East African integration: State of play

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1 August 2014 East African integration: State of play The East African Community (EAC) represents Africa s most ambitious regional integration drive. With the ultimate aim of a political federation, progress has been slow with an ever dynamic political environment and strong nationalist sentiments posing the greatest challenge to seamless integration. The 2013 birth of the Coalition of the Willing (CoW) injected much needed, if controversial, impetus to the region s integration effort. Bold steps to fast-track integration by the presidents of Kenya, Rwanda and Uganda have demonstrated the substantial strides that are possible with political support at the highest levels and against the odds, the move to exclude Tanzania and Burundi has brought the EAC closer together. Political union remains a long way off but the movement of people, capital and goods within EAC boundaries is improving. For individuals and corporates in the region the process may seem sluggish but clear benefits from closer integration are already starting to materialize. Progress to date Since its revival in 2000, after the 1977 collapse, the EAC has ratified Customs Union, Common Market and Monetary Union protocols and is in the process of drafting the plan for a Political Federation. Significant progress has been made in the implementation of the Customs Union and Common Market; intra-eac trade is increasing and the number of non-tariff barriers has been substantially reduced. Other issues remain unresolved and the monetary union will be far more complex but EAC integration is at least heading in the right direction. Shoul d you wis h to discuss wit h the author s, pl ease c ontact: Rob ert Nde ge: rnd ege@ africapr actice.com or Frank Nyam b weke: fnyam b weke@a fricap ractice.com africap ractice advises ind u s try and gover nments; hel p ing them t o ide ntify opp ort unity, mana ge risk and overc o me critical commu nications challeng es. A c c ra - C o n a k r y - D a r e s S a l a a m - H a r a r e - J o h a n n e s b u r g - L a g o s London - N a i r o b i - S y d n e y

2 A c c r a - C o n a k r y - D a r e s S a l a a m - H a r a r e - J o h a n n e s b u r g - L a g o s - London - N a i r o b i - Sydney East African integration: State of play

3 Coalition of the Willing In large part recent progress must be credited to the Presidents of Kenya, Uganda and Rwanda Uhuru Kenyatta, Paul Kagame and Yoweri Museveni who in June 2013 upped the ante by forming what has come to be known as the coalition of the willing. The coalition, whose official name is the Tripartite Initiative for Fast Tracking the East African Integration, excluded Tanzania and Burundi, seen by their partners as laggards in the integration drive, and held three summits in The three presidents agreed on several measures aimed at fast tracking integration efforts in the region, with an initial focus on joint infrastructure projects and the eradication of NTBs in the Northern Transport Corridor that covers Kenya, Uganda, Rwanda and South Sudan and is a vital trade link for landlocked countries in the region. CoW achievements have included: INFRASTRUCTURE: The three countries signed a tripartite agreement for the development and operation of a standard gauge railway (SGR), getting the ball rolling on an infrastructure project that has the potential to transform the region. The SGR is designed to run from the port city of Mombasa through Nairobi to Malaba on to Kampala, Kigali, and Juba. It will supplement the current slower narrow gauge line built in colonial times by the British which only runs from Kenya to Uganda. With almost 90 per cent of cargo transported from the port of Mombasa being presently moved by road, SGR has been presented as a necessary alternative. NTBs: The CoW has taken swift action to limit the impact of NTBs. President Kenyatta, following the CoW discussions, ordered for operations at the port of Mombasa to be streamlined leading to a reduction in the time taken to clear goods. He further ordered for the number of road blocks on transit to Uganda to be reduced. As a result, according to an EAC ministers report from the 5 th CoW summit held in May 2014, the clearance time for cargo destined for Kampala at the Mombasa port dropped to 4 days from 18 days, and 6 days from 21 days, for cargo destined for Kigali. Additionally, the cost of clearing a container destined for Kampala has reduced from USD 3,375 to USD 1,731. For a container destined for Rwanda, the cost has reduced from USD 4,990 to USD 3,387. FREEDOM OF MOVEMENT: Rwanda led the way on efforts to ease the free movement of persons and labour in the bloc by abolishing work permit fees for all EAC citizens. Kenya followed suit and at the beginning of 2014, Uganda also abolished work permit fees for Kenyans and Rwandans. For multinationals running multiple offices in the three countries, cross-border operations will be greatly eased. Further, as of February 2014, citizens of Kenya, Rwanda and Uganda are able to travel anywhere in the three countries using only their national identity cards previously, passports were required. The three countries also launched an East Africa visa in June The 6 month visa allows residents and expatriates residing in the three countries to travel freely within the 3 countries. The heads of state also authorized the establishment of a single tourist visa for the three countries. These developments mark significant improvements to travel within the region, both for business and leisure. ICT: The CoW has announced plans to establish a single area mobile network by the end of The single area network will result in the elimination of roaming charges in the region. Beginning August 2014, mobile phone users in Kenya, Uganda, and Rwanda are expected to enjoy a 20 per cent cut in tariffs on cross-border calls. This will follow harmonization of taxes on mobile services by the three countries in April 2014, which resulted in a reduction in charges for text messages, and voice and data services. Indications are that Tanzania and Burundi will be invited to join the single area network. Successful implementation of this initiative will, albeit virtually, connect East Africans better than they have been at any point in history.

4 OTHER: Perhaps most significantly, CoW partners agreed to fast-track implementation of the Single Customs Territory (SCT) ahead of their EAC partners. They also signed a Memorandum of Understanding (MoU) on defence, security and foreign affairs policy, effectively an attempt to fasttrack the political federation. Progress from adversity The emergence of the CoW and exclusion of Tanzania and Burundi was not driven solely by economic interests. Its emergence coincided with a period of tense diplomatic relations in the region. Tanzania President Jakaya Kikwete, in May 2013, called for Rwanda to engage in peace talks with the Democratic Forces for the Liberation of Rwanda (FDLR), a rebel group which Kigali holds responsible for atrocities during the 1994 Rwandan genocide. Rwandan President Paul Kagame took great exception to President Kikwete s sentiments. At the same time Tanzania s robust participation in a UN led intervention force in the Democratic Republic of Congo (DRC) also raised diplomatic tensions with Uganda, a country which is never too far from the rough and tumble of Congolese politics. Furthermore, in July 2013, Kikwete expelled 35,000 illegal immigrants from Rwanda, Uganda and Burundi. Meanwhile Kenya was intent on realigning its foreign policy to focus more on regional relations in the face of International Criminal Court (ICC) charges facing its president and deputy president. When Tanzania broached closer ties with DRC and Burundi, an eventual EAC collapse seemed probable. The actions of the CoW initially exacerbated tensions: President Kikwete, in November 2013, in a fiery address to his country s parliament, strongly criticized CoW s interventions on issues that he felt were already under the purview of various EAC protocols. He specified the use of national IDs as a travel document, political federation, single tourist visa and Single Customs Territory. Kikwete strongly stated that discussions on the political federation and single customs territory ought to include Tanzania, clarifying that he was comfortable with CoW fast tracking the rest. Critically though, the president underlined that his country was in the EAC to stay. Fortunately there was a de-escalation in rising tensions in January 2014 when the CoW summit scheduled to take place in Kampala was cancelled at the last minute. It was subsequently held on 20 th February, 2014 with Tanzanian Vice President Dr. Mohamed Gharib Bilal and Burundi s Vice- President Geravis Rufykiri in attendance, in addition to CoW heads of state. During the summit, the heads of state resolved to allow Tanzania, Burundi and South Sudan to submit their areas of cooperation/interest by the next summit. At the 5 th CoW Summit in May 2014, Tanzania was represented by Prime Minister Mizengo Pinda with Burundi s VP also in attendance. Importantly, the two nations are now on board in the implementation of the SCT, albeit some steps behind. Forging ahead Against the odds, the COW has improved levels of collaboration among all five member states and injected precisely the kind of impetus that is required if EAC s integration goals are to be achieved. The February 2014 scorecard launched by the EAC Secretariat, in conjunction with the World Bank, to monitor the implementation of the common market in the five member states still makes for sober reading. The report leaves no doubt as to the colossal task that awaits member states in order to achieve full common market status with only one year remaining to the initial 2015 target. It also drives home the challenge of ensuring that the message of integration and its implications trickles down to ordinary citizens. The EAC Secretariat for instance lists the adoption of an EAC anthem as an achievement, yet one will be hard pressed to find an East African who can identify its tune let alone mouth its words.

5 That notwithstanding, the region is already much more unified; a region in which business and personal interactions are becoming a lot easier. Companies with operations in the EAC will, for instance, increasingly draw greater benefits from the efforts being made to facilitate smooth movement of people, capital and goods within the region s boundaries. It has been fourteen years and counting, and the second attempt at integrating the East African region has already surpassed the ten years that the previous effort lasted. One day, this tenacity could just see East Africa emerge as one.