i

EAST AFRICA COMMUNITY INTEGRATION AND RWANDA

TRADERS’ WELFARE

A CASE STUDY OF RWANDA CEMENT TRADERS

HABIMANA THEOGENE

MBA /3619/12

A Research Project Submitted in Partial Fulfillment for the Degree in

Master of Business Administration (Finance and Accounting option) of

Mount Kenya University

OCTOBER 2014

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DECLARATION

This thesis is my original work and has not been presented for a degree in any other

University or for any other award

Students Name: HABIMANA THEOGENE

Sign ____________________ Date _____________

I confirm that the work reported in this thesis was carried out by the candidate under my

supervision

Name:Dr NYAMBANE DAVID

Sign ____________________ Date _____________

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DEDICATION

This work is dedicated to my parents; RUTAGANDA Evariste and MUKARUBAYIJA

Eugenie. Who have supported me both morally and materially.

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ACKNOWLEDGEMENTS

With all my enthusiasm, my heartily felt gratitude goes to my parents Mr. and Mrs.

Evariste RUTAGANDA for their love, financial and moral support they have always

given me.

I further thank my best friends Mr. HATEGEKIMANA Emmanuel Thierry and Mr.

NDORIMANA Celestin for their continuous financial support in my education during

this program, that enabled me to accomplish one of my educational goals.

I cannot forget to thank my supervisor Dr. NYAMBANE David who provided me with

invaluable guidance, commitment and encouragement throughout the writing of this

research project.

I cannot forget to thank my brothers and sisters; TWAGIRIMANA Jean De Dieu,

MUKANDAYISENGA Olive, HABINEZA Jackson, HABINSHUTI Jean Paul,

NSANZUMUHIRE Fidele, MUKANEZA Honorine, UWINEZA, MUHAWENINEZA

and UWITUZE; for their constant love and prayers that have always encouraged me.

Last but not least, I thank all my friends, classmates and colleagues who used to visit me

in my different harmful events, for the constant encouragement and prayers that enabled

to successfully finish my studies through hardworking.

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ABSTRACT

Every state in Africa is at least a member of one community, but the contribution of their

integration to the welfare is not weighty. This research assessed the contribution of EAC

to Rwanda traders „welfare and was carried out in Rwandan cement traders, due to the

highest cost of cement in the EAC region (US$300/ ton); the main objective of this

research was to assess relationship between East Africa Community integration and

Rwanda traders‟ welfare. The specific objectives were to optimize the different factors

facilitate region members in trading on the basis of optimal price and quantity demand of

cement, to assess the different approaches used by region members to achieve their goals

regarding trading and then, to establish the correlation of regional trade integration and

Rwanda traders‟ welfare using price of cement in Rwanda and aggregate quantity demand

of cement in the regional members. The findings of this study is important for different

users especially Rwanda traders‟. This researcher focused on the period scope of 2001 to

2013.The researcher reviewed literature related to regional integration, welfare and the

contribution of regional integration to trade in the region, whereby the study focused on

East Africa community. The critical review of existing literature to identify the gap that

was bridged by the research was also done. The conceptual; framework showing the

relationship between dependent and independent variables was presented together with

the factors that intervene from the environment. The research designed that, the

researcher used both descriptive statistics, correlation and regression model, where

analytical based on qualitative and quantitative data. Expert judgment was used to

determine the validity while Cranach alpha coefficient (0.862) was used to determine

reliability of research instruments. Qualitative, quantitative data using linear regression

analysis were employed. The total population was 418 people from MINEAC and

Rwanda cement traders with the selected sample size of 81 obtained using Morgan‟s

sampling formula with 90% confidence interval and 10% error of precision. The

researcher collected data using questionnaires and unstructured interviews for primary

data and documentary review for secondary data. The collected data were presented using

tables, figures and equations, while statistical methods were used to ascertain the

percentages and frequencies upon which analysis and interpretation were based. The

researcher found positive and low relationship (r = 0.402) between EAC integration and

Rwandan traders‟ welfare using primary data. The researcher suggested the optimal price

of cement in Rwanda using regression model, where he found that optimal price of

cement should be US$199.12 per ton. This research also recommended Rwandan cement

traders, Government of Rwanda, EAC members and other researchers.

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TABLE OF CONTENTS

DECLARATION................................................................................................................ ii

DEDICATION...................................................................................................................iii

ACKNOWLEDGEMENTS ............................................................................................. iv

ABSTRACT ........................................................................................................................ v

TABLE OF CONTENTS ................................................................................................. vi

LIST OF TABLES ............................................................................................................. x

LIST OF FIGURES ......................................................................................................... xii

LIST OF ACRONYMS AND ABBRREVIATIONS ...................................................xiii

DEFINITIONS OF KEY TERMS .................................................................................. xv

CHAPTER ONE: INTRODUCTION .............................................................................. 1

1.0. Introduction ................................................................................................................... 1

1.1. Background of the study ............................................................................................... 1

1.2. Problem Statement ........................................................................................................ 3

1.3. Objectives of the study.................................................................................................. 4

1.3.1. General objective of the study ................................................................................... 5

1.3.2. Specific objectives of the study ................................................................................. 5

1.4. Research questions ........................................................................................................ 5

1.5. Significance of the study ............................................................................................... 5

1.6 Limitations of the study ................................................................................................. 6

1.7 Scope of the study .......................................................................................................... 7

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1.7.1 Content scope .............................................................................................................. 7

1.7.2 Geographical scope ..................................................................................................... 7

1.7.3 Time scope .................................................................................................................. 7

1.8 Organization of the study ............................................................................................... 7

CHAPTER TWO: REVIEW OF RELATED LITERATURE ...................................... 9

2.0. Introduction ................................................................................................................... 9

2.1. Theoretical literature ..................................................................................................... 9

2.1.1 Overview of regional integration ................................................................................ 9

2.1.2. Factors facilitating region members in trading ........................................................ 10

2.1.3 Approaches for effective regional integration .......................................................... 12

2.1.4 The importance of regional integration in Africa ..................................................... 15

2.1.5 Overview of welfare ................................................................................................. 15

2.2. Empirical literature ..................................................................................................... 17

2.3. Critical review and research gap identification .......................................................... 18

2.4. Theoretical framework ................................................................................................ 21

2.5 Conceptual framework ................................................................................................. 22

2.6. Summary ..................................................................................................................... 24

CHAPTER THREE: RESEARCH METHODOLOGY .............................................. 25

3.0 Introduction .................................................................................................................. 25

3.1 Research design ........................................................................................................... 25

3.2Target population .......................................................................................................... 26

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3.3 Sample design .............................................................................................................. 26

3.3.1 Sample size determination ........................................................................................ 27

3.3.2 Sampling technique ................................................................................................... 27

3.4. Data collection methods .............................................................................................. 28

3.4.1 Data collection instruments....................................................................................... 28

3.4.2 Administration of data collection instruments .......................................................... 29

3.4.3 Reliability and Validity ............................................................................................. 29

3.5. Data analysis procedures............................................................................................. 30

3.5.1 Processing of data ..................................................................................................... 30

3.6 Ethical Consideration ................................................................................................... 32

CHAPTER FOUR: RESEARCH FINDINGS AND DISCUSION .............................. 33

4.0 Introduction .................................................................................................................. 33

4.1 Demographic characteristics of respondents ............................................................... 33

4.2 Presentation of findings ............................................................................................... 35

4.2.1 Factors facilitate region members in trading ............................................................ 35

4.2.2. Approaches used by EAC members in trade ........................................................... 39

4.2.3 Correlation of EAC integration and traders‟ welfare ................................................ 42

4.2.4 Perception on EAC integration on traders‟ welfare .................................................. 44

4.2.5 Analysis and presentation of secondary data ............................................................ 46

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMANDATIONS ... 51

5.0 Introduction .................................................................................................................. 52

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5.1. Summary of findings................................................................................................... 52

5.1.1. Factors facilitate EAC members in regional trade ................................................... 52

5.1.2 Approaches used by region members in trade .......................................................... 53

5.1.3 Relationship between EAC and welfare of traders ............................................... 54

5.2. Conclusion .................................................................................................................. 55

5.3. Recommendations ....................................................................................................... 56

5.3.1 Rwandan traders........................................................................................................ 56

5.3.2 Government of Rwanda ............................................................................................ 56

5.3.3 EAC members ........................................................................................................... 57

5.4. Suggestions for further study ...................................................................................... 57

REFERENCES ................................................................................................................. 58

APPENDICES .................................................................................................................. 62

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LIST OF TABLES

Table 3.1: Target population .............................................................................................. 26

Table 4.2: Purposive sampling technique .......................................................................... 27

Table 4.3: Distribution of respondents by gender .............................................................. 33

Table 4.4: Distribution of respondents by Level of education........................................... 34

Table 4.5: Distribution of respondents by Experience in EAC cement trade .................. 34

Table 4.6: Views of respondents on Elimination of Non-tariff barriers ........................... 35

Table 4.7: Views of respondents on exchange rate............................................................ 36

Table 4.8: Views of respondents on Free-trade area .......................................................... 36

Table 4.9: Views of respondents on Customs Union ......................................................... 37

Table 4.10: Views of respondents on Literacy ................................................................. 38

Table 4.11: Views of respondents on Culture ................................................................... 38

Table 4.12: Views of respondents on Different Production cost of cement ...................... 39

Table 4.13 Views of respondents on Security community ................................................ 40

Table 4.14: Views of respondents on free movement of goods and people ...................... 40

Table 4.15: Views of respondents on Building quality infrastructure ............................... 41

Table 4.16: Views of respondents on Remove road-blocks .............................................. 41

Table 4.17: Views of respondents on Mobilization ........................................................... 42

Table 4.18: Correlation between EAC integration and Rwanda traders‟ welfare ............. 43

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Table 4.19: Perception on benefits Rwanda country targets from EAC members ........... 44

Table 4.20: Perception on EAC and the price of cement in Rwanda ................................ 45

Table 4.21: Perception on EAC and the quantity of cement needed in Rwanda ............... 45

Table 4.22: Perception of respondents on being an EAC‟ citizen .................................... 46

Table 4.23: Supply cost, demand price and quantity demand of cement .......................... 47

Table 4. 24: Coefficients used to predict quantity of cement and ASCC in the region .... 50

Table 4.25: Coefficients used to predict quantity of cement and DPC in Rwanda .......... 50

Table 26: Data used to establish linear regression models ................................................ 66

Table 27: Test of normality................................................................................................ 66

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LIST OF FIGURES

Figure 2.1:Link between EAC and welfare of Rwanda traders ......................................... 23

Figure 4.2: Test of normality of quantity of cement from EAC ........................................ 48

Figure 4.3: Test of normality of demand price of cement in EAC .................................... 49

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LIST OF ACRONYMS AND ABBRREVIATIONS

ADPC: Aggregate Demand Price of Cement

APECA: Asia-Pacific Economic Cooperation

AQDC: Aggregate of Quantity Demand of cement

ASCC: Aggregate Supply Cost of Cement

CEMAC: Central African Monetary and Economic Community

CEPGL: The Economic Community of the Great Lakes States

CIMERWA: Cimenterie due Rwanda

COMESA: Common Market for Eastern and Southern Africa

CUTEG: Currency Union Technical Expert Group

Df: Degree of freedom

EAC: East African Community

ECCAS: Economic Community of Central African States

ECOWAS: Economic Community of West African States

EcUn: Economic Union

ERSD: Economic Research and Statistics Division

EU: European Union

GP: Gross Profit

IGAD: Inter-Governmental Authority on Development

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IMF: International Monetary fund

IOC: Indian Ocean Commission

MINICOM: Ministry of commerce

MRU: Mano River Union

NAFTA: North American Free Trade Agreement

NP: Net Profit

NTBs: Non-Tariff Barriers

OECD: Organization for Economic Co-operation and Development

RCT: Rwanda Cement Traders

RECs: Regional economic communities

RI: Regional Integration

SACU: Southern African Customs Union

SPSS: Statistical Packaging for Social Science

SADC: Southern African Development Community

TRIP: Trade-Related Aspects of Intellectual Property

UEMOA: West African Economic and Monetary Union

UMA: Arab Maghreb Union

WITS: World Integrated Trade Solution

WTO: World trade organization

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DEFINITIONS OF KEY TERMS

Regional integration: Regional integration (RI) is a worldwide phenomenon of territorial

systems that increase the interactions between their components and create new forms of

organization.

East Africa Community: The East African Community (EAC) is a regional inter-

governmental organization established under Article 2 of the Agreement for the

Establishment of the East African Community that entered into force in July 2000.

Membership of the Community comprises the Republics of Burundi, Kenya, Rwanda,

Uganda and the United Republic of Tanzania.

Trade: Trade refers to buying and selling of goods and services for money or money's worth.

It involves transfer or exchange of goods and services for money or money's worth.

Welfare: Welfare means the availability of resources and presence of conditions required

for reasonably comfortable, healthy, and secure living

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CHAPTER ONE: INTRODUCTION

1.0. Introduction

This chapter focuses to the background, and the statement of the problem .It also

comprises the objectives of the study, research questions, significance of the study, and

expected contribution to knowledge of the study. The chapter also highlights the scope

and limitation of the study. This study analyzed the influence of East Africa Community

on the welfare of Rwanda traders‟; a Case of study of Rwanda cements traders.

1.1. Background of the study

The idea of region integration and international trade is not new; Napoleon said this

before in 1870(Edward &Milner, 2002). The regional integration among different nations

involving the exchange of goods and services, that is, exports and imports. The guiding

principle of international trade is comparative advantage, which indicates that every

country, no matter their level of development, can find something that it can produce

cheaper than another country (Beghin& Bureau , 2001).

Some observers fear that regional economic institutions ; such as the European Union

(EU), the North American Free Trade Agreement (NAFT A), and the organization of

Asia-Pacific Economic Cooperation (APEC), reduce the multilateral system that has

guided economic relations since the end of World War II, promoting protectionism and

conflict. Others argue that regional institutions raise economic openness and reinforce the

multilateral system (Edward & Milner, 2002). Countries go an extra mile and agree to a

kind of trade allows for a greater competition and more competitive pricing in the market.

As it is the case for the East Africa Community (EAC).Regional trade arrangements have

become a popular vehicle for the promotion of trade and growth. This is particularly so in

2

Africa where a number of over lapping arrangements have come into existence(Sangeeta

et al., 2007).

Regional integration arrangements (RIAs) constitute an increasingly significant feature of

the world trade system. Africa and East Africa in particular is not an exception to this

phenomenon. A modern concept of using market integration in East Africa Community

has already started; the Vision of EAC is to attain a prosperous, competitive, secure and

politically united East Africa. The Mission is to widen and deepen economic, political,

social and cultural integration in order to improve the quality of life of the people of East

Africa through increased competitiveness, value added production, enhanced trade and

investment(Engel & Rogers, 1996). The Brand of the East African Community is „„One

People, One Destiny‟(East Africa Community [EAC], 2011).

East Africa Community was established in 1919 but it ceased to function in the

1970s(EAC, 2006). The treaty establishing the current EAC was signed on 30 November

1999 and came into force on 7 July 2001 upon its ratification by the Republics of Kenya,

Tanzania and Uganda (E A C, 2001). By studying the effects of regional integration that

occurred in the past, besides social effects, regional integration can be argued to play a

key role in completing the single market; and as such can be expected to boost trade

among monetary union member states (Font et al., 2010).

The economic effects of counties unions attract much attention of international trade. In

particular, the effect of countries unions on international trade becomes a central area of

research. Regional integration implies more than an elimination of exchange rate

volatility among its members if those countries use single currency payment. It also

reduces transaction costs relevant to trade and tourism dealings and provides a

commitment device for macroeconomic policies (Santana et al., 2009).

3

Although the concept of regional integration has been developed previously ,and some

studies have found that natural resources, laws of society or different cultures, language

barrier, and the last but not the least lack of single currency payment in regional trade is

one of variables which influence relationship between regional integration and

international trade(Edward, 2010).

The goal of a regional integration of East African Community has long been a pillar of

African unity, a symbol of the strength that its benefactors hope emerge from efforts to

integrate the continent(EAC, 2011).Kigali is expected to double the number of houses

available, an additional 344,000 apartment units were required by 2020,Population is

expected to approach nearly 2 million by 2020,28% of population are expected to be

apartments and then 200,000 tons of cement is required(Rwanda development [RDB],

2013). And then, (Ministry of commerce [MINICOM], 2013)reported that 40 per cent of

the overall market is controlled by the sole local manufacturer,Cimenterie due Rwanda

(CIMERWA).Cement prices are presently pushing US$300/t, and The Rwandan

economy grew by 6.8 per cent in 2012/13 with more foreign aid going into

infrastructure, therefore increasing cement demand to 100-150 per cent above that of the

overall economic growth. However, lack of adequate domestic supply and affordable

price make Rwanda vulnerable to aggressively looking importers(MINICOM,

2013).From this background, the research had intention to carry out the research on EAC

integration and Rwandan traders‟ welfare on the case of Rwanda cement traders.

1.2. Problem Statement

Every state in Africa is at least a member of one community; on the case of Rwanda;

Rwanda is a member of three key regional integration arrangements: the EAC, Common

Market for Eastern and Southern Africa (COMESA),and The Economic Community of

the Great Lakes States(CEPGL).It is also dealing with a tripartite agreement between

4

EAC, COMESA and the Southern African Development Community (SADC), is a

member of the African Union and has international trade agreements such as those with

the EU and USA (MINICOM, 2013). Although, Rwanda is a member of several different

states, It is reported that 40 per cent of the overall market of cement is controlled by the

sole local manufacturer, CIMERWA and cement prices are presently pushing US$ 300

per ton, this price is still higher than the price in the region of EAC, whereby the

Rwandan economy grew by 6.8 per cent with more foreign aid going into

infrastructure, therefore increasing cement demand to 100-150 per cent above that of the

overall economic growth (MINICOM, 2013). However, lack of adequate domestic

supply and optimal price of cement makes Rwanda vulnerable to aggressively looking

importers. The above problems and concepts indicate East Africa Community like

dreamers, whereby, Rwandan market like the trade integration of East Africa Community

spend huge amounts of money in their commitments to the community , although today

there is no country in Africa that is not a member of at least one regional economic group

whereas, implementation issues cover both the economic, political and institutional

constraints that surface at the implementation stage of regional integration treaties, that is

the same case to Rwanda country regrettably. Thus, there is some study in Rwanda has

carried out on trade effect of Rwanda to become East Africa community ( EAC ) member,

but they did not focus on plan implementation especially welfare of traders. It is against

that background that the researcher carried out this research with reference to Rwandan

Cements Traders (RCT) using regression analysis and Pearson correlation coefficient.

1.3. Objectives of the study

This is subsection focuses on the research objectives, such as general objective and three

specific objectives.

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1.3.1. General objective of the study

The most important aim of the study is to determine the correlation between regional

integration of East Africa Community and Rwanda citizens wealth as a member of East

Africa Community (EAC).

1.3.2. Specific objectives of the study

(i) To assess the factors that influencing the practice of trade integration in EAC

members;

(ii) To assess the different approaches used by region members to achieve their goals;

(iii)To determine relationship between regional trade integration and welfare of Rwandan

cements‟ traders.

1.4. Research questions

To achieve the objectives stated above, the following study questions were posed:

(i) What are the factors that influencing the practice of trade integration in EAC

members?

(ii) What are the approaches used by East Africa Community to achieve their goals?

(iii)Does East Africa Community trade integration have an effect on Rwandan cement‟s

trader‟s welfare?

1.5. Significance of the study

This study benefited the researcher, future researchers, Mount Kenya University, Rwanda

Cement Traders Association, the government of Rwanda and the general public in

different ways.

The researcher was able to fulfill partial requirements of completing a Master‟s degree in

Business Management- finance and accounting option, since it is a university

requirement. The researcher was further able to improve or increase his understanding

6

and skills in the field of regional integration especially in the integration of East Africa

Community.

The research was also put in the university library to increase the availability of literature

on regional integration. Future researcher in the field related to regional integration will

use this research when looking for secondary data and the basic guidelines of writing

research reports.

Rwandan Cement Traders uses this research when identifying how far it has gone in the

field of region integration and improving its profitability and competitiveness in the

regional cement industry. This may help the cement dealers to make relevant policies

related to profitability in regional integration. Other traders in Rwanda and beyond may

also use this research to learn about the possible ways they can improve their profit by

taking lessons and examples from Rwandan Cement Traders.

The government of the Republic of Rwanda uses this research to identify the ways

through which Rwandan traders get profit from East Africa Community. The general

public may also use the model established by this research in acquiring knowledge of how

they can make their business more profitable in the region. This mainly applies to the

future investors who wish to start their business in the EAC members.

1.6Limitations of the study

During this research, the researcher met the following challenges. Respondents were

doubtful of researchers who may be carrying out commercial research under the cover of

academic research. However, the researcher convinced respondents beyond doubt that the

research is purely academic until they give the required data.

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1.7 Scope of the study

In order to ensure that the research remains focused on its original purpose, it was divided

into content, geography and time.

1.7.1 Content scope

The research focused on EAC regional integration and Rwandan citizens‟ wealth. The

researcher focused in this field because, he recognized that sometimes those people with

low income do not benefit regional integration.

1.7.2 Geographical scope

The research was carried out for Rwandan Cements Traders association, located in Kigali

City, Northern Province, western province, Eastern province and Southern province and

Ministry of East Africa Community (MINEAC) located in Kigali City-Gasabo-

Kimihurura near Rwanda Revenue Authority. This study choose cements traders in

Rwanda because, It is reported that 40 per cent of the overall market is controlled by the

sole local manufacturer, Cimenterie due Rwanda (CIMERWA).

1.7.3 Time scope

The research covered the period between 2001 and 2013. This helped to ensure that

research is specific to determine period of time. The researcher has chosen this time scope

because the entrance of Rwanda in East Africa Community happened 2007 and then he

needs to know how the price of cement in Rwanda is before and after the entrance of

Rwanda in EAC.

1.8 Organization of the study

The first chapter gives the general introduction including background of the study,

statement of the problem, research objectives, research questions, significance of the

study, limitations of the study, scope of the study and next organization of the study. The

second chapter gives the review of the related literature where a critical search of what

8

other researchers has said about financial integration and some international trade

terminology. Chapter three was a narration of the research methodology and methods

adopted for this study. It highlights the research paradigms, methodology, methods, study

population, Sample size selection, data collection and data analysis. Chapter four

analyzed and presented the study findings. It attempts to summarize the views from the

questionnaires; interview guides and documentary review interpret them and then present

them as findings of the research. Chapter five was a summary, recommendation and

discussion of results. It further puts the conclusions and recommendations straight. The

last section for chapter five highlights the implications of the study. The research at the

end attached references and appendices used in undertaking this study.

9

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.0. Introduction

The effective research cannot be accomplished without critically studying what already

exists in the form of general literature and specific studies. Therefore, it is considered as

an important pre-requisite for actual planning and execution of research project. This

helps to formulate hypotheses and framework for further investigation. This subdivision

clearly focuses on to the review of the available literature related to the role of regional

integration on welfare promotion, it also contains some key definitions in order to well

understand and be familiar with regional integration and the traders‟ welfare. This section

focuses to the review of past studies and critical review .It also comprises gaps to be filled

by the study. And then, it concludes with the summary of literature review.

2.1. Theoretical literature

In this sub-section the researcher focuses on different Philosophy, techniques and factors

familiar with regional integration and traders‟ welfare.

2.1.1 Overview of regional integration

Regional integration (RI) is a worldwide phenomenon of territorial systems that increase

the interactions between their components and create new forms of organization

(Philippe, Giulia and Chatrini, 2008).Griswold (2005)defined integration as a process

leading to the creation of security communities.

Hass (1970) defined integration as the process whereby political actors in several distinct

national settings are persuaded to shift their loyalties, expectations and political activities

toward a new center, whose institutions possess or demand jurisdiction over preexisting

national states. He shared his view on nature of integration with other major integration

10

theorists of the time, such as Leon Lindberg and Karl Deutsch. International trade is

defined as the exchange of goods or services along international borders. This type of

trade allows for a greater competition and more competitive pricing in the market. The

economic interaction among different nations involving the exchange of goods and

services, that is, exports and imports (Elliott &Hanna, 1996). The guiding principle of

international trade is comparative advantage, which indicates that every country, no

matter their level of development, can find something that it can produce cheaper than

another country(Baldwin, 1976).

It is difficult to define the meaning of integration in general terms, thus researcher defines

regional integration as an arrangement for enhancing cooperation through regional rules

and institutions entered into by states of the same region whereby regional integration

could have as its objective political or economic goals or in some cases, a business

initiative aimed at broader security and commercial purposes. Regional integration could

have an intergovernmental or multinational organization.

2.1.2. Factors facilitating region members in trading

Economic integration occurs when barriers to commercial exchange across countries are

removed. Economic integration applies to all forms of commercial exchange: buying and

selling goods and services, combining inputs to produce goods and services, capital

investments, and employment, including immigration. According to Griswold (2005),

they are five basic factors of regional economic integration from the standpoint of tariff

policies:

Free trade area is among the factors influence region promotion trade, the unrestricted

purchase and sale of goods and services between countries without the imposition of

11

constraints such as tariffs, duties and quotas is called free trade (Griswold, 2005). Free

trade is a win-win proposition because it enables nations to focus on their core

competitive advantage(s), thereby maximizing economic output and fostering income

growth for their citizens. In free trade area all barriers to the trade of goods and services

among member countries are removed (Edward & Milner, 2002). In the theoretical ideal

free trade area, no discriminatory tariffs, quotas, subsidies, or administrative impediments

are allowed to determine its own trade policies with regard to non-members. Free trade

area where barriers to trade in respect of all items among member countries are

completely eliminated by each member country, which follows its own policy in regard to

trade with non-member countries (Edward &Milner, 2002).

The customs union is one step further along the road to fulfill economic and political

integration; a customs union eliminates trade barriers between member countries and

adopts a common external trade policy (Farm, 2004). According to Grinnell and williams

(1990), the establishment of a common external trade policy necessitates significant

administrative machinery to oversee trade relations with nonmembers. Customs union

apart from elimination of all barriers to trade among themselves, the member countries

follow a common policy in their trade with non-members (Justin, 2004). Customs unions

are extension of free trade areas in which members operate together to set a common

tariff for all non-member states/countries (David, 2004).

Common market, like a customs union, the theoretical ideal common market has no

barriers to trade between member countries and a common external policy. Unlike a

customs union, a common market also allows factors of production to move freely

between members (Engel & Rogers, 1996). Labor and capital are free to move because

there are no restrictions on immigration, emigration, or cross-border flows of capital

between member countries. Establishing a common market demands a significant degree

12

of harmony and cooperation of fiscal, monetary and employment policies (Justin, 2004).

Common market is like a free trade area and customs union with the added freedom that

people and political can move freely between member countries as well as traded goods

and services (David, 2004).

Economic Union (EcUns) is established by means of a formal intergovernmental legal

agreement among sovereign countries/jurisdictions with the intention of fostering greater

economic integration. In an economic union some of the elements associated with a

national economic territory are shared among the different countries (Currency Union

Technical Expert Group [CUTEG], 2005).Allowing employees to form unions to bargain

collectively over wages and employment conditions is consistent with economic freedom,

and any government intervention preventing unionization would be a violation of

economic freedom(Randall & James , 2010).

According to Baldwin,(1976), a political union is the ultimate step along the regional

economic integration path. A political union brings full economic and political unification

to members of an economic union. The question whether or not there were a United

States of Europe sometime in the tomorrow‟s beyond, is an example of a situation of an

economic union maturing toward full economic and political unification (Justin, 2004).

2.1.3 Approaches for effective regional integration

There are several approaches in the regional integration process, ranging from the

formation of a trade bloc to the establishment of an economic and monetary union. Acean

(2010) said that, one important in the integration process is the formation of a customs

union which not only eliminates tariffs and quotas on trade between member countries,

but also establishes a common external tariff applying to non-members. The others are the

use of single currency payment, non-tariff barriers and integration market.

13

Non-Tariff Barriers is any measure that blocks international trade other than tariffs.

Baldwin (1976) defines Non-Tariff Barriers as any measure (public or private) that causes

internationally traded goods and services, or resources devoted to the production of these

goods and services, to be allocated in such a way as to reduce potential real world

income. A Non-tariff-Barrier is a restriction other than a tariff that leads to a decrease in

world welfare (Mahé, 1997). Any governmental device or practice other than a tariff

which directly impedes the entry of imports into a country and which discriminates

against imports, but does not apply with equal force on domestic production or

distribution (Beghin & Bureau , 2001).NTBs mean measures other than tariffs which

effectively prohibit or restrict import or export of products(Acean, 2010).

In a study of Non-Tariff Measures (NTMs) in EAC region, Sangeeta et al. said that the

stock of the fundamental NTMs within EAC has been far from comprehensive and

other measures identified as NTMs in the member states were not specific to

regional or international trade and included national shortfalls in physical infrastructure,

as well as supply constraints that affect the overall business environment for private

enterprises.

Market integration, ever since the time of Adam Smith, the attribution to foreign trade of

the ability to affect the wholesale transformation of the productive powers of an economy

has remained a very powerful concept (Edward, 2010). Market integration is a market in

which there are no barriers to financial flows, and same risk asset commands the same

expected return, irrespective domicile. The term market integration also called Smith an

market (Griswold, 2005).Any market where capital may flow freely or a country with

uniform tax laws and regulation usually has an integrated market because there no

circumstances where one‟s return were reduced because of tax restrictions or different

14

regulation (Kibret & Alemayehu,2002). To have a better understanding of the concepts of

market integration, it is necessary to know the concepts of market itself and the way in

which these are interrelated. Generally market is any place in which the buyers and

sellers interact each other, in which the price of a good tends to uniformity. The idea

behind market integration is that an efficient management of the overall industry or to say

the economy for the well-being of society(Baldwin, 1976).

According to Engel and Rogers (1996), currency union(Single currency payment)

strengthens the effects of a free market by rendering the latter irrevocable and by

motioning a commitment toward even more controlling in areas of regulations and social

policies. A common currency among partner countries is seen as “a much more serious

and durable commitment” than other monetary arrangements between countries. It

prevents future competitive devaluation, facilitates foreign direct investment and the

building of long-term relationships, and is likely to encourage forms of political

integration. Producers maybe more ing to undertake large fixed costs involved with

exporting abroad. This promote reciprocal trade, economic and financial integration and

foster even business cycle synchronization among the countries sharing a single currency

(Acean, 2010).

However, there are diverging views on this link. Some monetary costs disappear or fall

following monetary integration. For instance the introduction of the euro contributes,

amongst others, to reducing trading costs both directly and indirectly: whereby removing

exchange rate risks and the cost of currency hedging. The euro had a catalyzing role for

the Single Market Program by enhancing price transparency and discouraging price

discrimination. As a result, a common currency promotes convergence in social

conventions with potentially far reaching legal, contractual and accounting implications

(Garcia et al., 2001).

15

According to the researcher, a single currency implies a single central bank and therefore

a potentially flexible supply of interregional means of payments. But in a currency area

comprising more than one currency, the supply of international means of payment is

conditional upon the cooperation of many central banks; no central bank can expand its

own liabilities much faster than other central banks without losing reserves and impairing

convertibility.

2.1.4 The importance of regional integration in Africa

According to Haas (1970), the role of the state in this process should be one of the key

questions in all integration, but unfortunately it was pushed to the sidelines over 57 years

ago, when the first attempts at regional integration were launched. Instead, its main

argument was that a transnational logic and a functional way of organizing human

activity were replacing the nation-state. In other words, the first integration theories

tended to avoid the state almost completely or at least saw that it had very little relevance

in steering the process. Nowadays there is no significance role of regional integration

because of different reasons like poverty and inadequate of human security.

2.1.5Overview of welfare

Most of us associate welfare with money, our savings, our investments, our homes or

other forms of financial capital. Welfare is a measure of the value of all of the assets of

worth owned by a person, community, company or country. Wealth is the found by taking

the total market value of all the physical and intangible assets of the entity and then

subtracting all debts. Essentially, wealth is the accumulation of resources. One of the

most basic principles of democracy is the notion that every citizen‟s preferences should

count equally in the realm of politics and government. A key characteristic of a

democracy is the continued responsiveness of the government to the preferences of its

citizens, considered as political equals.

16

Wealthy nations can materially shape development in the poor world and that their efforts

to do so should consist largely of providing resources to and trading opportunities for

poor countries. In September, at the un Millennium Summit meeting of heads of state, in

New York , leaders of wealthy nations will emphasize their commitment to deeper debt

relief and increased aid programs for developing countries. The Millennium Development

Goals, the centerpiece of the conference‟s program, call for halving the levels of world

poverty and hunger by 2015. The summit will focus on increasing international aid to 0.7

percent of donors‟ gross national product to finance a doubling of aid transfers to

especially needy areas, particularly in Africa. Financial laid and the further opening of

wealthy countries‟ markets is tools with only a limited ability to trigger growth, especially

in the poorest countries. The tremendous amount of energy and political capital expended

on these efforts in official circles threatens to crowd out attention to other ways in which

rich countries could do less harm and more good (Nancy , Dani & Arvind , 2005).

People are said to be welfare when they are able to accumulate many valuable resources

or goods. Wealth is expressed in a variety of ways. For individuals, net worth is the most

common expression of wealth, while countries measure by gross domestic product (GDP)

or GDP per capita (Beghin & Bureau , 2001).There are different measures of net worth,

but the researcher intends to focus on price of cement in Rwanda and quantity of cement

in the region, as this research problem focuses on the price of cement in Rwanda which is

highest in the region.

Optimal price is the profit maximizing through affordable price. It can be determined

through various methods, but generally it is the demand price for the full capacity output

of any given product(NaLi, Lijun, & Steven., 2002).An optimal pricing strategy may

involve favoring certain agents by offering the good at a discounted price and

subsequently exploiting the positive effect of their usage on the rest of the consumers. At

17

its extreme, such a scheme would offer the product for free to a subset of consumers,

hoping that this would have a large positive impact on the purchasing decisions of the rest

(Ozan ,Kostas &Ozdaglar, 2005). The researcher used linear regression model on the

basis of determining optimal price and cost of cement .

According to Ozan et al. (2012), optimal quantity demanded term used in economics to

describe the total amount of goods or services that are demanded at any given point in

time. The quantity demanded depends on the price of a good or service in the

marketplace, regardless of whether that market is in equilibrium. When a given quantity

of a good or service is demanded, as determined by its price, it then impact the amount of

goods or services that were purchased. Demand side management is a key component of

future smart grid that can help reduce peak load and adapt elastic demand to fluctuating

generations (Nali, Lijun& Steven).

2.2. Empirical literature

A large number of empirical studies have provided a wealth of information about the

important role that regional integration plays in mediating countries‟ imports and exports.

Product quality was first emphasized in international trade wealthy countries have both a

higher taste for quality and, given their firms‟ proximity to relatively wealthy customers,

a comparative advantage in producing it (Andrew, Bradford ,Stephen, Redding & Peter ,

2007).

According to Nancy , Dani and Arvind (2005) it is time to direct the attention of the

world‟s wealthiest countries to other ways of helping the poorest ways that have been for

too long neglected. They also postulated that the reality is that liberalizing agricultural

trade would largely benefit the consumers and taxpayers of the wealthy nations. To help

developing countries help themselves, wealthy nations must begin to lift the burdens they

impose on the poor. Currently, the developed world uses international trade agreements to

18

impose costly and onerous obligations on poor countries. The most egregious example

has been the WTO‟s intellectual property agreement, the Trade-Related Aspects of

Intellectual Property Rights (TRIPs).

Katembo (2008) postlated thatto understand why the EAC concept had to be re-launched,

the circumstances and issues affecting its demise and collapse must be revisited and

accessed. In the 1890s, British colonial interest in East Africa (conceived as a region from

a territorial perspective) can be traced back to accomplishing three major objectives: 1)

securing control of the Nile headwaters as a conduit for protection of British position in

Egypt and the Suez Canal, 2) monitoring of pre-World War I era German imperial plans

in the region, and 3) opening up the Kenyan hinterland via rail transport to introduce

lucrative large-scale farming. At this time, the East African region, colonized under

British control, was comprised of Tanganyika (i.e. mainland Tanzania), Kenya, Uganda,

and Zanzibar (an island off the coast of Tanganyika). He also confirmed that the EAC

(East African Community is the umbrella organization overseeing a pan-nation trade bloc

consisting of Kenya, Tanzania, Uganda, Rwanda, and Burundi. This confederation

features a single currency, common language (Kiswahili), and shared regional initiatives.

The paper also chronicles and highlights the challenges and the moments of triumph that

have brought the EAC to fruition and functionality (Katembo, 2008).

2.3.Critical review and research gap identification

The researcher criticized the study of Katembo, Philippe et al.,Kibret and Alemayehu and

Edward . Katembo (2008) carried out a research called Pan Africanism and Development:

The East African Community Model. His paper discusses the EAC model as an extension

of Pan-Africanism, its use as a prototype for economic integration in other African

regions, and the reciprocal benefit of mutual cooperation with the African Diaspora. His

19

study also register and highlights the challenges and the moments of achievement that

have brought the EAC to fruition and functionality. Katembo study focused on the

challenges faced by EAC. His research methodology was focused on the experience and

results of past studies. His research was very important, but he did not focus on the

benefits that citizens could get from regional integration.

Philippe et al. (2008)presented a critical review of previous studies on the indicators of

regional trade integration with setting up indicator systems for monitoring regional

integration processes in different parts of the world. The review covered both conceptual

proposals as well as indicator systems developed for regional organizations such as the

European Commission, the European Central Bank, the UN Economic Commission for

Africa, COMESA, etc. A systematic comparison of the different indicator systems made

it possible to evaluate their relative qualities and to identify best practices. Philipe et al.

research designed qualitatively and quantitatively. Their research was very important in

the concept of regional integration, but they did not focus on regional welfare of Rwanda

traders and benefits that they get from regional integration.

Moreover, Kibret and Alemayehu (2002) carried out a research called Regional Economic

Integration in Africa: A Review of Problems and Prospects with a Case Study of

COMESA. They have attempted to examine both the theoretical and empirical issues of

regional economic integration in Africa. This paper critically reviews the implementation

issues in East Africa Community cover the economic, political and institutional, and tests

the determinants of trade flows using the experience of COMESA as a case study. The

major conclusions that emerge from the study are: First, bilateral trade flows among the

regional groupings could be explained by standard variables as demonstrated by the

20

results of the conventional gravity model, while regional grouping has had insignificant

effect on the flow of bilateral trade. And, second, the review of the issues indicates that

the performance of regional blocs is mainly constrained by problems of variation in initial

condition, compensation issues, real political commitment, overlapping membership,

policy harmonization and poor private sector participation. In their study, they did not

focus on citizens‟ wealth.

Furthermore, Edward (2010) established the study called customs and trade facilitation in

the East Africa community (EAC). This study expounds and evaluated the contribution of

customs to trade facilitation within the East African Community (EAC). He used

regression analysis and concluded that the establishment East African Customs Authority

can lead to trade facilitation only if there is a formidable amendment of East Africa

Community customs law so as to enable better coordination among all stakeholders in all

the East Africa Community Partner States.

It is important to note that, although there have been various researches from different

countries like Philippe et al. (2008) and Katembo (2008) on this topic. These studies did

not analyze the influence of regional integration to welfare of Rwanda traders using

Pearson correlations coefficient and regression analysis . This is our guiding motivator to

conduct a research in the local situation to enable us prove or disapprove, so far, the

studies conducted elsewhere on this topic for local situation relevance. In addition, it is

our aspiration to concentrate on the gaps by some of the researchers as highlighted in this

review. Therefore, It is against that gap that the researcher carried out this research called

EAC integration and Rwanda traders „welfare, with reference to Rwandan Cements

Traders (RCT).

21

2.4. Theoretical framework

Regression analysis is a statistical tool for the investigation of relationships between

variables. Usually, the investigator seeks to ascertain the causal effect of one variable

upon another the effect of a price increase upon demand, for example, or the effect of

changes in the quantity supply upon the price of cement in this study. To explore such

issues, the investigator assembles data on the underlying variables of interest and employs

regression to estimate the quantitative effect of the causal variables upon the variable that

they influence. The investigator also typically assesses the statistical significance of the

estimated relationships, that is, the degree of confidence that the true relationship is close

to the estimated relationship (Alan , 2006).

According to Harper (1991) the linear regression model is presented by the,

𝑌𝑖 = 𝛽0 + 𝛽1𝑥𝑖 + 𝜀𝑖 , where𝛽0and 𝛽1 are unknown constants and the error terms are

usually assumed to be𝜀1 ,𝜀𝑖 ,…………….𝜀𝑛 ~ 𝑁(0, 𝜎2 ) .,

𝑌𝑖~ 𝑁 𝑏0 + 𝑏1𝑥𝑖 , 𝜎2 , this implies that in order to minimize error, linear regression

minimizes error using normal distribution.

𝑏1 = 𝑛 𝑥𝑖∗𝑦𝑖−( 𝑥𝑖)∗( 𝑦𝑖)

𝑛 𝑥𝑖2−( 𝑥𝑖)

2 , 𝑏0 = 𝑀𝑒𝑎𝑛 𝑜𝑓 𝑌 − 𝑏1 ∗ 𝑀𝑒𝑎𝑛 𝑜𝑓 𝑥

When you choose to analyze your data using linear regression, part of the process

involves checking to make sure that the data you want to analyze can actually be analyzed

using linear regression. You need to do this because it is only appropriate to use linear

regression if data "passes" some assumptions that are required for linear regression to

give a valid result. In practice our two variables should be measured at the continuous

level, in this study quantity of cement is measured in tons and price of cement is

measured in US $, there needs to be a linear relationship between the two variables under

22

study, in our case the variables under study are quantity of cement and its price, there

should be no significant outliers. An outlier is an observed data point that has a dependent

variable value that is very different to the value predicted by the regression equation. As

such, an outlier will be a point on a scatter plot that is (vertically) far away from the

regression line indicating that it has a large residual, independence of observations, in this

study it has been checked using the Durbin-Watson statistic, the Durbin-Watson statistic

is always between 0 and 4. A value of 2 means that there is no autocorrelation in the

sample. Values approaching 0 indicate positive autocorrelation and values toward 4

indicate negative autocorrelation. data needs to show homoscedasticity, which is where

the variances along the line of best fit remain similar as you move along the line, check

that the residuals (errors) of the regression line are approximately normally distributed;

two common methods to check this assumption include using either a histogram or a

Normal P-P Plot(Beghin & Bureau , 2001). This research used histogram to test

normality.

2.5 Conceptual framework

This research recognized the different factors that lead to region integration. These have

been identified in the literature review above. However, this study focused on economic

and other integration factors. The study analyzed the relationship between these factors

with welfare of Rwanda trader‟s indicators. According to figure 2.1, the independent

variable (East Africa Community integration) facilitates the performance of dependent

variable (traders‟ welfare). Apart from dependent and independent variables, there is

intervening variable with other influences on citizens‟ wealth, such as non-tariff barriers,

language and trade culture. This can be represented under the theoretical model: figure

2.1

23

Figure 2.1:Link between EAC and welfare of Rwanda traders

Independent variable Dependent variable

INTERVENING VARIABLE

Source: Researcher (2014)

The figure 2.1 indicates the relationship of variables under study, such as East Africa

Community and traders‟ welfare. This study focused on non- tariff barriers, free trade

area, custom union, single currency payment and cost of cement in EAC members as the

main determinants of EAC. And then, this study analyzed optimal price of cement and

optimal quantity of cement as the main indicators of cement traders‟ welfare. The

relationship between these variables has been analyzed using regression analysis and

Pearson correlation coefficient.

Market integration

Free trade

Political integration

Customs union

TRADERS ‘WELFARE

Optimal price of cement

Optimal quantity of cement

EAST AFRICA

COMMUNITY

Non-Tariff-Barriers

Free trade area

Customs union

Single currency payment

Cost of cement in EAC

members

Language

Culture

Regional security

24

2.6. Summary

From the past critical review the researcher found that many studies on regional

integration has focused on how regional integration influences regional promotion. Kibret

and Alemayehu have attempted to examine both the theoretical and empirical issues of

regional economic integration in Africa, this study was very important for regional

integration and regional promotion. Regional integration topic is of importance to citizens

wealth especially with the trend of globalization in which the world is converging into a

one shop market and customers satisfaction. Literature review has shown a strong

regional integration due to its importance to regional promotion. These authors, scholars

and researchers have similarly suggested that regional integration may mean different

things for different types of community states, most findings and conclusions have linked

regional integration and promotion of regional trade. Thus, this is one aspect that has a

positive impact on business. Thus, this subject provides valuable justification for this

research for advancement of knowledge, in which case our desire to investigate the effect

of EAC and welfare of Rwandan traders using regression analysis and Pearson correlation

coefficient: - A case of Rwandan cements traders.

25

CHAPTER THREE: RESEARCH METHODOLOGY

3.0 Introduction

According to Rajasekar et al. (2013) research methods are the various procedures,

schemes and algorithms used in research. All the methods used by a researcher during a

research study are termed as research method. They are essentially planned, scientific and

value-neutral. This chapter focuses on the approach adopted for the study which describes

the method and techniques that are adopted to collect data for the analysis of field data.

As a result, the research design, data requirement and sources, sampling frame and

techniques, the data collection tools and techniques, the data analysis and presentation

methods were discussed.

3.1 Research design

According to Rajasekar et al.(2013), it is necessary for a researcher to design a

methodology for the problem chosen. One should note that even if the method considered

in two problems is same the methodology may be different. A research design represents

a plan, structure, and strategy of investigation conceived so as to obtain answers to

research questions and to control variance. The researcher used a case study and adopted

both descriptive and correlation research design with the intention of ensuring that issues

related to the effect of regional integration on citizens wealth. The descriptive research

design was used to ensure that the characteristics of variables of interest in a situation are

described, and correlational based on qualitative and quantitative data both from primary

and secondary sources was considered in order to determine relationship between

variables. The study was based on the views of respondents (primary data) and secondly

data to make conclusions and recommendations. This research also used Durbin Watson

Statistic and scatter plot to verify the use of linear regression analysis in this research.

26

3.2Target population

A population is the totality of persons or objects with which a study is concerned

(Grinnell & Williams, 1990). The population of this research was 418 responds including

50 employees of ministry of East Africa community (MINEAC) employees and 368

members of Rwandan cement traders‟.

Table 3.1: Target population

Target population category Population under study

MINEAC employees 50

Rwanda Cement Traders‟ members 368

Total 418

Source: Secondary data

3.3Sample design

Grinnell and Williams (1990) defines a sample as a subset or portion of the total

population under study. This part concerns the sample size and sampling procedures were

used to come up with the sample size. In practice, the sample size were used in a study

were determined based on the expense of data collection, and the need to have sufficient

power. Sampling is the process of selecting elements from the total population Rajasekar et

al. ( 2013) said that, sample size is respondents defined as definite part of statistical

population whose properties are studies to gain information about the case of study. It is

not potential to collect data from the whole population due to the time and financial

constraints. In this study, the researcher used both primary and secondary data. That

means questionnaires, interview guiding and report on cement in Rwanda.

27

3.3.1 Sample size determination

The level of precision or sampling error were 10% and 90% confidence level, total

population were418, Morgan formula were used, where

𝑛 =N

1+N e 2=

418

1+418(0.12)=

418

1+418∗0.01=

418

5.18 = 81, and then, n= 81respondents. The

sample size of the study was 81 people and is classified in the table 3.2, according to the

four provinces, Kigali City and MINEAC employees.

Table 4.2: Purposive sampling technique

population

category

Sample

size

Purposive sampling

MINEAC

employees

15

5

1. Department of trade and commerce

2. Department of finance and accounting

Rwanda Cements

traders

10

10

10

10

21

1. Northern province

2. Southern province

3. Eastern province

4. Western province

5. Kigali city

Total 81

Source: Primary data

3.3.2 Sampling technique

The choice of sampling technique is based on the feasibility and sensibility of collecting

data to answer the research questions and to address the objectives. Quantitative

researches usually ensure sample representativeness using scientific, statistical and

28

probabilities or random sampling as quantitative research therefore, this study is going to

use purposive sampling method.

Purposive sampling technique: In choosing a sampling method for selection, the question

the researcher is interested in answering is of greatest importance (Tongco & Dolores,

2007). Purposive sampling technique is a type of non -probability sampling where the

researcher consciously selects particular elements or subjects for addition in a study so as

to make sure that the elements have certain characteristics pertinent to the study. It

normally targets a particular group of people. According to Kenneth (1978), purposive

sampling is a method of sampling whereby the researcher uses his or her own judgment

about which respondents to choose, and picks only who best meet the purpose of the

study and it refers to non-probability sample that is often called a judgmental sample

Therefore table 3.2 shows that Purposive sampling technique used to question 81

respondents.

3.4. Data collection methods

The sources of data to be collected were primary and secondary data. Primary data were

collected at the first hand when the researcher arrived to the field to collect raw data from

MINEAC employees and cement traders (in 4 provinces and Kigali city). However

secondary data were obtained from cement traders and MINICOM reports or journals.

3.4.1 Data collection instruments

The researcher used various instruments that help in acquiring the sufficient data required

from both primary and secondary sources. The researcher in this case used questionnaires

and interview guide to collect data from MINEAC and Rwanda cement traders

association.

29

A questionnaire is a set of well-designed questions intended to help the researcher acquire

the required information from respondents. The researcher in this case formulated

questions regarding the study variables and gives them to respondents to express their

views on the study topic.

The researcher formulated an unstructured interview which to help in getting data from

some of the employees and traders who were busy with limited time to fill questionnaires.

Documentary review: The researcher further reviewed various literatures of regional

integration and citizens‟ wealth.

3.4.2 Administration of data collection instruments

The researcher designed the questionnaires according to the research objectives, questions

and then as the research analyzed two variables, the researcher focused on price and

quantity. The distributions of the questionnaires were done by the researcher and their

collections were done after they were completely filled. The researcher distributed

questionnaires in four provinces, Kigali city and MINEAC. The researcher explained to

the respondents the purpose of the research which is academic only and also requested

them to completely answer the questionnaires.

3.4.3 Reliability and Validity

Reliability demonstrates that the operations of the study such as the data collection

procedures can be repeated and reach to equal result. The researcher tried as much as

possible to ensure that the findings of the research are properly analyzed and interpreted

for accurate conclusions. The validity of this study was constructed by the use of sources

of evidence during the data collection, the establishment of a chain of evidence which is

based on the principle of allowing the external observer to follow the source of any

evidence from initial research questions to the conclusions of the case study. Therefore,

30

the researcher first carried out a pilot study by testing questionnaires to20people. And

then after, the researcher tested questionnaire using SPSS and found that Cronbach's

Alpha coefficient equals to 0.862.

3.5. Data analysis procedures

The researcher used SPSS as the statistical tool. This involved analysis of regression

model and presenting findings in a logical and sequential way so that conclusions could

be drawn from them. The data were presented according to the research questions and

research objectives. Tables, figures and equations were used to present data. Data from

completed questionnaires and unstructured interview were edited, categorized and entered

into SPSS sheets and summarized using the percentage and frequencies of respondents for

analysis. The relationship between EAC and welfare of Rwanda traders were analyzed

using SPSS and interpretations were done using Pearson correlation coefficient. The data

processed were analyzed according to the research objectives one by one with the

consideration of the variable indicators shown in the conceptual framework.

3.5.1 Processing of data

Data processing is, broadly, the collection and manipulation of items of data to produce

Meaningful information. In this sense it can be considered a subset of information

processing the change (processing) of information in any manner detectable by an

observer. Data analysis makes use of specialized and highly accurate algorithms and

statistical calculations that are less often observed in the typical general business

environment. During data process the research focused on editing, coding, recording,

classification and tabulation.

31

The researcher checked for completeness, accuracy, consistency, word choice, writing

style and spelling errors of the research instruments. While a writer may accept, negotiate

or reject individual edits, the efforts of an editor always enhance the final product.

Manual data adjustment and editing is when the selection of a more reasonable value is

done by a person. It may involve writing down, for key entry, the adjustments to be

posted to the survey data file using a batch procedure. "Manual" data adjustments may

also take place interactively as in the process of "heads-up" data entry or interactive data

review.

A frequent criticism of coding method is that it seeks to transform qualitative data into

quantitative data. Coding is a systematic way in which to condense extensive data sets

into smaller analyzable units through the creation of categories and concepts derived from

the data. The process by which verbal data converted into variables and categories of

variables using numbers, so that the data can be entered into computers for analysis. For

surveys or questionnaires, codes are finalized as the questionnaire is completed. In this

study the researcher used numerals in order to well understand the research process. Most

research studies result in a large volume of raw data which must be reduced into

homogeneous groups if we are to get meaningful relationships. This fact necessitates

classification of data which happens to be the process of arranging data in groups or

classes on the basis of common characteristics. In this study the researcher classified the

secondary data according to the price and quantity of cement.

Descriptive statistics in decrypting EAC integration and Rwanda traders‟ welfare were

used; the statistics like frequency, percentage, mean, mode and medium were used. The

research used linear regression analysis to establish a question of quantity of cement and

price.

32

Pearson Correlation coefficient calculation was done to find out the role of EAC

integration and traders‟ welfare in terms of percentage. Pearson product moment will be

used. According to Yount (2006) if Pearson correlation coefficient (r ) is 0 therer is no

correlation between variables, if r is in the range between ] 0, 0.5 [ the variables are

weakly correlated, if r is in the range between ] 0.5, 0.79 [ the variables are strongly

correlated, if r is above 0.8 the variables are strongly and perfectly correlated , if r is

negative the variables are negatively correlated (varibles change in opposite direction)

and then if r is positive, the variables are positively correlated (Variables change in the

same direction).

3.6 Ethical Consideration

Respondent‟s participation was voluntary and they had the right to withdraw from the

study at any time they not interested. Confidentiality was promised and ensured, by

providing a self-addressed return envelope with each questionnaire and by requesting

respondents not to write their names on the questionnaire. In addition, an authorized letter

which explained the aim and objectives of the study accompanied each questionnaire.

33

CHAPTER FOUR: RESEARCH FINDINGS AND DISCUSION

4.0Introduction

In this chapter the researcher presented the findings which were collected from the field

by using the questionnaires and unstructured interview. The questionnaires were

administered to the respondents whereby they were required to fill in their information

based on their understanding of East Africa Community and citizens‟ wealth. This

chapter presented in tables, figures and equation. This chapter is divided into two

division; demographic characteristics of respondents and presentations of findings related

to research objectives.

4.1 Demographic characteristics of respondents

This subsection focuses on gender of respondents in order to know whether EAC has

promoted gender balance in trading, age of respondents in order to assess how old are the

population involved in EAC trade, education and experience of respondents in order to

get accurate information.

Table 4.3: Distribution of respondents by gender

Frequency Percent

Male 60 74.1

Female 21 25.9

Total 81 100.0

Source: Primary data

The table 4.3 indicates that out of 81 respondents, 74.1 % of respondents were male and

25.9% of respondents were female.

34

From these data, there were larger figures of male who participate in EAC activities

rather than female. Hence, the number of male is greater than the number of female, this

implies that the number of female who participate in EAC activities is still low according

to the number of male, actually, gender balance is still low in EAC.

Table 4.4: Distribution of respondents by Level of education

Frequency Percent

University 37 45.7

Secondary 41 50.6

Primary 3 3.7

Total 81 100.0

Source: Primary data

The table 4.4 shows that 45.7 % of respondents were University level, 50.6% were

secondary level and 3.7% were primary level. Thus, from this information, the conducted

respondent‟s level of literacy was adequate in order to well respond research questions.

Table 4.5: Distribution of respondents by Experience in EAC cement trade

Frequency Percent

2 - 4 Years 18 22.2

4 - 6 Years 45 55.6

Above 6 Years 18 22.2

Total 81 100.0

Source: Primary data

The table 4.5 indicates that 22.2 % of respondents had experience between 2 – 4 years,

55.6 %of respondents had experience between 4 – 6 years and then 22.2 % of

35

respondents were experienced above six years. This data shows that the conducted

respondents had accurate information about the research objectives.

4.2 Presentation of findings

This section is divided into three sections. Both primary and secondary data were

arranged according to research objectives. These data has been gotten using

questionnaire, unstructured interview and documentary review. The collected data is

summarized into tables, figures and equation using SPSS program.

4.2.1 Factors facilitate region members in trading

This subsection focuses on the factors facilitate region members in trading on the basis of

optimal price and quantity demand of cement. Those factors are Non-tariff barriers,

Exchange rate, free trade-area, customs union, literacy, culture, different production cost

of cement.

Table 4.6: Views of respondents on Elimination of Non-tariff barriers

Frequency Percent

Yes 69 85.2

No 12 14.8

Total 81 100.0

Source: Primary data

The table 4.6 indicates that 85.2 % of respondents accepted that elimination of Non-tariff

barriers are one of the factors that facilitate trade of cement in EAC region, 14.8% of

respondents did not accept the statement.

As Non-Tariff Barriers is any measure that blocks international trade other than tariffs

and cause internationally reduction of potential real world income. Elimination of Non-

36

tariff barriers is a key factor of success of EAC to have optimal price and quantity of

cement in the region.

Table 4.7: Views of respondents on exchange rate

Frequency Percent

No 81 100.0

Total 81 100.0

Source: Primary data

The table 4.7 indicates 100 % of (81) respondents said that exchange rate in EAC region

did not facilitate region members in trading on the basis of optimal price and quantity

demand of cement.

Actually, regional integration should imply more than an elimination of exchange rate

volatility among its members, if EAC members‟ countries use single currency payment, it

should also reduce transaction costs relevant to trade of cement. Thus, EAC members

need to implement the plan of single currency payment in the region. In other words,

exchange rate is one of the obstacles faced by regional trade which must be eliminated.

Table 4.8: Views of respondents on Free-trade area

Frequency Percent

Yes 38 46.9

No 43 53.1

Total 81 100.0

Source: Primary data

37

The table 4.8 indicates that 46.9% of respondents accepted that free-trade area in EAC

members facilitates region members in trading on the basis of optimal price and quantity

demand of cement, but 53.1% of respondents did not accept this statement.

The above data motivate the researcher to confirm that some members of EAC region

focus on free-trade area like free movement of goods and service between Uganda,

Rwanda and Kenya, where the citizens could use ID or student card .Whereas, on the

other hand Tanzania and Burundi did not implement these.

Table 4.9: Views of respondents on Customs Union

Frequency Percent

Yes 34 42.0

No 47 58.0

Total 81 100.0

Source: Primary data

The table 4.9 indicates that 42.% of respondent said that customs union facilitates region

members in trading on the basis of optimal price and quantity demand of cement, whereas

58 % of respondents did not accept the statement.

Hence, as the customs union is one step further along the road to fulfill economic and

political integration; a customs union eliminates trade barriers between member countries

and adopts a common external trade policy, unfortunately, EAC do not implement their

plan in the same way. Thus, there is a need of strong leadership in EAC members.

38

Table 4.10: Views of respondents on Literacy

Frequency Percent

No 81 100.0

Total 81 100.0

Source: Primary data)

The table 4.10 indicates that 100%of 81 respondents indicate that literacy did not

facilitate region members in trading on the basis of optimal price and quantity demand of

cement..

As literacy rate is the ability to ready, write and understand the concept in other to make

a good decision and the country‟ literacy rate, defined as those aged 15 or over who can

read a, this research found that literacy did not facilitate EAC regional trade. Hence,

mobilization is still low about the benefits of EAC to citizens.

Table 4.11: Views of respondents on Culture

Frequency Percent

Yes 69 85.2

No 12 14.8

Total 81 100.0

Source: Primary data

The table 4.11 indicates that 85.2 % accepted that culture of EAC citizens‟ is among of

the factors facilitate region members in trading, whereas 14.8% did not accept the

statement.

Thus, culture is the quality in a person or society that arises from a concern for what is

regarded, development or improvement of the mind by education or training, the

39

behaviors and beliefs characteristic of a particular social, ethnic, or age group. The EAC

citizens have some similarities concerning their culture. The reason why culture is among

the factors facilitates EAC trade in general.

Table 4.12: Views of respondents on Different Production cost of cement

Frequency Percent

Yes 69 85.2

No 12 14.8

Total 81 100.0

Source: Primary data

The table 4.12 shows that 85.2 % of respondents confirmed that different production cost

of cement facilitate region members in trading on the basis of optimal price and quantity

demand of cement, whereas 14.8% of respondents did not confirm.

The different production cost of cement in EAC region improves the competition in the

region. And then that competition influence the quality, quantity and price of cement in

the regional trade.

4.2.2. Approaches used by EAC members in trade

This subsection focuses on the approaches used by EAC regional members to achieve

their goals regarding trade, such as security community, free movement of goods and

people, Building quality infrastructure, remove road blocks and mobilization.

40

Table 4.13 Views of respondents on Security community

Frequency Percent

Yes 66 81.5

No 15 18.5

Total 81 100.0

Source: Primary data

The table 4.13 indicates that 81.5% of respondent accepted that security community is

among the different approaches used by EAC members to achieve their goals regarding

cement trade in the region, whereas 18.5% did not accept the statement.

As security is a set of all basic needs of citizen in the region. EAC has established a force

called East Africa Stand By Force (EASBF).This EASBF has responsibility to make sure

that the security in the region is in good faith. Hence, East Africa Community focuses on

security community as a tool of attracting investors in the region.

Table 4.14: Views of respondents on free movement of goods and people

Frequency Percent

Yes 61 75.3

No 20 24.7

Total 81 100.0

Source: Primary data

According to the table 4.14, the majority of respondents confirmed that free movement of

goods and people are among of the approaches used by the EAC members to achieve

their goals concerning trade in the region. Where 75.3% of respondents confirmed the

statement and then 24.7% of respondent did not.

41

Hence, the free movement of goods is one of the success stories of one side of the EAC

project. It has helped to build the internal market from which citizens and businesses are

now benefiting. Many of the major restrictions on the free movement of goods have now

been removed. As free movement of goods and service facilitate time savings in regional

businesses, East Africa Community could use this approach in order to attain the goal

regarding to trade in the region.

Table 4.15: Views of respondents on Building quality infrastructure

Frequency Percent

No 81 100.0

Total 81 100.0

Source: Primary data

The table 4.15 indicates that 100% of 81 respondents confirmed that building quality of

infrastructure is among the approach used by EAC members in order to promote regional

trade.

Quality infrastructure relates to all fields of standardization and testing systems, quality

management, and conformity assessment, including certification and accreditation. Thus,

the quality of infrastructure facilitated the performance of EAC members in terms of

trade.

Table 4.16: Views of respondents on Remove road-blocks

Frequency Percent

Yes 6 7.4

No 75 92.6

Total 81 100.0

Source: Primary data

42

According to the table 4.16, the majority of respondents (92.6 %) said that remove road

blocks is not among of the approaches used by EAC members for achieving their goal

regarding regional trade. Road blocks are still problem in EAC member‟s trade,

especially in Tanzania. Thus, there is a need of other requirement and agreement in order

to well implement the plans which have been established by EAC members for all sides.

Table 4.17: Views of respondents on Mobilization

Frequency Percent

Yes 65 80.2

No 16 19.8

Total 81 100.0

Source: Primary data

The table 4.17 indicates that 80.2% of respondents confirmed that mobilization is among

the approaches used by EAC members in order to achieve their goal concerning trade in

the region whereas, 19.8% of respondents did not accept that statement.

As mobilization refers to Organize and encourage (a group of people) to take collective

action in pursuit of a particular objective; mobilization is a useful approach or tool which

should be used to achieve the goal. Thus, EAC members have to increase the level of

mobilization in order to commutate EAC plans to its member‟s citizens and other

stakeholders.

4.2.3 Correlation of EAC integration and traders’ welfare

This section focuses on the correlation of regional trade integration and traders‟ welfare

using price and quantity demand of cement. In order to well analyze the correlation the

researcher used both primary and secondary data in this section.

43

Table 4.18: Correlation between EAC integration and Rwanda traders’ welfare

East Africa

Community

Traders‟ welfare

East Africa

Community

Pearson Correlation 1 .402**

Sig. (2-tailed) .000

N 81 81

Traders‟ welfare

Pearson Correlation .402**

1

Sig. (2-tailed) .000

N 81 81

**. Correlation is significant at the 0.01 level (2-tailed).

Source: Primary data

According to the table 4.18 and then, according to (Yount, 2006) as this research stated

in chapter three for data analysis, if Pearson correlation coefficient if Pearson correlation

coefficient ( r ) is in the range between ] 0, 0.5 [ the variables are weakly correlated. This

implies that EAC integration and Rwanda traders‟ welfare are positively and weakly

correlated with r equals to 0.402. Hence, according to MINEAC employees and Rwanda

ciment traders, EAC integration influence the level of trader‟s welfare on the rate of

40.2%.

Legend:

[-1.00 - 0.00[ : Negative correlation;

[0.00 - 0.25 [ : Positive and very low correlation;

[0.25 - 0.50 [ : Positive and low correlation;

[0.50 - 0.75 [ : Positive and high correlation and

[0.75 - 0.1.00] : Positive and very high correlation.

44

The variation of Pearson Coefficient correlation is between -1 and 1. Pearson Coefficient

correlation has significance when it is equal or greater than 0.05. According to the

research, the correlation of 0.402 (40.2%) is located in the interval [0.25-0.50[categorized

as positive and low correlation. As the significant level is at 0.01 (1%), the p-value of

0.000 (i.e. 0.0%) is less than 0.01%. This leads to confirm that there is relationship

between EAC integration and traders‟ welfare. This was also justified by the respondents‟

level of agreements on that contribution which was presented in the table 4.19 up to 4.21.

4.2.4 Perception on EAC integration on traders’ welfare

The researcher focused on the benefits that Rwanda country targets from EAC and other

questions related to EAC trade and Rwanda citizens‟ wealth. This subsection is

confirming the relationship between EAC and Rwanda traders‟ welfare.

Table 4.19: Perception on benefits Rwanda country targets from EAC members

Frequency Percent

Industrial specialization 30 37.0

Investment facilitation 26 32.1

Increased competition 25 30.9

Total 81 100.0

Source: Primary data

The table 4.19 indicates that the benefits that Rwanda country targets from EAC

members, whereby 37.0% of 81 respondents perceived that industrial specialization is

among the benefits Rwanda country targets from EAC members, 32.15% of 81

respondents perceived that Rwanda country targets investment facilitation, and then

30.9% perceived that Rwanda country targets increment of competition in the country.

None perceived regional security and international security.

45

Industrial specialization and investment facilitations attract investors in the country, and

then high level of competition in Rwanda facilitates the citizens‟ to benefit the quality of

products on the affordable or optimal price. For instance, the researcher can use the case

of the improvement and access of University education level in Rwanda.

Table 4.20: Perception on EAC and the price of cement in Rwanda

Frequency Percent

SA 41 50.6

A 40 49.4

Total 81 100.0

Source: Primary data

According to the table 4.20, all respondents perceived that the integration of Rwanda in

EAC influence positively the price of cement in Rwanda. Whereby, 50.6 % of

respondents strongly agreed the statement and 49.4% of respondents agreed the

statement. Hence, the entrance of Rwanda in EAC is a key of business success in

Rwanda, because of the improvement of competition, availability of quantity needed and

affordable price of the product.

Table 4.21: Perception on EAC and the quantity of cement needed in Rwanda

Frequency Percent

SA 38 46.9

A 43 53.1

Total 81 100.0

Source: Primary data

The table 4.21 indicates that 46.9% of 81 respondents strongly agreed with the statement

and 53.1 % of 81 respondents agreed with the statement.

46

From this information, the researcher confirmed that integration of Rwanda in EAC

region facilitates the improvement of production and availability of quantity of cement.

Table 4.22: Perception of respondents on being an EAC’ citizen

Frequency Percent

Good 73 90.1

Bad 8 9.9

Total 81 100.0

Source: Primary data

The table 4.22 indicates that 90.1 % of respondents said that according to their individual

life conditions, it is good to be an EAC citizen whereas, 9.9 % of respondents it is bad.

Therefore, East Africa Community has a positive effect on individual life conditions, but

there are some obstacles that citizens should meet during their business activities, like

high competition between large and small businesses in the region.

4.2.5 Analysis and presentation of secondary data

This subsection focused on the presentation and analysis of secondary using SPSS

computer program. The analysis was done on the basis of relationship between ASCC in

EAC and quantity of cement, and then relationship between DPC in Rwanda and

aggregate quantity of cement. The data from MINEAC and MINICOM were for the

period of 13 years (2001 – 2013).

47

Table 4.23: Supply cost, demand price and quantity demand of cement

Year ASCC in EAC DPC in Rwanda AQDC in EAC

1 220 240 6800

2 220 240 7300

3 180 200 6500

4 160 180 4800

5 320 340 10700

6 220 240 7300

7 170 190 5200

8 170 190 5500

9 180 200 5500

10 170 190 6100

11 150 200 6300

12 170 190 7200

13 240 260 7900

Source: Secondary data (2014)

The table 4.23 summarizes the secondary data used in this research to establish the

correlation between demand price of cement in the region and quantity of cement. These

data also used to establish a simple linear regression model. Where; ASCC: Aggregate

Supply Cost of Cement In the region, DPC : Demand Price of Cement in Rwanda and

AQDC: Aggregate Quantity Demand of Cement in the region.

This paragraph showed only main tables histograms required to understand results from

the linear regression procedure concerning the relationship between quantity of cement

and cost of supply, assuming that no assumptions have been violated as we have stated in

theoretical literature. A complete explanation of the output has been verified when

checking data for the assumptions required to carry out linear regression is provided

theoretical literature. This includes relevant histogram, and the Durbin-Watson statistic.

48

Figure 4.2:Test of normality of quantity of cement from EAC

Source: Primary data

The figure 4.1 (histogram‟s shape) approximates a bell-curve and it suggests that the data

have come for a normal population. From the table …in the appendices, the researcher

calculated Skewness Z-value = 1.042, Kurtosis Z-value = 0.171 and found all Z-value are

within ]-1.96 – 1.96[

49

Figure 4.3: Test of normality of demand price of cement in EAC

Source: Primary data

The figure 4.2 (histogram‟s shape) approximates a bell-curve and it suggests that the data

have come for a normal population. From the table 26 in the appendices, the researcher

calculated Skewness Z-value = 1.042 , Kurtosis Z-value = 0.171 and found all Z-value are

within ]-1.96 – 1.96[. Therefore, from the figure 4.1 and 4.2 the researcher was allowed to

establish a linear regression model using SPSS program as the assumptions were verified.

50

Table 4. 24: Coefficients used to predict quantity of cement and ASCC in the region

Model Coefficients

Constant 822.629

Aggregation of supply cost of cement in EAC 29.73

Durbin-Watson 1.402

.817

a. Dependent Variable: Quantity EAC aggregation

Source: Primary data

From the table 4.24, the researcher found that Durbin-Watson equals to 1.402,this implies

that there is a positive autocorrelation between quantity of cement and aggregation

quantity of cement. The table 4.24 indicates that if supply cost of cement in EAC

increased by one, the quantity of cement increased by 29.730.From the above information

the research formulated linear equation of quantity of cement and supply cost of cement;

Ys = 822.629 + 29.730Xs (1) where; (1) indicates the relationship between the aggregate

of quantity of cement in the region and aggregate supply cost of cement in the region, Xs

is aggregate supply cost of cement in the region

Table 4.25: Coefficients used to predict quantity of cement and DPC in Rwanda

Model Coefficients

Constant -291.525

Demand price EAC aggregation 31.78

Durbin-Watson 2.914

a. Dependent Variable: Quantity EAC aggregation

Source: Primary data

The table 4.25 confirmed that quantity demand of cement is correlated to the price of

cement in Rwanda. The table 4.25 indicated that intercept of linear equation from given

data is -291.525 and slope is31.780. Hence the researcher gets equation;

51

Yd= -291.525 + 31.780Xd(2), where (2) is the equation establishing the relationship

between the aggregate of quantity of cement from the region and price of cement in

Rwanda, Xd is price of cement in Rwanda.

According to Nagurney (2002), the price of commodity is optimal in the region if and

only if there is equilibrium between demand and supply, this equilibrium if and only if

demand price equals cost of supply plus transportation cost . Hence, in this research;

Ys= Ydi.e 822.629 + 29.730Xs = -291.525 + 31.780Xd, where Xd = transportation cost

(45) + Xs (3)

i.e822.629 + 29.730Xs = -291.525 + 31.780(45 +Xs )

i.e 822.629 + 29.730Xs = -291.525 + 1430.1 + 31.780 Xs

i.e 822.629 - 1138.575 = 2.05 Xs

i.e-315.946 = 2.05 Xs

i.eXs = $ 154.12 (4)

(4) in (3), we get Xd = 45 + 154.12 = $ 199.12

Hence, the optimal price of cement in Rwanda should be $199.12 per ton if supplying

cost is $ 154.12 per ton in the EAC region.

52

CHAPTER FIVE: SUMMARY, CONCLUSION AND

RECOMMANDATIONS

5.0 Introduction

This chapter focuses on summary, conclusions, and recommendations. It highlights

summary of findings according to three research objectives, conclusions where the

researcher answer the research questions, recommendations and ends with suggestions for

further study.

5.1. Summary of findings

This study carried out on East Africa Community and trader‟s welfare. The problem

statement was related to the price of cement in Rwanda which is highest in EAC region.

The study identified the different factors that facilitate region members in trading on the

basis of optimal price and quantity demand; it also assessed the different approaches used

by region members to achieve their goals regarding trading and then it established the

correlation of regional trade integration and citizens wealth using price, cost and quantity

demand of cement in the regional members. To establish the correlation between EAC

regional trade integration and welfare of Rwanda traders, the researcher used primary

data from Rwanda cement traders and MINEAC‟s employees. Also, the researcher used

secondary data regarding the price, cost and amount of quantity of cement from

MINEAC.

5.1.1. Factors facilitate EAC members in regional trade

Elimination of Non-tariff barriers is a key factor of success of EAC to have optimal price

and quantity of cement in the region. The researcher found that 85.2 % of respondents

accepted that elimination of Non-tariff barriers are one of the factors that facilitate trade

of cement in EAC region. Exchange rate is one of the obstacles faced by regional trade,

53

because 100 % of respondents said that exchange rate in EAC region did not facilitate

region members in trading on the basis of optimal price and quantity demand of cement.

The EAC citizens have some similarities concerning their culture. The reason why culture

is among the factors facilitates EAC trade, in general 85.2 % accepted that culture of

EAC citizens‟ is among of the factors facilitate region members in trading. The different

production cost of cement in EAC region improves the competition in the region. And

then that competition influence the quality, quantity and price of cement in the regional

trade. The researcher found that 85.2 % of respondents confirmed that different

production cost of cement facilitate region member‟s trade.

5.1.2 Approaches used by region members in trade

East Africa Community focuses on security community as a tool of attracting investors in

the region. The researcher found that, 80.8% of respondent accepted that security

community is among the different approaches used by EAC members to achieve their

goals regarding cement trade in the region.

Free movement of goods is one of the success stories of one side of the EAC project. It

has helped to build the internal market from which citizens and businesses are now

benefiting. Many of the major restrictions on the free movement of goods have now been

removed. As free movement of goods and service facilitate time savings in regional

businesses, East Africa Community could use this approach in order to attain the goal

regarding to trade in the region. The researcher found that, 75.3 % of respondents

confirmed that free movement of goods id better approach used by EAC trade.

The quality of infrastructure facilitated the performance of EAC members in terms of

trade. Hence, 100% of respondents confirmed that building quality of infrastructure is

among the approach used by EAC members in order to promote regional trade. The

54

majority of respondents (92.2 %) said that remove road blocks is not among of the

approaches used by EAC members for achieving their goal regarding regional trade.

5.1.3 Relationship between EAC and welfare of traders

The third objective of this study intended to establish the correlation between EAC

regional trade integration and welfare of Rwanda traders. Using primary data and Pearson

correlation coefficient, the research found that the correlation between EAC integration

and Rwanda traders‟ welfare indicated by correlation coefficient (r) equals to 0.402.

Hence, EAC integration is positively correlated to Rwandan traders‟ welfare . This was

confirmed by the perception of respondents on the benefits that Rwanda traders get from

EAC. Industrial specialization and investment facilitations attract investors in the country,

and then high level of competition in Rwanda facilitates traders to benefit the quality of

products on the optimal price of cement. Integration of Rwanda in EAC region facilitates

the improvement of production and availability of quantity of cement. This research also

analyzed secondary data using simple linear regression analysis and found the

relationship between quantity demand of cement and aggregation of supply cost of

cement in EAC region. It also found the relationship between quantity demand of cement

and price of cement in Rwanda. Hence, the researcher found two equations such as

Ys(relationship between quantity of cement and aggregate supply cost in the EAC region)

= 822.629 + 29.730Xs and Yd(relationship between quantity of cement and price of

cement in Rwanda) = -291.525 + 31.780Xd, from these two equation this research found

that the optimal (affordable) price of cement in Rwanda should be be $ 199.12 per ton, if

supply cost of cement is $ 154.12 per ton in the EAC region and transportation cost is

$45 per ton.

55

5.2. Conclusion

This subsection is classified according to the research questions;

According to the first research question, the researcher concluded that the factors

facilitate EAC members in trading on the basis of optimal price and quantity demand

were Non-tariff barriers, Exchange rate and Culture.

According to the second research question, this research concluded that the approaches

used by EAC regional members to achieve their goals regarding trade were Security in

the region; in this case we can say the establishment of East Africa standby force ; free

movement of goods and people, in this case we can say the use of ID in Kenya, Uganda

and Rwanda and Building quality of infrastructure. Whereby, the railway project is

expected to change the region‟s economic landscape by providing efficient and cost

effective rail transport for both freight and passengers. It is intended to reduce the cost of

doing business by reducing the cost of transport among the countries served by the

Northern Corridor

According to the third research question, using linear regression and Pearson correlation

coefficient, the researcher found that there is a positive relationship between cost of

quantity supplied and price of cement in Rwanda. Hence, EAC integration has a positive

effect on welfare of Rwanda traders, whereby using perception and opinion of

respondent, this research conclude that EAC integration influence Rwanda traders‟

welfare on the rate of 40.2%. And then, using secondary data and simple linear regression

analysis, this research concluded that there is a significance and positive relationship

between quantity of cement in EAC region and price of cement. From this relationship,

this research found and suggested the optimal (affordable) price of cement in Rwanda.

56

Finally, the entrance of Rwanda in EAC is a key of business success in Rwanda, because

of the improvement of competition, availability of quantity of products needed and

affordable price of the product. East Africa Community has a positive effect on individual

life conditions, but there are some obstacles that citizens should meet during their

business activities, like high competition between large and small businesses in the

region.

5.3. Recommendations

Even if this research found that EAC integration has a positive effect on welfare of

traders in Rwanda, this research recommends Rwandan traders, government of Rwanda

and MINEAC members as follows:

5.3.1 Rwandan traders

There is a high competition in the region, thus Rwandan traders need high skills regarding

business and competition. And then, the level of cement production in Rwanda is still

low, there is one company produces cement in Rwanda called CIMERWA. Therefore,

Rwandan traders should invest in cement industry in order to improve the level of

production and export of cement in the region.

5.3.2 Government of Rwanda

The country should try to provide incentives to producers within the country for

improvement of production and promotion of quality products through technical and

organizational innovations to enhance the competitiveness of Rwanda‟s industries on the

world market by exposing them to competition within the regional economic integration,

and to create an environment which is conducive to foreign direct investment in the

country.

57

The price of cement in Rwanda is still highest in the region, thus there is a need of

removing some barriers rather than tariff and facilitate the level of production in Rwanda.

Rwanda should ensure that small and medium-sized enterprises have an equitable

opportunity to participate in the regional economic integration. Rwanda should mobilize

the citizens towards a good understanding of the Integration of Rwanda in the EAC.

Government of Rwanda should mobilize its citizens about the benefits that they could get

from EAC integration as they are interested in international trade

5.3.3 EAC members

Road-blocks are still problem in EAC member‟s trade. Thus, there is a need of other

requirement and agreement in order to well implement the plans which have been

established by EAC members for all sides. Exchange rate is a strong obstacle in the

region; hence there is a need of implementing the use of single currency payment in EAC

members in order to have the same price of product in the region.EAC members have to

increase the level of mobilization in order to commutate EAC plans to its member‟s

citizens and other stakeholders. EAC do not implement their plan in the same way. Thus,

there is a need of strong leadership in EAC members. Elimination of Non-tariff barriers is

a key factor of success of EAC to have optimal price and quantity of cement in the region.

5.4. Suggestions for further study

The researcher suggested the following areas as necessary for future research in order to

improve the awareness of East Africa Community citizens and the benefits have from

EAC .Future researchers should look into other areas in which EAC is important to the

education rather trade. Future researcher should also look into the benefits that

accumulate from increased institutional competitiveness in the region. This provides the

institution with valid reasons for striving to increase competitiveness. And then future

58

researchers should carry out a researcher on EAC and trade, but they should focus on

other areas like petroleum.

59

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62

APPENDICES

63

Authorization Letter

64

Letter from MINEAC

65

Letter to MINEAC

66

Table 26: Data used to establish linear regression models

2001 220 240 6800

2002 220 240 7300

2003 180 200 6500

2004 160 180 4800

2005 320 340 10700

2006 220 240 7300

2007 170 190 5200

2008 170 190 5500

2009 180 200 5500

2010 170 190 6100

2011 150 200 6300

2012 170 190 7200

2013 240 260 7900

Source: Secondary data

Table 27: Test of normality

Descriptive

Aggregation of supply cost of cement in EAC Statistic Std. Error

Quantity of cement

EAC aggregation

170 Mean 6000.0000 441.58804

95% Confidence

Interval for Mean

Lower Bound 4594.6698

Upper Bound 7405.3302

5% Trimmed Mean 5977.7778

Median 5800.0000

Variance 780000.000

Std. Deviation 883.17609

Minimum 5200.00

Maximum 7200.00

Range 2000.00

Interquartile Range 1650.00

Skewness 1.057 1.014

Kurtosis .448 2.619

Source: Primary data

67

Research Questionnaire

Dear Respondent,

I am HABIMANA THEOGENE, MBA student at Mount Kenya University. I am

currently carrying out a research on the topic “East Africa Community Integration and

Rwanda traders‟ welfare” as part of my course requirements, it is a purely academic

questionnaire and I kindly request you to spare few minutes of your time and express

your views on the questions below, your answers were treated with greatest confidence.

I. QUESTIONS REGARDING PERSONAL IDENTIFICATION

1. Gender

Male Female

2. Level of education

University Secondary Primary No-formal

3. How old are you?

Less than 21

years

21 – 25

years

26 – 30

years

31– 35

years

>35

4. How long have you experienced with cement trade in EAC especially in Rwanda?

Less than 2 years 2 – 4 years 4 – 6 years Above six years

II. EAST AFRICA COMMUNITY INTEGRATION QUESTIONS’

5. Do the following Factors facilitate region members in trading on the basis of

optimal price and quantity of cement?

a) Elimination of Non-tariff-barriers Yes [ ] No [ ]

b) Rate of exchange Yes [ ] No [ ]

c) Free-trade area Yes [ ] No [ ]

d) Customs union Yes [ ] No [ ]

68

e) Level of Literacy Yes [ ] No [ ]

f) Culture Yes [ ] No [ ]

g) Different production cost of cement Yes [ ] No [ ]

h)

6. What are the different approaches used by EAC members to achieve their goals

regarding cement trade?

a) Security community approach Yes [ ] No [ ]

b) Free movement of good and people Yes [ ] No [ ]

c) Building quality infrastructure Yes [ ] No [ ]

d) Remove road blocks Yes [ ] No [ ]

e) Mobilization Yes [ ] No [ ]

7. The benefits Rwanda country targets from EAC

Please, choose one;

a) Regional security [ ]

b) International security [ ]

c) Industrial specialization [ ]

d) Investment facilitation [ ]

e) Increased competition [ ]

8. Do you think that the integration of Rwanda in EAC influence positively the price of

cement in Rwanda?

a) SA [ ]

b) A [ ]

c) D [ ]

d) SD [ ]

9. Do you think that the integration of Rwanda in EAC promote the quantity of cement

needed in Rwanda?

a) SA [ ]

a) A [ ]

b) D [ ]

c) SD [ ]

10. According to your individual life conditions, is it good or bad to be an EAC citizen?

Good [ ]