: - (1) Professionals and (2) Technicians and Associated Professionals and lastly Burundi opened selected categories of workers in one major group that is (Professionals) effective in It was added that, in order to facilitate free movement of workers Partner States agree to recognize all academic qualifications that meet the descriptors stated in the schedule to Mutual Recognition of Academic and Professional Qualifications Annex and obtained from recognized institutions in Partner States. 5.0 Other Movements of Persons Liberalized by the Protocol Apart from liberalization of the labour market also EAC Protocol stipulates clearly other movements of persons liberalized as namely below: 1) Free Movement of Persons provided for under Article 7 of the CMP. (It can range from visiting friends and relatives, seeking medical treatment, transit passengers and students); 2) Right of Establishment provided for under Article 13 of the CMP; and, 3) Right of Residence provided for under Article 13 of the CMP 6

7 6.0 Benefits of Common Market It was underscored that, if common market is well implemented to the letter, the below are expected to be recorded as benefits:- 1) Expansion of trade in goods. 2) Expansion of trade in Services. 3) Expansion of investments. 4) More jobs, free movement of workers. 5) Increased competition results, better goods and services at competitive prices to end users. 6) Perceptions and thoughts of individuals and groups in the region to think regionally. 7) Increased regional, national and personal income. 7.0 The position of Tanzania in the EAC Labour Market The presenter underlined that the United Republic of Tanzania remains to be the most populous partner state in EAC where the country accounts for more than 50% of the EAC land. It was added that, Tanzania is the second largest economy in the EAC following the Republic of Kenya also the country is endowed with natural resources and enormous tourism attractions. It was further underscored that, there are some issues affecting the position of Tanzania in the labour market competitiveness in EAC which includes: 1) Socialist ideology (the Ujamaa hangover as termed by presenter). It was said that, socialist beliefs is still affecting Tanzanians in their daily life hence Tanzania s active participation in the EAC Integration is negligible compared to other partner states. 7

8 2) Lack of confidence to most Tanzanians was mentioned as a stumbling block towards exploiting employment opportunities extended in the EAC secretariat and accompanied projects. 3) Inherent hostilities were also pointed as a hindrance for Tanzanians to take part in labour markets of EAC Partner States. 8.0 Challenges faced Position of Tanzania in the Labour Market Competitiveness in EAC There were several challenges mentioned which includes:- 1) Positive Role of Media in Tanzania It was highlighted that, media has painted Tanzania and Tanzanian as a resisting force towards the EAC integration. It was further emphasized that in several occasion media has played a critical role in tarnishing the image of the United Republic of Tanzania as a stumbling block to the EAC Integration process; while the reality is that Tanzania has been very careful to avoid the recurrence of ) Biased Role of Media It was expressed that media has been biased where media houses have not endeavoured to acclimatize with the fundamentals of the EAC Integration. The role of the media in educating the citizenry while sending out unbiased information to the audience has been skewed hence affected Tanzanian in the labour market in the EAC Region. 3) Non-Tariff Barriers by partner states It was underscored that, NTBs still exist among partner states and has posed challenges to members accessing job opportunities in those countries. For instance recently (July 2012), the Minister of Immigration of Kenya passed two restrictive regulations which contradict the EAC Common Market where the 8

9 media has not made adequate reporting. The regulation aims to restrict movement of labour among partner states in terms of age and annual salary income that will be generated. 9.0 Discussion from the Participants Members from the floor actively participated to an intensely debate on issues seemed critical and noteworthy with a view of formulation a way forward that will guide Tanzania on policy matters. It is envisaged that, their contributions could enable Tanzania to compete in the EAC labour market as below:- a) Creating Awareness Participants emphasized that the role of creating awareness about EAC and activities to Tanzanian cannot be underestimated. Hence the government through Ministry of East Africa Cooperation has a critical role in creating awareness as well as stipulates the benefits of integration so that people can effectively take part. The government should sensitize Tanzanian about the EAC and processes. Not only should that education be impacted from the primary school level. b) Build Confidence Tanzanian were encouraged to participate fearfully to all matters regarding EAC as they posses right education, positions, skill and experience to do so. c) Need for Tanzanian to change the work attitude Cited with some unpleasant attitude on how Tanzanian conduct themselves at work places which includes lack of proper customer care, theft, persistence excuses to dodge work among others, participants agreed that every individual Tanzanian has a critical role to play in order to change the negative attitude that persist among Tanzania s workforce. 9

10 d) Dissemination of Information Participants challenged and advised responsible stakeholders particularly Ministry of East Africa Cooperation to disseminate information and if possible to do so via social networks. e) Political Will It was highlighted that, even though President has been in the forefront supporting EAC yet political will from other leaders play an important role and can enable Tanzanian to reap the advantages of free movement of labour. f) Role of different Stakeholders Participants expressed concerns that multi stakeholders are also needed and government alone cannot play an effectively role to involve the entire public in the process of integration. In order for the Tanzanian workforce to be competitive in the future, the role of other stakeholders such as academic institutions and NGOs were over emphasized to take part. g) Undertake Research Since the presentation lacked figures that could justify for the position of Tanzania in the EAC, participants urged Ministry of EAC to conduct thorough study that will establish exactly position of Tanzania in labour market, participation of media and any other topics. h) Change of Mindset It was pointed out that, Tanzanian culture have a role to play towards being courageous and aggressive so as to take positions in the EAC labour market. Therefore, there is a great need for Tanzanian to change the mindset in order to take more opportunities in the EAC labour market. 10

11 10.0 Way Forward The participants deliberated on below matters as a way to formulating policy recommendations that will give Tanzania a competitive role in labour market in the EAC region. I) The media has a role to play. It would be essential for the media to be engaged and trained so as to educated citizenry in a way that would result to positive impact II) III) IV) Mind shift from the Ujamaa hangover is necessary; Implementing strategic plans in a strategic way is essential; Monitoring and evaluation is vital V) Creation of awareness of the Integration process to the citizenry 11.0 Recommendations It s definitely that Tanzania and Tanzanians need deliberate efforts that can enable it stand better chances and be competitive in the labour market of EAC. It is for this reason that the role of government, individuals and other stakeholders are extremely important in realizing the fruits of integration. It is therefore recommended that, Tanzanian government together with its people and other stakeholders such as (academic institutions, advocacy groups, and civil societies) should play a critical role in addressing the following: Creating awareness to Tanzanians that will bear fruits concerning benefits of the integration, Conduct in-depth research regarding participation of Tanzanian to the Common market while assessing any gaps and formulating ways to address them 11

12 Release accurate information that will guide media houses also convene regular educational meetings with editors so as to clarify on EAC matters including citizenry Government through Ministry of EAC to recommend and develop modules of EAC issues that can be introduced to the education system of Tanzania Government through Ministry of EAC to develop slogans that will be disseminated to different groups especially youth with an aim to instill the culture of confidence to Tanzanian Tanzanians to take individual initiatives to change negative and destructive culture such as (theft, laziness, dishonest, etc) that seem to be holding their personal development Conclusion East African Community (EAC) can bring enormous benefits to workforce within the region. Leaders and responsible stakeholders need to sensitize and educate people so that they can take part in the EAC labour market. However individual transformation and confidence plays a critical role to enable active participation of workforce in the labour market. 12

13 REFERENCES East African Community, EAC Treaty, 1999 East African Community, Protocol on the Establishment of the East African Community Common Market: (2009) East African Community Secretariat, Protocol on the Establishment of the East African Community Customs Union Market: (2004) 13

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