The rebirth of the East African Community
By Lanre Akinola | Published: 31 May, 2010
A new report from brewer SAB Miller, “The East African Community: Why this time is different,” gives a cautiously optimistic assessment of the East African Community’s prospects in building a coherent regional economic and political framework at the second attempt.
The EAC was re-established in 1999 following its collapse in 1977. Ethan Kapstein, chair in political economy at Insead and author of the report, argues that the factors that contributed to the organisation’s earlier demise have in the most part been addressed, which accounts for the significant strides that the organisation has taken since 1999.
Pointing out that the exact reasons for its collapse are still a contentious issue, he nevertheless identifies three central hypotheses on which there is some level of consensus
The first is that Kenya was simply too big relative to its neighbours in the 1970s, thus capturing all the gains of regional integration for itself. Secondly, significant differences in the political systems of member states led to a lack of trust between leaders that is fundamental to deeper integration.
The third hypothesis is that the underlying economic structures of the member-states, which were mainly agricultural at that time, did not enable them to gain much from integration.
On all three counts, Mr Kapstein argues that the landscape has undergone considerable change.
“In terms of the relative scale argument, the fast growth of Uganda and Tanzania in comparison to Kenya over the past ten or twenty years has not only narrowed the gap between them and their larger neighbour, but it has given these smaller nations confidence in their competitive abilities.”
On the political front, Mr Kasptein argues, “all three countries are much closer politically than they were thirty years ago in important respects.
“Finally, changes in the economic structures of these countries, coupled with a growing middle class that has increasingly sophisticated product demands, suggest that the benefits from trade may be much greater than at earlier times when the commodity structures of all these countries were mainly agricultural.”
These new realities do give some reason for optimism that the EAC will fare better this time, when it comes to the gains that each country can expect from deeper regional integration.
He does however caution that this leaves little room for complacency, and that the EAC’s continued success is contingent on a deep commitment by all of the stakeholders of regional integration.
“Regional elites must become committed to collective investments in, among other things, infrastructure to facilitate regional trade, along with improvements in governance that give investors and traders confidence in the political-economic environment for business,” says Mr Kasptein.
“Foreign direct investors will also have a role to play in the EAC’s success by committing capital and technology to this expanded economic arena. Finally, the international community needs to ensure progress in world trade negotiations so that competitive enterprises based in East Africa meet with a ‘level playing field’ when their products seek global markets.”
