The Observer (Kampala)

30 December 2012

East Africa: Will New EAC Learn From Old?

Photo: In2EastAfrica
Rwandan franc.

The new East African Community has a membership of five partner states, up from the original three that founded the EAC in 1967 and dissolved it in 1977.

It is now a Common Market, moving towards a Monetary Union and the ultimate goal of a political federation. In the course of this progress, the EAC has drawn lessons from successful regional economic communities elsewhere, but apparently, inadvertently or otherwise, there seems to have been no effort made to draw lessons from itself, in other words, what does the old EAC teach the revived EAC?

Prior to its collapse in 1977, the East African Community was one of the oldest and most prosperous regional economic communities in the world. Founded in 1967 by the three countries of Kenya, Tanzania and Uganda, it was an achievement of what had earlier failed in the run-up to independence. Britain, the colonial power, had wanted to create a federation of the three East African states, a move that was opposed by Buganda, in Uganda.

Tanganyika had been keen on such a federation, with its leader, Mwalimu Julius Nyerere, reportedly ready to delay the independence of Tanganyika so that the region could attain independence as one federation. Earlier, in 1917, there existed a Customs Union between Uganda and Kenya, with Tanganyika joining it in 1927.

This was followed by the East African High Commission that ran from 1948-1961; the East African Common Services Organisation (which became the foundation of the common undertakings), from 1961-1967. In 1967, the East African Community was born, lasting 10 years until its dissolution in 1977.

By the time of its collapse, the EAC of 1967-77 was already a Monetary Union, with a currency board and a parity currency. A parity currency means that each country had its own currency, but converting at par: one Uganda Shilling equaled one Kenya Shilling and one Tanzanian Shilling. One key defining feature of the community then was its supranational parastatals through which the partner states took an active role in the region's economy.

This was the era of such public enterprises as East African Railways and Harbours, East African Airways, East African Posts and Telecommunications and East African Development Bank. The latter two were headquartered in Uganda, and the EADB still soldiers on.

Other areas of commonality included education, with a single syllabus and a single examination body, the East African Examinations Council; the University of East Africa with specialised colleges in each country; the East African Literature Bureau engaged in publishing, the Inter-University Council of East Africa, and others.

Citizens of the community moved and worked across the region, from the professionals to the casual labourers. Kampala's suburbs, like Namuwongo for example, still have communities whose roots are in Kenya, traceable to the EAC days. As an economic bloc, the region presented a large market for foreign direct investment with many multinationals establishing themselves in the region.

The EAC was a success story and at the time of its dissolution several countries had applied to join the economic bloc. Various reasons have been advanced for the collapse of the old EAC, ranging from political differences, especially between Uganda and Tanzania, to ideological ones pitting Nyerere against Kenya's Jomo Kenyatta. The actual collapse of the old EAC was occasioned by different levels of economic development, with Kenya taking the lion's share of the EAC benefits and the other partner states only importing from Kenya.

This made Kenyan officials to question the relevance of the East African Railways and Harbours being headquartered in Dar es Salaam, and the East African Posts and Telecommunications being in Kampala, while they had substantive ministries in Kenya in charge of these sectors. One other crucial factor was the Kampala Agreement. Signed in Mbale, this sought to establish a rationalised, even distribution of industries across the region as a means of ensuring balanced development and mutual benefits from the community.

'One partner state refused to ratify it...,' says my source, and this, according to him, is the core reason why the EAC collapsed in 1977. He predicts the same fate for the current EAC, which, in his analysis, is built more on conventions and treaties, than substantive strong economic pillars. Whereas time and resources have focused on governance, gender, minority groups, legislation, and other soft aspects, meaningful integration, he says, must revisit The Kampala Agreement.

His predictions may not be far-fetched, going by the cycle of non-tariff barriers characterising intra-EAC trade. From Kenya requiring Ugandan tea taken to the Mombasa auction to be cleared as a 'plant', to Tanzania requiring Ugandan sugarcane from Rakai sold to Kagera Sugar Works to await sanitary and phyto-sanitary clearance from Dar es Salaam, one non-tariff barrier or another crops up everyday.

The single explanation is that each partner state is trying to protect her turf in terms of jobs, markets and patronage, the typical scenario expected when seeking to integrate poor economies. Anyone out there with a copy of the Kampala Agreement?

The author is a partner at Peers Consult Ltd.

Ads by Google

Copyright © 2012 The Observer. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.

InFocus

Single East African Currency Encouraged

Rwandan franc.

A report by the African Development Bank says that if a monetary union is achieved, it will benefit in a greater macroeconomic convergence in the region. Read more »