Demystifying the East African Community (Part-I)

Looking back to my A’ Level days as someone keen on understanding the way an economy works, I never imagined (then) that politics and economics are so similar yet so different in their theories and practices that I knew I needed to do a BA(Economics) to rectify all my misgivings on the issues then and now.

As economies grow, they realise the need to earn more in order to provide for their own i.e. their own population needs newer opportunities so as to thrive and the cycle goes on and on. This earning however comes at a cost of exchanging commodities and services across their own borders if their population cannot meet its demand (unless you have a population like China and India).

images EAC againSo to be able to take advantage of the future growth potential of the three economic units of Uganda, Tanzania and Kenya, the Presidents at that time (Milton Obote – Ug; Jomo Kenyatta – Ke, and Julius Nyerere – Tz) chose to sit on a round table and become one unit for different reasons ranging from economic to diplomatic as well as political.

To understand the gravity of the choice to become one unit, the East African Community (EAC), one must fully understand the difference in political and economic thought at the time, the mid 1960s… A time that was fraught the world over with times of Governments taking care of their citizens and likewise citizens were taking care of their governments in an impartial and wholly productive manner. So initially when the above mentioned Their Excellency’s were listening to their advisors, Economists and Political Analysts alike, the idea to come together as a unit for the common goal of allowing each one’s citizens to prosper was what came first in their minds.

Between the years of 1967 and 1977, the East African Community burgeoned from a simple coffee drink of Presidents into a formal document, a regional development Bank (The East African Development Bank), the set-up of the East African University (split between Makerere University, University of Dar-es-Salaam and University of Nairobi); the East African Railways; The East African Railways and Harbour Corporation and if they had thought it through then, possibly a very well structured East African Customs Union matching with the well sounding East African Monetary Union.

Let’s not get it twisted, the EAC seemed to be way ahead of its time in ideologies and thus became a blue-print for the current European Union (EU), but that notwithstanding, the EAC was not to stay too long and in 1977, it collapsed. At this time of collapse, regional integration in East Africa had reached the highest level experienced in the world. indexThe EAC was both a fully-fledged Customs Union and a Common Market. It shared railways and harbours, airlines, civil aviation, inland waterways, road transport systems, post and telecommunications, power and lighting, customs and tax management, health and medical research, aviation training, pesticides research. At the same time, under the EAC umbrella were the East African Court of Justice, an East African Legislative Assembly, and a regional Secretariat. Not even the current European Union has an institutional framework as elaborate and powerful in decision making as that of the EAC at the time of its collapse in 1977.

Following the dissolution, the Member States negotiated a Mediation Agreement for the Division of Assets and Liabilities, which they signed in 1984. Reasons for its demise have been spread abound and revolved mainly around change in ideological thinking and as such a game of who can take more by getting more prevailed.

Tanzania was opposed to a zero tariff regime arguing it will be unfair to treat Kenya, Tanzania and Uganda equally as if they were at the same level of economic development. It was equally opposed to free movement of factors of production especially labour and right of establishment arguing if these were free Kenyans could flock into Tanzania in search of land and job opportunities that Tanzanians themselves need.

Tanzania wanted a common understanding that the three countries were at various levels of economic development and should not be treated uniformly especially when it came to application of tariffs. Tanzania was in favour of a ‘step by step’ approach to integration. Uganda stood with Tanzania on this position while Kenya preferred a delay until more of contentious details had been agreed upon.

Tanzania wanted the issue of trade imbalances recognized in the Treaty and mechanisms to correct it. Kenya’s perceived dominance in the EAC trade had been a sticking issue for a long-time.

Ideologically, the three countries were very different. However, Kenya adopted capitalism; Tanzania adopted socialism, while Uganda was also going leftist. Kenya which feared socialist regimes developing in the region co-operated with Uganda to check the growing Tanzania-Uganda socialist ideological axis, and ensure her hegemony in the region. Amin’s coup of 1971 broke the Tanzania-Uganda axis as Tanzania refused to recognize Amin and gave political asylum to Dr. Milton Obote.

On the other hand, Tanzania saw intra-regional trade as benefiting the foreign investors in Kenya who had captured Ugandan and Tanzanian markets. This led to the closure of Kenya-Tanzania border and a lot of political acrimony in the relations of the two.

Uneven levels of development among the three states were equally blamed for the collapse of the East African Community. Controversy over gains from co-operation ruined any efforts to correct the imbalance.

Political trends in Uganda especially after the Idi Amin Coup of 1971 shattered the hopes of integration in the region. While Kenya did not do without Uganda’s market, Tanzania did not recognize Amin’s government.

Another problem that led to the collapse of the EAC in 1977 was the lack of political will after independence as the new East African leaders got busy with consolidating power. Again, Uganda and Tanzania viewed EAC as a zero-sum game or even a negative-sum game given the dominant position held by Kenya. So, they may have wished the EAC to collapse than proceed on smoothly. 

A few successes of the East African Community:

The EAC eliminated or reduced tariffs on goods traded within the Community, made it easier for workers and companies to do business in any of their countries and created institutions to implement policies uniformly across the region.

  • Joint infrastructure development projects (e.g. Arusha-Namanga-Athi River Road)
  • Reduction of national trade barriers
  • Harmonization of standards for goods produced in East Africa
  • Mutual recognition of health certificates issued by national bodies for goods traded in East Africa

Fast forward 16 years later in 1993, the urgency to re-switch on the EAC and its fast-tracking occurred and subsequent meetings of the then three Heads of State led to the signing of the Agreement for the Establishment of the Permanent Tripartite Commission for East African Co-operation on November 30, 1993.

In the second article in this 3-part-series, i shall break down the re-switching-on-phase of the East African Community that occurred between 1993 and 2001.

Edmund KamugishaEdmund is the Engagement Director at BLEGSCOPE®, and has over 9 years of management consultancy experience notably in MSMEs, FMCG companies and in the service industry. You can follow him on twitter: @edmokmg

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