How the East African Community may not survive the current pandemic and why this may be a good thing
THE LAST WORD | ANDREW M. MWENDA | The coronavirus disease has exposed the deep holes in the dream and delusions of the East African Community (EAC). It has not caused them. The gapping holes between the aspirations of the EAC’s key advocates on the one hand, and the reality of our economies and their politics on the other were already visible to those who cared to look. Most fans of regional integration schemes ignore the vital role of enlightened self-interest in the success of public policy.
The question for the relevance and, therefore, the success of the EAC project has always been: whose interests does it serve? And does such a constituency enjoy a politically weighted majority in each of these countries to tilt the levers of power in its favour?
Every time I speak to its advocates, I get the sense that they base their entire aspirations on “ideology” – an intellectual conviction that such schemes create large markets that attract investment. Ideological convictions are an important and necessary condition for successful public policy, but they are hardly sufficient.
Long before COVID, Kigali had imposed a trade embargo on Uganda accusing Kampala of plotting regime change. Kigali did this because it felt Kampala was not listening and responding to her complaints. Hence President Yoweri Museveni’s personal ideological commitment to East African integration did not (and could not) be sufficient to ensure the smooth handling of our delicate relations with Kigali. In any case, in spite of his strong convictions about the need for and necessity of integration, he also has fears and anxieties that may play a bigger role in his attitude towards neighbours.
But Uganda’s problems are not only with Rwanda. Before Kigali had closed its border, Dar es Salaam had ratcheted up a series of non tariff barriers against Ugandan goods. The aim was to reduce her trade deficit with Uganda. Amidst all this, Kenya imposed restrictions on Ugandan eggs, milk and chicken as our firms began outcompeting hers. In all these cases, Uganda’s partners in the EAC acted unilaterally and Kampala has not gone to court to challenge any of these gross violations of the EAC treaty, and neither has it retaliated by imposing similar restrictions.
Yet these squabbles are not just between Uganda and her neighbors. Rwanda and Burundi are on the edge of war and Kenya and Tanzania are fighting over whose trucks should cross into whose country. Tanzania has been expelling Ugandan and Kenyan workers and blocking Rwandan goods over its relay system for truck drivers. The failure of the EAC to adopt a common policy to contain COVID is one example. Its bigger failure is in not playing a role of reconciling members – Rwanda versus Burundi and then Uganda versus Rwanda. Sadly, it is Angola and DRC mediating the conflict between Kampala and Kigali.
Regional economic integration through the creation of what are actually customs unions is not a good thing for poor countries. An average African country belongs to about four such bodies, reflecting the ideological obsession with them. Yet experience shows that these regional schemes never work as anticipated.
The original EAC collapsed in 1977 in what many people think was because of disagreements between then-Tanzanian President Julius Nyerere and Uganda’s Idi Amin. Yet by the time the EAC collapsed, Tanzania had closed its border with Kenya, and it is disputes between Jomo Kenyatta and Nyerere that brought it down, more than Idi Amin. In our poor countries, social groups with a strong vested interest in such regional schemes are too weak (politically) to tilt public policy in favour of regional economic integration.
Secondly, the economist Tony Venables has shown that customs unions tend to benefit those nations closest to the global average income. In rich regions of the world, the nations closest to the global mean are the poorest in their region. In European Union’s case, these were Portugal, Greece and Spain. Being part of the EU protects their workers from cheap labour in poorer countries of other regions, while shifting investment opportunities from rich countries like France, Germany and the UK with high labour costs to these relatively poorer countries with almost the same skills but with cheap labour. Regional integration, therefore, pulls the poor ones up.
This is the reverse for customs unions in poor regions. Here, the countries closest to the global income mean are the better off in the region. In East Africa, the benefits of regional integration would go to Kenya with its more developed infrastructure, better human capital, literally by protecting Kenyan workers from competition from more advanced countries. So most investors would prefer to locate their businesses in Kenya to serve Uganda, Rwanda, Burundi and South Sudan. This tends to relocate incomes upwards from these poorer economies to better off Kenya.
African countries are culturally diverse. This demands too many political compromises to achieve internal social integration. Hence it is hard to build a policy consensus on transformative change. In expanding the administrative reach of these nations to a regional scale, one complicates decision making even more. The result is that good policy proposals would get bogged down in endless wrangling.
Yet the more important lesson of regional integration, especially one that seeks to create a political federation is that it stifles innovation. We need to begin to see our small countries as laboratories of innovation. When an innovation is resisted in one lab (Uganda), it has a chance to migrate to Kenya or Tanzania or Rwanda. If one of these governments adopts it and it succeeds, it can return to Uganda via demonstration effect. In creating a federated East Africa, we may achieve a grand political scheme but at the price of stifling quick decision making and killing laboratories for innovation.
Finally, we should remember that the most dominant influence on government in our nations is from interests with a parochial vision: farmers, petty traders and intellectuals. We do not have a class with interests in creating and enlarging markets for their goods across the region. The others are multinational corporations, represented bilaterally and multilaterally by their home governments and international agencies. Their vision is securing markets for their products, not building domestic constituencies with a vested interest in regional integration.
The point is that regional integration is neither good nor bad. It depends on context. The conditions for successful integration do not exist in our poor countries. They need to be created first. For now we are better off without them.
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