x Abu Dhabi, UAEFriday 28 July 2017

East Africa's borders begin to fall before common market concept

New laws establishing the groundwork for a common market expected to boost investment and cross-border trade between five countries.

Maize imports  are loaded onto a truck at Kenya's  coastal port of Mombasa, which serves as a conduit for goods destined for landlocked East African Community members.
Maize imports are loaded onto a truck at Kenya's coastal port of Mombasa, which serves as a conduit for goods destined for landlocked East African Community members.

NAIROBI // The borders between East African countries are beginning to fall as the East African Community moves towards creating a European Union-style federation. Last week, the five countries that make up the East African Community implemented new economic rules to create a common market. The laws are expected to boost cross-border trade, investment and employment between Rwanda, Burundi, Kenya, Tanzania and Uganda.

The steps are part of a plan to integrate the five economies into a single market with a single currency similar to the EU. The East African Community (EAC) was founded in 1967 by the former British colonies of Kenya, Tanzania and Uganda but collapsed 10 years later over political disagreements among the member states. It was reinvigorated a decade ago with the addition of Rwanda and Burundi, with the goal of achieving a single currency and a political federation by 2015.

"What we have achieved so far is only the basic legal framework that outlines what needs to be done," Juma Mwapachu, the secretary general of the EAC, said in a statement. "It is a milestone that epitomises strong political will and firm commitment by all the EAC stakeholders in deepening and widening integration." The new set of rules will allow goods and workers to move freely between the five countries. The EAC already charges a uniform set of duties on goods from outside the region, and now products traded between countries are duty free under a customs-union agreement.

The five countries have long been trading partners. Landlocked Uganda, Rwanda and Burundi rely on the Kenyan and Tanzanian ports of Mombasa and Dar es Salaam for supplies. A railroad connects Kenya's Indian Ocean port to Uganda. Kenya, Tanzania and Uganda, the three largest economies in the bloc, have enjoyed growth rates of more than five per cent in the past year. Uganda is poised to start producing oil and exporting it through a new pipeline into Kenya and on to the coast. The countries in the bloc mostly rely on agricultural exports.

With the goal of moving to a common currency within the next five years in reach, leaders have talked about making the bloc into a single nation. The East African Community already has a parliament and a court. "Together we are now five countries with a total area of 1.85 million square kilometres, a combined population of 126 million people, and a combined GDP of US$75 billion [Dh275.5bn]," said Mwai Kibaki, the Kenyan president. "This is a great region with vast potential for business and social networking for our people."

The East African common market is not a first for Africa. The West African economic and monetary union, formed in 1994, brings together eight West African economies under a single currency, the CFA Franc. EAC member states still must approve the new rules and make changes to local laws to allow for the common market, but most have already begun the process. The next step will be working toward a single currency, Amason Kingi, Kenya's EAC minister, said at a press conference.

"Chiefs of central banks are spearheading the process," he said. "By 2012 we are supposed to sign another protocol for the establishment of a monetary union." The EAC is also planning for a single tourist visa for all five countries and the member states are collaborating on a new railway line that would run from the Indian Ocean to Burundi. The ultimate goal of uniting as a single nation may be harder to achieve. Rwanda and Burundi, former Belgian colonies, speak French, although Rwanda is moving towards English, the language of the three former British colonies. However, all five countries share Swahili as a common language.

As the East African Community moves toward a single currency, leaders can learn lessons from the European Union's single market, The East African, a regional newspaper, said in an editorial. "What can the EU experience teach the EAC? First, the economic disaster of its eurozone, currently raging in Greece, should inform our remaining stages of integration to create stronger checks, more so in the very next Monetary Union phase," the newspaper said. "Secondly, the EAC's integration process should live up to the mantra of its treaty: a people-centred, private sector-led community."

@Email:mbrown@thenational.ae