East African Unity, Take II

The East African Community eyes full economic and political unity by 2015, but success will depend on whether governments take into account the heterogeneity of national political systems and the past regionalization failures, Edoardo Totolo writes for ISN Security Watch.

The East African Community (EAC) is about to embark on a three-step integration process that will lead to political and economic unification in 2015. If implemented, the plan would mark the realization of the dream of Mwalimu Nyerere - a father of pan-Africanism from the 1960s - who saw regionalization as the most effective path to African development.

The schedule is very tight. On 1 July, Kenya, Tanzania, Uganda, Rwanda and Burundi will take the first step with the abolishment of regional tariffs and the removal of barriers to the free movement of goods, capital and labor within the region.

This phase began already in 2005 with the creation of a customs union between Kenya, Tanzania and Uganda, which was joined later by Rwanda and Burundi in July 2009. However, next month the EAC common market will become fully operational.

The second step will be the creation of a monetary union with the adoption of the ‘East African shilling’ as a unique currency in 2012.

Finally, in 2015, the five countries will create a political federation, with the establishment of a single government and common economic institutions for the entire region.

This is the second attempt at integration in East Africa. The first EAC was created in 1917 by Kenya, Uganda and Tanganyika (former Tanzania), but it collapsed in 1977 because of rising political and economic tensions between member states.

There are external pagedifferent opinions regarding the chances of success of this second regionalization project and the effects of unity on single national economies. Whereas some analysts point out that there will be winners and losers, others argue that the entire region will be strengthened.

The impression is that today there is the right combination of favorable conditions, including strong political will, sustained economic growth and popular participation. However, whereas economic integration seems reachable in the foreseeable future, rushing for political unity might jeopardize the entire project.

Integration challenges

The first problem is related to Kenya’s dominating role in the region and the ‘victims’ that increasing EAC competition may claim. Because of its stronger market, Kenya is likely to penetrate the neighboring economies and increase its exports at the expense of the other member states, in particular Tanzania.

This situation was a major cause of the previous EAC failure, which provoked a feeling of mistrust and skepticism about regionalization among Tanzanian citizens. That said, the situation seems to have changed in recent years, and the ground is now more fertile for integration.

Khalid Mlanga, project officer at the Tanzanian branch of the external pageEast African Community Youth Organization, told ISN Security Watch that “Tanzanians used to be skeptical about regionalization, but now they are aware of the great opportunities of the common market.

“Since the establishment of the customs union, exports from Tanzania to Kenya have increased more than imports. People still fear that the free movement of labor will increase the competition for jobs, but in general the feeling is that the benefits will be higher than the costs,” he said.

Mlanga’s argument is confirmed by a recent external pageAfrobarometer survey which show that 67 percent of Tanzanians are in favor of the free movement of goods and services; 60 percent are in favor of the customs union, and 54 percent are in favor of the monetary union.

The trust in the monetary union is quite surprising, especially because the lack of a sound monetary policy was another major cause of the past EAC failure. 

In 1967, in fact, the EAC decided to adopt a fixed-exchange-rate regime among the three currencies. However, since most of the valuable manufacturing goods were coming from Kenya, Tanzanians and Ugandans preferred to keep their savings in Kenyan shillings.

The external pageconsequence was that the Kenyan currency became very strong whereas those of Tanzania and Uganda became weaker. In the long run, the fixed exchange rate provoked the creation of a black market and major currency flight among the EAC countries. The situation evolved into a serious economic crisis and led eventually to the failure of the regionalization project.

Another great obstacle to the EAC, which finds no solution even today, is related to the heterogeneous political realities and the instability of some EAC members. Afrobarometer shows that whereas Tanzanian citizens are in favor of economic integration, only 23 percent of them approve of the creation of a single political entity.

According to Mlanga, there is no need to rush for a political federation, because of the little degree of homogeneity in the five countries. “We fear that the political federation is not possible at the present day because the countries are too different in political terms. Uganda, for example, is not even in line with the principles of democracy. Rwanda and Burundi are stabilizing, but they are too different from the Tanzanian and Kenyan political systems.[…] For now, we should focus only on economic integration,” he said.

In fact, in contrast to its neighbors, Tanzania has maintained political stability since independence and all presidents have complied with the constitutional limit of two terms of office. Uganda and Rwanda have been characterized by internal ethnic struggles and conflicts with the neighboring Democratic Republic of Congo (DRC). Kenya was recently at the edge of a civil war after a post-election crisis and there are concerns for the next round of elections in 2012.

It seems reasonable that Tanzanians want neighboring countries to solve their own internal problems before creating a single political entity. This will probably be one of the core points of the future negotiations. 

‘Conditional’ optimism

Compared to the previous regionalization attempts, today’s has a greater chance of success simply because it is supported by both the governments and the citizens, whereas the first EAC was a purely colonial in nature, conducted under the guidance of the UK and with the aim of strengthening the settlers’ economy.

Moreover, some optimism comes from the fact that even though East Africa remains one of the most impoverished regions in the world ($506 of per capita GDP), it is expected to be the external pagefastest increasing regional economy in Africa for the next two years, with a growth rate of over 6 percent, followed by West Africa at 5 percent, and 4 percent in Southern and Central Africa.

If during this period of sustained growth the EAC will be able to accompany the policies of market integration with investments in infrastructure and against corruption, success will not be so elusive.

It is important to consider that even though regional tariffs have been abolished, a recent survey calculated that at least external page21 percent of shipping costs from Rwanda to Kenya is spent in bribes and corruption. Businesses face additional costs thanks to poor infrastructure.

Arguably, improving infrastructure and tackling corruption are two key priorities for this second attempt at regionalization, and they are necessary preconditions for political integration. That said, just like political unification, these objectives could prove extremely difficult to pursue in the short term.

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