The difficult dynamics of EA federation

Paul Kagame, Pierrie Nkuruzinza, Yoweri Museveni, Mwai Kibaki and Jakaya Kikwete at the 14th ordinary summit at Kenyatta International Conference Center Nairobi last year. ppu pHOTO, Mwai Kibaki and Jakaya Kikwete at the 14th ordinary summit at Kenyatta International Conference Center Nairobi last year. ppu pHOTO

What you need to know:

A rhetoric question of sorts, the author was wondering the balance of forces between Kenya and Uganda, in respect to the outcomes of the integration project we are pursuing zealously

We were final-touching a presentation to be delivered at a seminar organised by the Ministry of East African Community Affairs (MEACA) mid-May 2013. Call it coincidence or luck, an e-mail from a friend in Nairobi was the next pop into my in-box.

A rhetoric question of sorts, the author was wondering the balance of forces between Kenya and Uganda, in respect to the outcomes of the integration project we are pursuing zealously. Dubbed ‘Scratch Your Mind’, the enigmatic message pictures a scenario on a typical working Monday between Nairobi and Kampala:

It read: “...wake up in Nairobi, one Monday morning. Take a tour around the upmarket hotels, of the Panari, The Stanley, Intercontinental class, or even the budget-class of the Lenana Mount and Bounty family. 80 per cent of the event-business (conferences, workshops, seminars, meetings) will be from the private sector (largely the manufacturing sector). Wind up this by 1200 hours, jump onto the next Kenya Airways flight from Nairobi to Entebbe, to be in Kampala by 1500 hours.

Take a tour around our upmarket hotels, of the Serena, Imperial Royale, Sheraton class, or even the Ridar, NobView class. 80 per cent of the event-business (conferences, workshops, seminars, meetings) will be from the NGO world or donor-funded programmes and projects.
On the Nairobi-Entebbe flight, read the jobs page of Kenya’s dailies. 80 per cent of the jobs advertised will be from the private sector (largely manufacturing and service sectors). On the road from Entebbe to Kampala, read the job page of Uganda’s dailies: 80 per cent of the jobs advertised will be from the NGO world of donor funded programmes and projects...’

Implications on Common Market and Monetary Union
The emerging Pareto dynamics are clear: Even going by these two variables above, the private sector’s role in Kenya is 80 per cent while in Uganda, it is 20 per cent. We were shocked to the marrow as we entered the hotel for the said MEACA seminar. There were ten workshops/seminars in the same hotel that day, and only one (10 per cent) was from the private sector: one of the international banks here.

What then will be the nature of integration between the two economies? Without minimising the role of the other three EAC Partner States, Uganda is Kenya’s largest export market, thus the significance of this balance.

Non-tariff barriers
Is it any wonder then that non-tariff barriers (one of the most common stumbling blocks against integration) remain a headache? Hardly is one eliminated than another one crops up.

Protection of turf (jobs and markets) remains a key factor in this whole NTB-elimination thing, thus a threat to the meaningful implementation of the Common Market Protocol provisions.

From this simple scenario, it emerges that the Common Market is yet to take root and effect. Should we then be rushing to the Monetary Union? Even the 10 years recently suggested as the realistic target may seem too short a period. Indeed the key question pundits are posing is ‘...common currency to buy what...?

The ultimate foundation for meaningful integration lies in planned, focused production, since trade is nothing but a function of production. Beyond the many agreements, conventions, treaties, protocols and their attendant ceremonies, little seems in progress.
The paradox is that there is real and visible development between Kenya, South Sudan and Ethiopia, which are not Partner States to the EAC.

The LAPSET Project that entails a port at Lamu on the Kenyan coast, with a road and rail link to South Sudan and Ethiopia is the kind of development that we need to see taking shape in the EAC, beyond the strategic plans and master plans with little beyond revisions on paper.

African bug
I am not an Afro-pessimist, but again I am not an Afro-gullibist. The former is well-known, thus no need to elaborate, while the latter is a term used to describe blind, uncritical faith and following in any project African, which usually begins and ends at sloganeering, conferences, workshops and thousands of documents( declarations, conventions, protocols, reports, generations and versions of strategic plans, et al).
The East African Community has not escaped this African bug.

Now at the stage of a Common Market, it is being driven more by textbook ‘characteristics’ of what a Common Market as a stage of economic integration should be, rather than what the East African economy actually is.

Free movement of goods is one ‘characteristic’ of a Common Market and thus the Protocol establishing the EAC Common Market has it as one of its cornerstone hinges.
No speech by the bloc’s leaders ends without the standard ritual of ‘calling-upon’ the removal of non-tariff barriers.

A close examination of these barriers leads to one simple conclusion: protection of national turf in terms of jobs and markets, which itself is a reflection of a hurried paper integration process, oblivious of the objective realities on the ground.
What exactly drives these non-tariff barriers? Free movement of goods within a regional economic bloc presumes a high degree of intra-regional trade within the bloc. Statistics available show that less than 10% of the trade in the EAC is intra-regional, namely only 10 per cent of the goods moving and traded within East Africa are manufactured within the region.

Indeed at a recent workshop on the same subject in Kampala, none of the participants present could stand up and confirm to be wearing any garment made in the EAC. Whose goods then should have free movement?

What is labelled ‘barriers against the free movement of goods’ are actually barriers against transit goods either as imports or exports across the region.

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Non-tarrif barriers here to stay

A random pick of any non-tariff barrier will reveal this common streak: protection of jobs and markets.
•Ugandan tea entering Kenya for the Mombasa Tea Auction is treated as a plant by Kenya, thus has to undergo sanitary and phyto-sanitary(sps) inspection and certification at the Kenyan border, and on reaching Mombasa, it must be warehoused, instead of going straight to the auction floor. The truth here is simple: fighting over a limited tea market by Kenya and Uganda. We produce the same tea, export to the same market, thus this acrimony
•Kenya Revenue Authority requires cash bonds for goods transiting to Uganda (used textiles, shoes et al). This is to prevent physical dumping of purported transit goods onto the Kenyan market. Another case of transit ‘barriers’ to trade.
•The incessant quarrels over sugar, rice, meat, chicks, are a reflection of one bitter reality: protectionism, both of home and export markets. Virtually each EAC Partner State has its own bilateral trade arrangement with its key export markets outside the EAC, whose interests may be at variance with the EAC Common Market ideals.
As one pundit has observed, we legislate integration, but at best practice cooperation. And until the region has made a total paradigm shift, to have a planned, rationalised, focused regional production in key sectors, to produce what we consume and consume what we produce, the entire integration agenda will remain on paper, with foreign-funded plane-hopping ceremonies and countless documents. We may need a few lessons from the European Union integration path: production preceded legislation. EAC is doing the reverse. [Matsiko Kahunga]