How will the Democratic Republic of Congo's Joining the EAC Bloc Affect Regional Trade?
The Democratic Republic of Congo (DRC) in 2019 expressed interest in joining the East African Community (EAC) regional bloc to tap into the benefits of the regional trade and expanded markets. Using the SMART-WITS Model simulation approach, this study examines the likely trade effects of DRC’s membership to the EAC. The results reveal that trade effects are positive among the EAC partner states, more so for Rwanda and Uganda, given that there are the current leading EAC exporters to DRC. Specifically, DRC’s membership to the EAC increases exports of Rwanda by USD 81 million, Uganda (USD 60 million), Tanzania (USD 50 million), Kenya (USD 42 million) and Burundi (USD 6 million), Tanzania (USD 50 million), Kenya (USD 42.5 million) and Burundi (USD 6 million). The positive trade effects are attributed to trade creation (due to new exports by EAC to DRC initially sourced from non-EAC countries) rather than trade diversion. In terms of trade growth shares, it is estimated that free trade with DRC increases the current trade with Uganda by 30 percent, 24 percent for Rwanda, 34 percent for Tanzania, 29 percent for Kenya and 33 percent for Burundi. The main economic sectors/industries poised to benefit from DRC membership are agro-processing, metal products (mainly iron and steel) and mineral ores industries. Overall, the potential entry of DRC into the EAC calls for strategic investments in these industries while addressing Non-Trade Barriers (NTBs) such as poor infrastructure and insecurity in DRC.