Protectionism killing EAC integration, says business executive

Mr Nicholas Nesbitt, chairperson of the East African Business Council, during an interview with journalists from across the six partner states of the East African Community in Nairobi recently. PHOTO BY STEPHEN KAFEERO

What you need to know:

Nicholas Nesbitt is the chairperson of the East African Business Council (EABC). He is also the general manager of IBM Eastern Africa and the chairperson of Kenya Private Sector Alliance (KEPSA), among other roles. In a recent wide-ranging interview with journalists from across the six partner states of the East African Community (EAC) in Nairobi, Kenya, Mr Nesbitt reflects on the opportunities and challenges in the regional bloc. Stephen Kafeero captured the highlights.

You are in the tech industry. What opportunities can East Africa leverage from the sector?
I firmly believe the time is now for East Africa to really leapfrog and catch up with other parts of the developing world, and the way to do that is with digitisation. Digitisation, especially if it is done properly, the one benefit you get out of all that is trust. When you have trust in the data that you are collecting, that you are storing, that you are analysing and you are using to make decisions then you have a much better chance of ensuring a more favourable outcome.

One of the biggest problems of businesses, whether they are East African or international, is the lack of trust about doing business in Africa. They [investors] cannot trust that the money that they are putting into these countries is going to be used properly, effectively, and that they are going to get returns they expect.

Therefore, it is so much easier to move your money to a different part of the world and, as I said, we can raise our trust levels once we start using technology to capture everything digitally.

Do you have specific examples of how this can happen?
One technology, I think, is going to take us to the next era of digitisation is blockchain. Blockchain is a technology that allows you to store data about a transaction in multiple places simultaneously in a ledger so multiple people can have information simultaneously about what is happening.

So, anytime anything happens, everybody knows and it becomes hard to fiddle with that data and when you start to use blockchain in trade to secure certificates of pharmaceutical drugs, fertilisers, blood that is being transported, the sugar that you know is genuine and everyone on the blockchain can see it is genuine then you can begin to trust.

So that is one example of a technology that is really going to help. The second is just putting in the basic infrastructure; high-speed internet access, telephone lines and Wi-Fi, making it easier for people to communicate using their smartphones.

The third area is in the use of technology in enhancing access to credit for SMEs and business people and use of electronic platforms to make business transactions. Technology also allows firms to easily access digital letters of credit. I think the fourth area of technology that needs to be addressed is the One Network Area in East Africa.

The cost of making a telephone call from one country to the next is very high. The cost of roaming is very high, to do voice and the cost of roaming to data is even higher.

So it makes it very difficult for that transporter or trader who is moving across borders to communicate as effectively as they would like to with their suppliers, their offices or even their customers.

When it comes to technology in the EAC and academic qualifications, many “tech-savvy” youth lack academic papers which are required in formal employment. How do they go about this?
With technology, it is getting more and more questionable whether the number of academic qualifications you have make you a better practitioner of technology. In fact, we see Bill Gates, Mark Zuckerberg, Steve Jobs all of these high-level people, Micheal Dell, who did not go through to get advanced degrees yet they are founders of large enterprises and we say ‘oh, that is because they are Americans’, and we make excuses for them.

But there are many young people here in East Africa who are doing brilliant things with technology who must be recognised. So, it is a very challenging question around ICT professionals; how the partner states can standardise acceptance of their capabilities because it is about skills and sometimes not even documented.

In other areas like architecture, accountancy and medicine standards and certifications is critical, but with technology it is about creativity, innovation and it has become almost artistic in the same way you can’t say an artist has to have great qualifications to do a very good “Makonde” curving or some art. It is the same with IT professionals.

How do you benefit, specifically, as IBM from the EAC integration?
First for us in IBM, we benefit from your second question. IBM has rolled out a programme called the Digital Nation Africa (DNA). So, digitalnationafrica.com is a portal that is free, that gives anyone who goes there the ability to learn new technologies and get badges or certifications for novice, intermediate and expert levels.

Novice means you are dangerous; you can really convince your friends at a party that you are smart. The ones in the middle you can do some applications and when you become an expert you can probably build a company, or you can adopt this in your enterprise.

We are rolling it out for free and we are calling those types of jobs new collar jobs. So [they are] the same jobs we are trying to worry about; how do we legislate them and [how do] academic qualifications fit in between blue collar and white collar. They are called new collar and these are the people who are going to change the world really.

So at IBM, we would get great benefit if any professionals working for IBM in East Africa could move freely from one city to another. When IBM professionals visit one country, they are not allowed to go to the office even though they are Kenyan or they might be an expatriate working in Kenya. Certain countries do not allow them to go to the office.

That reduces people’s interest in going to that country. IBM in East Africa had great hopes of expanding to six countries, but now [it is] only focusing on one or two or three countries. It means we don’t attract many resources hence companies and government institutions do not get the benefits that I am talking about today.

So these partner states that are not cooperating with the laws that have been defined in the EAC around the movements of people, services and so on are really doing their own countries a disservice by saying it is only us who can do it. We look forward to policies being reformed around the movement of professionals or the technology.

Away from the technology, what is your view of the East African Community?
A lot of progress has been made in the EAC Customs Union, Common Market and Monetary Union protocols. My biggest concern is that it feels like the East African Community, from a business standpoint, is sliding backward because of Trumpism, which is nationalism, protectionism.

It is not expansion-thinking, it is scarcity-thinking. It is not growth-minded, it is shrinkage. So that kind of thinking where people are saying ‘we have had too many foreigners coming to our country, we have had too much foreign this or the other, why should we let them’, that kind of thinking is a backlash against globalisation.

People are complaining about that happening in Europe, in the US and I am sorry to say it is even starting to happen in Kenya. When people think that way they start to get in a tit for tat environment. It is MAD – Mutual Assured Distraction – and so I do not believe that is the right way to go for the East African Community.

In light of that, what then is your vision for the East African Business Council?
My goal is to make the EABC very strong to ensure that business people have one voice when we go to parliament. Why that is important is because fundamentally in regional trade and global trade you have to pick a philosophy or people will be coming from one spectrum and the other.
One is either I am a manufacturer in that country or a trader/importer.

So if I am a manufacturer, I want my raw goods to be imported cheap so that I can manufacture. If I am a trader, I don’t want to take local goods but import them from a country that produces cheaply and I may say what is done here locally is not good enough. The challenge for the EAC Council of Ministers, the Ministries of Trade and the EALA is who are they listening to?
When the music stops, it depends on who has been heard from the other side. This makes EAC politicians to take a more protectionist role. Secondly, it means the EABC should be stronger and collaborate closely with the national focal points such as KEPSA and other private sector associations in the EAC partner states and call them to bring regional trade issues to the EABC.

Across the board, people have not been acting the way they should, which means protectionism has been left to grow. Because of these trade barriers and because countries are not implementing what they should be, it allows border control people and the police near the borders to go rogue and they, therefore, stop things. The recent trade bans scare SMEs doing cross-border trade which in turn leads to illicit trade i.e. smuggling. So you can see the snowball effect if people don’t adhere.

You are now at the helm of the EABC. What do you seek to achieve?
My goal as the chairperson of the EABC is to bring structure in thinking, in behaviour and even in policy back to the level that the forefathers thought about when they said we need to have a single customs. My goal is to bring the different people together to speak with one voice.

We would like to steer EABC to greater heights. We have a lot of interests and support from our members and development partners like GiZ and TradeMark East Africa and even other European partners who would like to invest in us to improve different areas, policy and research in particular and capacity building within the secretariat itself.

Among other things we are going to do with our observer status at the EAC is that we are going to spend more time with the parliamentarians. I personally met the speaker of EALA twice within the last two months. I am building a relationship with the Rt Hon Martin Ngoga, Speaker of the EALA. EABC board of directors also met with the EALA committees on Communication, Trade and Investment, and Agriculture, Tourism and Natural Resources.

We continue to do that and we have an open invitation to go down to meet them. Yesterday, one of our directors was meeting the chair of the EAC Summit of Heads of State, President Museveni, who wanted to know what we are doing as EABC and he has invited me personally with my team to go.
I will take the Uganda Private Sector Foundation with me to meet with the chair of EAC Summit Heads of State to discuss about these regional issues.

I am also going to spend some time with president Magufuli [of Tanzania], president Kenyatta [of Kenya] and president Kagame [of Rwanda] before the EAC Summit of Heads of State that is going to happen in November, so they know what EABC is doing. We can present key regional issues that the business community faces while doing business across borders.

We are also going to address the policy angle by taking our messages to the parliament, to the local parliamentarians to highlight national laws which need to be in harmony with regional laws. We as the EABC will become the glue and harmonising factor because we are going to focus on this deliberately and we will make a difference. So we will address the policy, the politics and we will also work with the different business federations.

EAC countries have failed to achieve a single electronic cargo tracking system since the central corridor and northern corridor are using different systems. What is your opinion?
That is music to my ears as IBM, if that is actually the challenge. The core of what IBM does in software is what is called middle web or Application Programming Interface (API). We do not care what systems you have, IBM can bridge them, make them communicate as one, period! So if the policymakers are talking about it and the policymakers want to fix it, IBM has the technology.