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MULTIPLE REGIONAL BODIES BLOCK ECONOMIC COOPERATION IN EASTERN AFRICA

Economic cooperation in the East African region has often faltered owing to the existence of multiple regional bodies all having overlapping mandates.

By Charles Wachira


August 1999

Nairobi: Political rows have intermittently clouded the relationship of Kenya's President Daniel arap Moi and his opposite number in neighbouring Uganda, Yoweri Museveni. It was previously believed that the two leaders, considered heavyweights in the East African region, which is one of the world's turbulent zones, could never work together. But that seems to have changed.

Apparently the two bellicose leaders have actively played the linchpin role in efforts aimed at reviving the East African Community (EAC), whose fate now lies squarely with Tanzania, the other member state.

As if that is not enough, Tanzania is wavering in its commitment to Africa's biggest trading bloc, namely the Common Market for Eastern and Southern Africa (COMESA), which has 21 member states and an estimated population of 370 million people. It was established in 1994 and Kenya currently holds the chair.

The African continent is presently divided into five economic regions: the Northern, Western, Eastern, Central and Southern regions.

Incidentally, on 30 July this year the authorities in Tanzania torpedoed the treaty creating the EAC, citing a technical hitch in the formal draft.

'There are consultations going on on a number of outstanding issues and for sure the treaty will not be signed on the 30th.There are a number of issues still sticking out related to trade matters and there is no point in signing a treaty if there are big gaps,' explained Joshua Opanga, head of the East African Co-operation unit in Tanzania's Ministry of Foreign Affairs.

The stymie which stood in the way leading to the formal signing of accords is to be found in chapter 10 of the draft treaty, which is the document precipitating the formation of the proposed regional trading bloc, says the Tanzanian Government.

The contentious chapter exclusively deals with the nitty-gritty issues that would lead to the formation of a custom union amongst the three neighbouring states.

According to a close source in the Tanzanian Government, a deal can only be cut if Kenya and Uganda accept the use of bilateral protocols to thrash out the issue of trade liberalisation.

Kenya and Uganda have since argued that the draft treaty acts as the sole abiding law for the union, and that it is only after its endorsement in its totality that estranged issues can be sorted out using other forums, amongst them bilateral protocols.

Keen regional observers are convinced that Tanzania is playing subterfuge. They substantiate their claims by pointing out that Tanzania is deeply involved with other trading blocs found within the region where it has an advantageous trading position.

In fact the Tanzanian Government under the current leadership of Benjamin Mkapa has said unequivocally that the core reason why it may tear away from COMESA is because of the apparent duplication of efforts among regional groupings in Eastern and Southern Africa.

According to Dar-es-Salaam the decision to withdraw from COMESA, which has an intra-Africa trade worth US$4 billion, had actually been made known in 1997 but its implementation of the decision had been delayed.

One such organisation is the Southern Africa Development Coordination Committee (SADCC), which has so far failed to resolve key sticking issues in its plan to create a free-trade area within eight years.

Like the EAC, the SADCC is also grappling with problems of its own. Key obstacles in the SADCC trade negotiations include rules of origin and non-tariff barriers to trade, as well as details regarding tariff-reduction schedules.

Striking a resilient pose, trade and industry ministers from among the member countries of the SADCC are optimistic that fortunes will tilt in their favour and have set a meeting in the South African town of Pretoria in September, ostensibly aimed at clinching a deal.

Eleven of the SADCC's 14 members - South Africa, Botswana, Lesotho, Namibia, Swaziland, Zambia, Malawi, Zimbabwe, Mauritius, Mozambique and Tanzania - are hoping to begin dismantling tariffs and other trade barriers next January to bolster intraregional trade.

The other three SADCC members - Angola, the Seychelles and the Democratic Republic of Congo - are not expected in the talks because of what one source said was 'internal problems in the respective countries' but confirmed that they would join the bandwagon 'at a later day'.

Economic experts here comment that Tanzania's reluctance to sign the accords igniting the EAC has among other things got to do with provisions in the treaty that clash with commitments already made under the SADCC.

Tanzania's predicament is a paradigm illustrating a core reason why economic cooperation in the region has more often faltered, namely the existence of multiple regional bodies all having overlapping mandates.

Amongst them is the Inter-Governmental Authority on Development (IGAD), which initially was to focus only on desertification but has since expanded its mandate to include trade.

Established in 1967, the EAC acrimoniously collapsed in 1977 after the leadership in Uganda and particularly in Tanzania groused that Kenya's strong trading position was disadvantageous to them.

The share of trade then among the three countries was in the ratio of 5:3:2 in favour of Kenya, with Uganda next and Tanzania lagging behind.

Today, very little has changed and the disparate levels of trade are not showing any signs of narrowing.

According to Chris Walsh, a senior manager with the local Price Waterhouse Coopers audit firm, the fundamental and perhaps insurmountable problem facing the EAC 'are the relative development, size and power of Kenya's businesses when compared to its partners and the balance of trade among the member states'.

'Kenya enjoys large positive trade balances with both Tanzania and Uganda and the removal of tariff barriers would open up those countries to even greater imbalance. In 1997, Kenya's positive trade balances were US$240 billion with Tanzania and US$272 million with Uganda.'

Equipped with better infrastructure, and arguably a robust middle class, Kenya is way ahead of its two neigbours. It is telling that its currency, the shilling, is the region's favoured unit of exchange.

In retrospect, it is clear that Kenya did not metamorphosise into being the region's economic muscle by fluke.

Upon getting independence in the early 1960s, the three countries followed different paths. Kenya favoured the capitalist system and was considered the blue-eyed boy of the West while Tanzania, under the indefatigable African statesman Julius Nyerere, chose the socialist path. Uganda by then had been snared by political hatred that saw buffoons like Idi Amin Dada - who authored the deaths of tens of thousands of his fellow citizens - forcibly seizing power.

Counting itself lucky not to have experienced a major hitch, Kenya has every reason to want the regional integration.

Currently 47% of Kenya's total exports go to the two neighbouring countries, according to the country's Minister of Trade, Joseph Kamotho.

Official statistics here show that in 1998, Kenyan exports to both Uganda and Tanzania amounted to Ksh 34.6 billion, out of a total of Ksh 120 billion accounted for in the same year.

At the current exchage rates, 75 Kenya shillings fetch one US dollar.

Interestingly the three East African states remain among the poorest 25 countries of the world and 21 of these are in sub-Saharan Africa.

According to a new World Bank report, World Atlas, for 1999, Kenya's gross national product (GNP) is US$340, Uganda's is US$330, while Tanzania lags behind with US$240.

But the World Bank's adjusted per capita purchasing power assessment indicates that both Kenya amnd Uganda have a per capita income of US$1160. Tanzania has US$620.

Per capita purchasing power takes into account real prices on an international level, as well as inflation.

Pessimists who had believed that Presidents Moi and Museveni would not get along had every reason to think so. Since the Ugandan leader took power in Kampala using the gun in 1986, suspicion between the political establishments of the two countries has been overt.

Supporters of the 74-year-old Kenyan leader, who has ruled his country with an iron hand since assuming office in 1979, comment that the Ugandan leader has political ambitions to lord it over all in the East African region.

The claim has not gone well with the Ugandan regime, which has since denied the claim.

With a market populated by about 100 million people, the signing of a new East African treaty would truly be beneficial to the locals as economies of scale would gradually lead to efficiency and the proper utilisation of resources.

'If Moi and Museveni can at last agree to put their political differences aside for the sake of their people then we cannot rule out that Tanzania will see the logic of joining in. Miracles do happen,' muses Steve Ochieng, a computer operator in the dormitory town of Ngong, situated 30 kilometres west of Nairobi. - Third World Network Features

About the writer: Charles Wachira is a Nairobi-based contributor to Third World Network Features.

1935/99

 


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