EAC: Enough with Rigid and Logistical Obstacles

Published on 8th April 2014

Like the United States (U.S) and European Union (EU), Africa is likely to give birth to a new Country- The East African Community, (EAC). It is just a matter of time. Comparatively, China, EU, and U.S, today enjoy economic hegemony as the largest bilateral trading partners that control almost 80 percent of the global trade. No wonder, they equally dictate the world prices and have greater influence in the tax regimes in the supranational arena-principally at the World Trade Centre.

Arguably, trade is the backbone of the World economies both in industrialized and industrializing democracies. Countries with stronger economies are stable in growth.  This is the reason why, EAC was founded in 1967 to match the successful regional economic communities around the World. It is unfortunate that it dissolved in 1977, defeating the primary purpose of creating it, even after most countries within EAC welcomed and joined the confederation with anxiety.

With the renewed commitment from EAC leaders led by President Uhuru Kenyatta, the obstacles that hitherto delayed the course could be fastracked to ease the union. So far President Uhuru has mobilized the Presidential cohorts and he is not relenting his renewed fight to push for the institutional framework to certify the move.

Kenya, Tanzania, Uganda, Rwanda and Burundi are home to about 145 million people and gloats in an annual GDP of US$110billion. EU is still the second largest economy in the world with a GDP per head of €25 000 for its 500 million consumers. It has achieved a strong position by acting together with one voice on the global stage, rather than with 28 separate trade strategies, to deeply explore global markets. This was possible with the ease of modern transport and communications that made it simpler to produce, buy and sell goods around the world. This is good lesson for EAC.

It means if EAC merge, their economy would be stronger and this would subsequently increase their bargaining power in the international market. But the path to EAC single market has been in the past wrought with vested and divergent political interests, in effect slowing the federation process. This must end. Our spirited leaders must continue to remove institutional and legal obstacles to allow smooth merger.

In Europe for instance, expansion of trade and good management gave an opportunity for economic growth, and motivated most countries keen on regional blocs. Yet in East Africa while some member states see the move as a genuine step toward an uncluttered bloc select few still see it is an affront to their Countries sovereignty. This is what led to the collapse of the sustained talks when the exercise started in 1977 after Kenya and Tanzania locked horns over some proposed merger ideas.

But riding on the common aphorism that United we stand and divided we fall, this time round we beseech our leaders to have some time to reflect and reconcile. Already, there is a pointer to the ultimate fruition if the sentiment by Tanzania’s President Jakaya Kikwete in Parliament in Dodoma recently, is anything to go by. President Kikwete who has been reluctant to open up to the process recently declared that Tanzania would not be a stumbling block to the re-union bids. He stated clearly that, “Our position is that we will never leave EAC, nor will we be part of the reason for the disintegration of the EAC.”

President Kikwete simply implied he did not want a replay of 1977, when ideological differences between Kenya and Tanzania led to the collapse of the EAC.

“Tanzania aims to build a regional bloc based on strong economic principles. Politics will always be there. But unless we peg our union on the foundations of a strong economy, all other efforts will be fruitless,” he said.

Conversely, he demanded that Tanzania also be treated equally with the same decorum that other partner states enjoyed ensuring effective homogeneity.

Kikwete was concerned at some point other members pushing corporal incorporation through investment in infrastructure, overlooked Tanzania pangs. If the claims are true, then the Chairman ought to give them a micro minute attention to insulate the process from possible hitches that could reverse the league’s gain. In the meantime, the EAC must carry on with reforms to legitimate and institutional frameworks to improve the trade environment in the region.

Ultimately, this will reduce the confederacy risks involved in doing business in the region, promoting entrepreneurship and hauling investment from abroad. Similarly, it will cut down cost and allow the new EAC market to set up Foreign Direct investment (FDI) programs to push for a bigger stake in the world Market.The FDI programs will also attract new investment in the region and also allow new tax regimes or concessions to breed more direct and indirect assets in EAC. This would also lead to rapid transfer of technology and management skills and create additional wealth and employment to spur the regional economic growth.

The Countries have been keen to push for a common railway that will connect four of the five nations to Kenya’s Mombasa Port. This is good when we look at the EU successful case. But that is not enough to note on the latest EAC developments. Plans are at advanced stage to set up two international oil pipelines and a new refinery that will boost its oil exports, alongside new roads.

Kenya, recently announced to add 5,000 megawatts of production and to diversify sources of supply through exploration of geothermal, wind, and nuclear power. This aptly shows how committed President Uhuru is to the final integration of the EAC, with new vitality of diplomatic mutual bargaining. While in Brussels a week ago, Uhuru and Museveni met at the sidelines of a global forum and appeared keen in setting pace of a possible political federation.

Going by the several achievements which we have so far attained in the journey toward a single market with common tariffs and monetary unions, education et al, then there is no doubt that a new country and new market is on the way in east Africa. Today, the global shift in economic power continues, with the newest data indicating that China usurped the US in 2013 as the leading trade powerhouse.

According to the General Administration of Customs (GAC), China's annual trade in goods passed the $4trn (£2.4trn) mark for the first time in 2013, making it world’s biggest trader. This reinforces why regional trading bloc would be significant for the much-hyped stronger economy of the confederate states in the supranational market. Let’s Unite.

By Kepher Akong’o

The writer kepher43@gmail.com  is a social scientist, consulting editor at County Insight and media adept.

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