The coming into force of East Africa’s common market protocol in 2010 has for the last six years opened new investment opportunities for coatings and paints manufacturers in the region.
Leading market players have within that period achieved additional sales and earnings from setting up shop in more than one member-country of the East African Community (EAC), a regional trading bloc that brings together Kenya, Uganda, Tanzania, Rwanda and Burundi.

Despite the challenges that come with cross-border business expansion, Crown Paints, Basco Paints and Sadolin paints have extended their business from Kenya to Tanzania, Rwanda and Burundi as manufacturers in East Africa take advantage of the elimination of internal tariffs and establishment of a common external tariff (CET) by EAC member-States.

Paint manufacturers are expanding their operations riding on ongoing efforts by the five countries in the region to achieve a Single Customs Territory and efficient Common Market, which are expected to open more opportunities for companies in East Africa.

The EAC member-States have been working at harmonizing their customs, customs administration, customs valuation systems and customs procedures and documentation to enable manufacturing companies to compete effectively and be more innovative in their drive to increase their share of the market.

Crown Paints, which has an estimated 65 percent share of the market, said in a previous report “the East African community market is opening up rapidly and with an estimated population of 140 million people, presents a large, attractive market for companies seeking to grow their footprint across borders.”

Despite Crown Paints being the market leader in East Africa, the region’s Common Market has ensured no paint manufacturer turns into a monopoly.

Opening up the region to free trade and the harmonization of trade policies has seen other paint companies in East Africa, especially Sadolin, Basco Paints, Solai Paints and Glory Paints, compete for a share of the paints industry market under the region’s single market, which analysts say tends to be competitive and averts existence of monopolies.

Crown Paints said in an earlier report that a number of Kenyan companies “have spotted this huge opportunity and spread their wings into the region.”

“Crown Paints belongs to this league of regional players having already established a presence in Kenya, Uganda and Tanzania,” the company said. It has outlets in Rwanda, South Sudan and Burundi.

However, the paint maker said regional expansion “does not come cheap” adding that the “cost of putting up a large factory runs into millions of dollars.”

“To surmount this challenge, Crown Paints, has adopted a cost-effective model that entails setting up mini-plants across the region to meet the growing demand for its products,” said the company which had as its core strategy the setting up of at least three mini-plants in Tanzania, Uganda and Rwanda at $3 million.

In 2013 as the Common Market continued to evolve, Crown Paints announced a 46 percent increase in pre-tax profits which it said was “buoyed by improved cash flow from operations, product innovations and expansion into the East African region.”

The single market has also helped efficiently run companies in East Africa to reap the fruits of economies of scale, increased competitiveness and lower costs.

With the integration of the East African market, paint and coating companies have not only competed on product pricing but have recently introduced new, high quality, environmentally sensitive and affordable decorative, automotive and industrial paints in addition to intermediate products, road markings, thinners and adhesives.

Basco Paints has also been looking forward to taking advantage of the opportunities that come with the East Africa Common Market with the company managing director Kamlesh Shah indicating last year the company looked forward to “extend our operations in Eastern Africa to help in the distribution of our wide range of paints both in existing and new markets.”

“We have identified growing opportunities in these countries where in some, we operate depots and the establishment of new plants will play a key role in distributing our products,” he said.

The company, which has been operating in the region since 1976, manufactures various paints and paint related products such as internal and external paints, specialized and textured paint finishes, roof paints, floor paints and wood varnishes.

Four of the EAC countries, Kenya, Uganda, Rwanda and Burundi, are also members of the Common Market for Eastern and Southern Africa (Comesa) trading bloc, which seeks to achieve a fully integrated, competitive and unified single economic bloc of 18 countries.

The economic bloc is also finalizing contentious issues that stand on the way to free movement of goods, services, capital and labor. Comesa also hopes to remove all physical, technical, fiscal and monetary barriers to intra-regional trade and commercial exchanges. This is likely to give additional opportunities for paint makers in East Africa, now benefitting from the EAC Common Market, to expand to countries such as Zambia, Zimbabwe, Comoros, Democratic Republic of Congo, Ethiopia, Sudan, Mauritius, Malawi, Swaziland, Seychelles, Libya, Eritrea, Djibouti and Egypt.

Comesa’s secretariat said member countries are also seeking to achieve lower tariffs when it comes to intra-regional trade that originates in member countries.

Although Comesa members are pushing for the elimination of tariffs on goods from other member-States, the countries will be allowed to apply their own regime of tariffs to goods imported from outside the Comesa region.

When fully operational, the Comesa Common Market like that of the EAC, will facilitate free movement of capital and labor, harmonized trade, exchange rate, fiscal and monetary policies, internal exchange rate stability and full internal convertibility.

Sadolin was recently a beneficiary of the EAC Common Market when the EAC Council of Ministers approved the company’s importation of acrylic polymers and alkyed resins in their primary format zero percent for the making of paints.

“In the event these goods are sold in the Customs territory (EAC) they shall attract duties, levies and other charges provided for in the EAC Common External Tariff,” the minister said.