20 December 2012

East Africa: Region's Growth Model Questioned

When the treaty establishing the East African Community (EAC) came into force on July 7, 2000, the main goal was to widen and deepen cooperation for the mutual benefit in economic, political, social and cultural affairs.

The EAC regional integration process has made progress, with the implementation of the Customs Union and the Common Market Protocol. The ongoing consultations on the monetary union and the political federation are a serious indication that the East African leaders and citizens are determined to make the bloc strong.

But despite the wider market, with a population of roughly 130 million, stakeholders are concerned that the EAC regional integration process is still not informed by the development needs in the region.

Trade experts contend that while the region needs a sustainable development focus for investment to trickle down to the common man, the prevailing Investment Agreements (IA) and Foreign Direct Investments (FDIs) meant to be sources of tax revenue and provide employment are not driven by the aspect of inclusive development.

"Foreign investors are rushing to sign trade and investment agreements with the EAC due to the discoveries of oil and natural gas. We should be very careful in our aspirations because these agreements, if not driven by the need for sustainable development, will deplete the region's resources," said Nathan Irumba, former Uganda's ambassador to the World Trade Organisation (WTO) and now SEATINI Uganda executive director.

The civil society were speaking during a four-day regional symposium on "Strengthening Stakeholder Engagement in the EAC Regional Integration Process for Sustainable Development" organized by SEATINI. The civil society is concerned that the current agreements are widening the gap between the rich and the poor and are hurting infant industries.

Clement Onyango, director CUTS Nairobi, says the right policies will reduce the numerous challenges facing the region's agricultural sector, where more than three quarters of the population depend for a living, and limit dependence on foreign aid. The stakeholders are also concerned about the region's dependence on foreign support during bilateral negotiations. This, they say, limits fairness.

Trade experts argue that the partner states should mobilize resources to fund themselves during negotiations if they are to sign meaningful agreements. "EAC's negotiations with partners like the European Union should be supported by the region and not by the people we are negotiating with," says Jane Nalunga, SEATINI Uganda Country Director. The EU, which is negotiating an economic partnership agreement (EPA) with the EAC, is at the same time funding the EAC to engage in the process.

Analysts have also expressed concern that despite the increasing Foreign Direct Investment and impressive growth rates in the region, these are not transformed into better livelihood for the citizenry.

The 2011 Human Development Index (HDI) shows that the EAC is performing poorly on the HDI scale. It ranks Kenya as number 143 out of the 187 countries surveyed, Tanzania at 151, Uganda 161, Rwanda 166 and Burundi 185. HDI is a summary of indicators that measures a country's average achievements in three basic aspects of human development: longevity, knowledge, and a decent standard of living.

The civil society has also called on the EAC to critically evaluate the region's natural resource endowment and formulate strategies that will ensure sustainable utilization and returns as well as avoid the 'curse' that has been seen to fall upon African states endowed with such resources.

Despite the challenges facing the EAC integration process, Abubakar Moki, the Assistant commissioner for Economic Affairs in the Ministry of East African Community Affairs (MEACA), says total EAC intra-trade grew from $1.6 billion in 2005 to $3.8 billion in 2010, representing a more than 100% increase.

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