The Influence of East African Community Customs Union on the Operations of East African Breweries Limited

Abstract

This research evaluates the influence of the East African Community Customs Union on the operations of East African Breweries Limited. The most common forms of Regional arrangements include Preferential Trade Area (PTA), Free Trade Area (FTA), Customs Union, Common Market, Economic Union and a Political Union with each succeeding level involving greater cooperation among member countries. Literature indicates that Regional Integration can generate benefits through trade creation and growth, reallocation of resources, trade creation and growth, specialization, economies of scale and increased levels of investment and growth. However, regional integration schemes are also associated with costs that include revenue loss from elimination of trade taxes, trade diversion and concentration of industries in well situated locations, which can lead to increased transport costs for markets in the periphery. Using qualitative data analysis, results indicate that the establishment of the EAC Customs Union has benefits which include expansion of business, increase in business turnover in terms of profits and sales and investments. The findings indicate that the establishment of the EAC Customs Union has opportunities and challenges that have an impact on the operations of EABL. Benefits include free movement of goods, expansion of business, increase in business turnover and investment opportunities. Non tariff barriers (NTBs) were cited as a cost affecting operations within East African Breweries Limited.