allAfrica.com: East Africa: Why EAC States Should Allow Free Flow of Services (Page 1 of 2)

Recently, the Minister for Gender and Youth Services encouraged nurses to seek jobs abroad with a view to obtaining better terms of service. At the same time, nurses have issued a strike notice. Unless their terms of service are improved they argue, they will lay down their tools.

I hope the minister did not intend to suggest that the international job market for nurses is the solution to their poor terms of service. While the minister is right to point to the fact that nurses have much better terms of service abroad, she ignored the woeful shortfall of nurses in the country.

Kenya like many developing countries are at peril of losing their most experienced nurses just when they are most needed to prop up our faltering public health care systems. Think only of one of our most significant pandemics, HIV/Aids, which requires the kind of palliative and ancillary care that nurses are trained to provide.

Should we have a government policy of encouraging en mass foreign emigration of nurses while we need them here? Why not give these nurses the kind of competitive terms that they deserve?

These questions are particularly pertinent considering that today, an admission to a public hospital is conditioned on a relative being available to wash, cloth and feed their sick relative. Their role has been reduced to administering medicines.

As such, public hospitals are becoming a boarding facility for the sick given there are often no medicines and medical doctors are few and far, given the enormous throngs of Kenyans seeking medical treatment. That is why when a government minister encourages nurses to look abroad you wonder if the minister is aware of the pressing situation of our public medical services.

Using the example of nursing among others, I want to address how best Kenyan negotiators can prepare for ongoing negotiations on liberalisation of services in the East African Community. While the nursing example suggests why we ought to be careful in making liberalisation commitments in the East African Community, there are services Kenya has a comparative advantage in. These include transportation, insurance, banking and farming.

Kenyan entrepreneurs in these sectors could greatly benefit from the 130 million East African Community market. In addition, free movement of services will enable capital investments in services to realise higher returns. This is because the free movement of services lowers transaction costs associated with complying with different national regulatory frameworks.

In addition, liberalisation of the services market enables firms in protected economies to overcome barriers that inhibit them from having access to better transportation facilities, better trained personnel and other factors of production in the entire common market.

There is an emerging empirical evidence of the positive relationship between services liberalisation, services performance and aggregate economic performance in transition economies like Kenya.

There are three types of concerns related to building the free movement of services. First are regulations and other barriers in EAC member States such as those requiring nationality or residency requirements. For example, work permits for non-nationals and special vetting of foreign qualifications as a precondition for employment eligibility.

In the context of financial services, for example, the Capital Markets Foreign Investor Regulations of 2002 defines corporate persons in the EAC as those who are registered or incorporated in one of the partner States in whom 100 per cent of the beneficial interest in the firm lies with the citizen of the partner State.

Second are regulations and other barriers in EAC member States impeding the importation of services or service products. For example the Law Society of Kenya requires anyone appearing before a court in Kenya to be a paid up member of the society.

Third, regulations and other barriers in member States on service products embedded in regulations such as rules of origin such as the 51 per cent equity rule in the then Preferential Trade Area (PTA) that was used to bar goods made by multinationals in Kenya into other PTA states.

By committing itself to the liberalisation of the services sector, Kenya must also be ready to welcome East African investors to establish and reside in Kenya in the same way EAC member states would be required to open up. The commercial presence of foreign firms in Kenya is not a new phenomenon.

However, one would anticipate resistance not least from Tanzania. In the ongoing negotiations on a Common Market Protocol, Tanzania failed to show up at a negotiating forum. In addition, few Tanzanians participated in the landmark Safaricom IPO.

The following suggestions can be the best ways to seek the establishment of a common market. First, rather than to pursue immediate harmonisation in the regulation of service sectors in the region, it would be best to negotiate strong anti-discrimination principles with well crafted exceptions as a guiding framework. These anti-discrimination principles are the most favoured nation norm, the national treatment and transparency norms.

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