EAC had a spirited 2014, but what does the future hold?

Yes, there was a discouraging wrangle in the East African Legislative Assembly (Assembly) and yes, al-Shabaab attacks again raised concerns over Kenya’s as well as the wider East African Community’s security. But the Community’s overall 2014 performance had some positives whose end product impacts on the future of the five-member regional bloc. The past 12 months saw no violent inter-state conflict and, in a way, the EAC is open for business in 2015. Minus al-Shabaab’s terror in Kenya, the relative peace and stability remains critical in attracting investments to the region. What’s more, the recent respite in the Legislative arm of the Community also puts east Africans’ minds at ease as EALA is now expected to concentrate and deliver on its legislative responsibilities. So important was the call by new Speaker, Daniel Kidega, when, after taking charge, vowed to bring unity in a house previously dented by members’ disapproval of his predecessor. The extended wrangle over Margaret Zziwa’s alleged abuse of office had threatened to erode east Africans’ trust in the House. With new trusted and trusting EALA leadership, hopefully, 2015 will bode well for the region. The positive and constant hustle and a bustle by the pace setters of the Northern Corridor – Kenya, Rwanda and Uganda – continued to accelerate integration, boost trade, and enhance security. The trio’s initiatives were a beacon of hope, and a sign of what the future probably holds. Among others, looking to cap off 2014 with an ‘unforgettable flash,’ the leaders of Kenya, Rwanda, Uganda and South Sudan, during December’s 8th northern corridor integration projects summit, signed an MOU on management of northern corridor air space, among others. The deal will deliver in the development of the infrastructure for transmission, power trade, and significantly reduce the region’s cost of air travel by 40 percent. The leaders also directed their ministers to expedite ratification of the Standard Gauge Railway (SGR) protocol. The SGR, despite small start-up hitches here and there, as common with nearly all gigantic projects, will in future supplement the bloc’s road transport and increase efficiency especially by providing landlocked economies (Uganda, Rwanda, Burundi) a better and faster access to Kenya’s maritime port of Mombasa. With an envisaged high design standard, the $3.6 billion double-track SGR (1,435mm), 1,890 km from Mombasa to Kigali line is expected to transform transport logistics in the region, stimulate economic development and benefit all east Africans. In February, the EAC issued regulations to enhance the operationalization of the EAC standardization, quality assurance, metrology and testing Act (SQMT), to facilitate regional trade. The regulations, among others, will provide consumer confidence of products traded in the region. That same month, a new tool, a Scorecard, to assess progress toward developing the EAC Common Market was launched. It measures Partner States’ compliance to the free movement of capital, services and goods. At its launch in Arusha, EAC Secretary General, Amb. Sezibera said: “The scorecard is not about pointing fingers, or apportioning blame. It is about identifying areas where we are doing well and strengthening them”. In 2015 and beyond, the Scorecard will help identify areas where reforms are required to meet expectations in the bloc’s integration agenda. It is expected to also foster peer learning and facilitate the adoption of best practice in the region, thus helping fortify the regional market, grow the private sector and deliver benefits to consumers. Also, tourism officials from Kenya, Tanzania and Uganda, met to mull over thorny issues that afflicted the sector since 2010. That the meeting happened was in itself an achievement. Outstanding among the issues that the ministers haggled over was that countries were denying entry of tourist vehicles registered in others’; cross border cooperation in wildlife law enforcement; and harassment of driver guides at border crossings; as well as disparities in fees charged. Ironing out these issues will impact on the bloc’s tourism sector in 2015 and further. The urgency and importance of cutting donor dependence was reiterated in 2014. Of the $117.5 million 2013/2014 budget, EAC countries contributed $37.2 million and donors, $79.8 million. In March, Sezibera urged the Summit to adopt the alternative financing mechanism of 1% of customs revenue as earlier proposed so as to provide for financial solidarity and equity, key tenets of the integration process. Some countries are now mobilizing domestic resources, either through infrastructure levies, or through setting aside monies from their own budgets,” said Sezibera. “Secondly, because of good macro-economic management, our countries are able to borrow from capital markets. Rwanda has issued bonds. Kenya did the same and Tanzania will do the same”. Furthermore, the March launching of the EAC Payment and Settlement Systems Integration Project (EAC-PSSIP), an important project in light of the proposed East African Monetary Union (EAMU), the third stage of EAC integration, was important. The US$23 million EAC-PSSIP project aims to enhance convergence and regional integration of payment and settlement systems; strengthen a harmonized legislative and regulatory financial sector; and build capacities in EAC countries. The project, said Dr. Enos Bukuku, EAC’s Deputy Secretary General (Planning and Infrastructure), is a requirement for the development and implementation of secure, efficient, reliable and integrated payment and settlement system to ensure efficient flow of financial transactions within the Monetary Union. Collaborating on security When Kenya, a gateway to most landlocked EAC partner states, hurts there is no doubt that others too feel the pain. The pain inflicted by Al-Shabaab militants on Kenya is a threat to Uganda and Rwanda. It was critical, when in October, Kenya, Rwanda, Uganda – and Ethiopia – contributed the bulk of a now ready-to-deploy military fighting force of 5,000 troops under the Eastern Africa Standby Force (EASF). EPAs The negotiations on Economic Partnership Agreements (EPAs) with the EU that started in 2007 were completed. It is the first time that the Community negotiated terms of trade with Europe and the deal is better than nothing. Even though the real benefits to EAC will have to be seen rather than expected, concluding the deal was significant as it ended the long-drawn-out and wearisome process of negotiations. The deal, it is hoped, will eventually provide legal certainty for businesses and open a long-term perspective for free and unlimited access to the EU market for products from the EAC. In November, the East African Trade and Investment Hub, a regional programme intended to increase food security and ramp up trade and investment between the US and east Africa was launched. The Hub, it is hoped, will assist EAC’s private sector to engage with government in finding practical solutions to constraints to trade and investment, as well as build awareness around opportunities for African and U.S. firms to increase trade, expand business partnerships, and invest in east Africa. On December 5, the International Criminal Court (ICC) Prosecutor withdrew the case against Kenyan President Uhuru Kenyatta. Despite a lurking chance the prosecutors may bring back charges, the collapse of the case was a welcome moment for EAC leaders, and citizens, who all the time disagreed with the trial. Bad news Yes, the bloc largely stood on the weak side during 2014 and, arguably, apart from the Northern Corridor initiatives whose achievements will ultimately benefit the whole region, little else was really exciting. For one, the ill of corruption remained a nagging burden. EAC countries generally continued to perform poorly in the fight against corruption with none surpassing the 50 per cent threshold in the latest global corruption perception index by Transparency International (TI). The World Bank’s Doing Business 2014 report also paints a damning picture of the regional business climate, with the exception of Rwanda. A key obstruction in the regional fight against graft is that regional anti-corruption agencies held opposing views on whether to give prosecutorial powers to their respective anti-corruption agencies. The signing of the EAC Protocol on Preventing and Combating Corruption was hampered by such differences. Beyond 2014, to create jobs, the partner states will need to jointly take further steps to tackle corruption, simplify business regulation and create a vibrant regional common market, among others. Frosty relations It remains unclear how the heart of inter-EAC relations will beat after Tanzania and Burundi hold their respective presidential elections, in 2015. But it is clear that regional leaders’ relations and camaraderie matter for the integration agenda to thrive. Without the leaders’ amity, a scenario akin to that which led to the EAC’s 1977 collapse would, regrettably, be inevitable. External shocks Besides other unpredictable socio-economic external or global shocks, the wave of violence and instability in the bloc’s shaky neighbors, especially the DR Congo, South Sudan and Somalia, is another cause for concern in 2015 and afar. Peace and stability in these neighbors would by the same token imply socio-economic gains for the EAC, and vice-versa. The two-year old tit-for-tat violence in the world’s youngest state which seceded from Sudan in 2011, for example, did not only claim thousands of lives, displace thousands others and wreck the nascent oil economy but also directly hit the economies of Uganda and Kenya, some of South Sudan’s biggest trading partners. Apart from the effect on cross-border trade, Uganda sent troops to assist President Salva Kiir against rebels led by his sacked vice-president, Riek Machar, forcing the country into war spending which definitely eats into its development budget. On the other side, since the Operation Linda Nchi began in 2011, Al-Shabaab vowed retaliation against Kenya. Burundi, which has provided the second largest contingent to the African Union Mission in Somalia (AMISOM), has also received threats from the militants. Somalia’s insecurity has not only affected its hope of joining the EAC. It hampers EAC’s economic progress when the bloc is forced to reinforce security at the expense of entirely focusing and pursuing much needed economic development. Analysts say that only deepening security cooperation in eliminating al-Shabaab and other security threats can deliver an enormous peace dividend benefiting not only Kenya and Somalia, but also the entire EAC in 2015 and beyond.

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EAC had a spirited 2014, but what does the future hold?