Africa Business Communities

[Column] Bob Koigi: East African Community. Whither integration agenda?

If the East African community member states are not burning each other’s chicks, or auctioning cows, they are embroiled in trade disputes and mistrust in what has become characteristic of the integration journey. This, threatening the bloc’s stability while creating investor apathy.

The unending tiffs paints a picture of partner states only paying lip service to the integration, threatening a repeat of the 1977 collapse of the union with the same problems of fears of dominance, political differences and a community without shared values at the heart of this donnybrook.

The seemingly overlapping and conflicting interests among member states have made it difficult to find common ground even as member states work hard to water down the EAC Treaty, the anchor accord of the community.

It has become increasingly difficult to implement the Common Market Protocol for example, seven years after it came to force despite the protocol promising increased trade and overall economic growth in the region that is home to an estimated 150 million people and a combined gross domestic product of Sh7.4 trillion.

With the protocol having dictated December 2015 as the deadline for member states to remove permit fees, only Rwanda, Kenya and Uganda have complied, with Tanzania and Burundi requiring non-nationals to pay for work permits, against the dictates of the protocol.

Tanzania only went ahead to reduce the permit fees from $200 to $500. This has further strained relations with Kenya despite both being the region’s largest trading partners.

Tanzania has always been apprehensive about the growing number of Kenyan professionals who have taken over jobs in the country at the detriment of the locals. Kenya on the other hand accuses Tanzania of bullying and lack of commitment to the integration spirit.

The Custom Union protocol that advocates for free trade of goods and services among member states has little force if the numerous reports on the non-tariff barriers instituted by partner states is anything to go by.

Tanzania has been identified as the country with the highest number of these barriers. The country charges $2000 for registration of any product as opposed to the $1000 that is charged by the other states in the region.

Mistrust and non-commitment have either delayed key infrastructural projects that the region desperately need to bolster trade or seen member states prefer to spend more, money they don’t have,  to hit back at their perceived rivals.

In one of the greatest deal breakers in the region, Uganda abandoned Kenya at the eleventh hour in the Hoima to Lokichar oil pipeline deal citing insecurity in Kenya and opted to go the Tanzania route. Kenya decided to go on with the project solo.

Tanzania would in return accept its full stake of eight per cent in the proposed barrel refinery in Hoima district Uganda, with Kenya taking up 2.5 per cent shareholding while Burundi and Rwanda still remain non-committal.  

Kenya on the other hand has refused to be party to the EAC capital markets infrastructure that is meant to connect the region’s stock markets electronically boosting trading insisting that it wasn’t satisfied with the tendering for procurement of the software.

Then there is the sticky issue of the Economic Partnership Agreements that allow free quota free access of East Africa Community products to the EU markets. While the EPAs are supposed to be negotiated as a block, Tanzania and Uganda have stuck to their guns insisting that they would not sign them arguing protection of their local industries comes first.

Arguments have been advanced that Tanzania and Uganda have been capitalizing on their access as least developed countries to increase their market share against Kenya which commands a lion share in the EU export market. Interestingly Tanzania pulled a similar move in 2014 which saw Kenya placed under harsher tax regime.

If the trend persists Kenya will be the biggest loser. The other EAC member states will continue enjoying preferential treatment for its exports to EU since it falls under the category of least developing countries. Kenya is the only country from the EAC that was dropped from this list after it was classified as a middle-income country, which has seen it lose out on some of the trade privileges it used to enjoy.

But even with some heartwarming news like the recent launch of the EAC electronic passport that will further boost free movement of people, the unveiling of the EAC Vision 2050 and the entry of South Sudan to the community, the existing problems threatens to put breaks on such noble initiatives moving forward.

Already export figures among member states have been on record lows with Kenya’s export to Tanzania for example dipping 18.9 per cent last year compared to the same period the previous year further hurting businesses in the two countries. This was last experienced ten years ago.

With the impending entry of Somalia and Ethiopia to EAC, more troubles could be in the offing for the bloc as traditional disputes among member states are rekindled. Putting its house in order is no longer an option if the federation is to live up to the dream of its founders; that of improving the lives of its people through trade and shared values.

Multiple award winning Kenyan journalist  Bob Koigi  is the Chief Editor of East Africa at Africa Business Communities


Also read:

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