East African states want economic integration in the next five years. Here’s why the plan is unrealistic

Abu Mubarik Sep 30, 2020 at 03:00pm

September 30, 2020 at 03:00 pm | Money Moves

Abu Mubarik

Abu Mubarik

September 30, 2020 at 03:00 pm | Money Moves

Photo Credit: Africa business central

East African nations have launched a plan to integrate their economies within five years. The East African Community (EAC), the inter-governmental organization made up of Burundi, Kenya, Rwanda, South Sudan, Tanzania, and Uganda, wants to form a union that models the Economic Community of West African States (ECOWAS) or the European Union (EU).

The integration will be built around four pillars: custom union, common market, monetary union and political federation. According to the speaker of the EAC legislative assembly, Martin Ngoga, the legal requirements for the pillars and the mechanism for the issuance of directives by heads of states summits will be in place within the five-year timeframe.

However, the time frame for the implementation of the integration plan set by EAC’s legislative assembly, coupled with the organization’s own history, makes the plan unrealistic.  

The EAC was first established in the 1960s but collapsed in the 1970s. It was re-established by the 1999 Treaty that entered into force in 2000 following its ratification by three partner states of Uganda, Kenya, and Tanzania. The Republics of Rwanda and Burundi became full members of the EAC later in 2007 while the Republic of South Sudan acceded to the Treaty and become a full member in 2016.

The EAC member states have a history of abandoning the organization when push comes to shove. Based on this history, and the tensions arising from the implementation of some of the integration pillars such as the customs union and the common market, caution must be exercised in pursuing full integration.

The coronavirus pandemic has hit the economies of countries, constraining fiscal space and investment in infrastructure. According to the World Bank, the COVID-19 will cost sub-Saharan Africa $37 billion. It also predicted that it will take more than five years for African economies to recover from the effect of the virus.

The contagion has disrupted the activities of many regional and international bodies. For instance, ECOWAS recently suspended the implementation of its common currency, Eco. Regional leaders cited the effect of the contagion on member states. East African economies are also struggling to cope with the effect of COVID-19. It is likely that COVID-19 will affect integration plans in EAC.

Also, the integration will require the establishment of regional institutions such as a regional bank, a common currency, a court to settle a dispute among member states and other political institutions. Considering the chaos in the global economy and among members of the EAC, it is unlikely this can be achieved in the next five years. ECOWAS has in the last 20 years sought to introduce a common currency but implementation has been delayed several times. 

Conflict in East Africa is another thorny issue that is likely to derail the ambition to integrate within five years. Kenya has seen an upsurge of terrorist attacks in recent years carried out by Al-Shabaab. There is still tension between Sudan and South Sudan following the secession of the latter. 

Besides the conflict, trade tensions between the governments of Uganda and Rwanda continue to affect cross-border trade which is largely informal. Reports of Ugandan immigration officers confiscating the identity cards of dual citizens and the extortion of monies at the Uganda-Rwanda border could also derail the integration plan unless these issues are addressed.

Tanzania and Kenya have also experienced such a border dispute. Although it has been resolved, there are reports of occasional harassment by border officials. What’s more, Kenya, Tanzania and Uganda continue to blame one another for exploiting import duties on sugar. As a result, Tanzania imposed a 25% import duty on sugar from Uganda while taxing Kenyan sweets and sugared drinks.

There are sticky issues that require a long time to resolve in the EAC. Admittedly, not all of the issues can be resolved even in the next 10 to 20 years. Five years is therefore a short time to implement a major decision like economic integration.

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