Burundi, Kenya, Rwanda, Tanzania, South Sudan, and Uganda’s governments have tasked the East African Community (EAC), a regional body, with driving the region’s economic, social, and political integration agenda. The Federal Republic of Somalia’s President, H.E. Hassan Sheikh Mohamud, pleaded with the East African Community to expedite his nation’s entrance. The president stated that Somalia’s membership in the Community has been a long-awaited goal for both its people and its government, and he pleaded with the Secretary-General, Hon. (Dr.) Peter Mathuki, to hasten the admissions procedure so that Somalia can become the EAC’s eighth member.
Over 30% of the estimated 283.7 million residents of the EAC live in cities. With a cumulative Gross Domestic Product of US$ 305.3 billion and a land expanse of 4.8 million square kilometers, its realization has significant strategic and geopolitical ramifications for the revitalized and revived EAC.
The EAC is guided by the Community’s founding Treaty. It was ratified by the initial three Partner States, Kenya, Tanzania, and Uganda, on 7 July 2000, after it had been signed on 30 November 1999. The Republic of South Sudan joined the EAC Treaty on April 15, 2016, and on August 15, 2016, it became a full member. The Republics of Rwanda and Burundi joined the Treaty on June 18, 2007, becoming full members of the Community with effect from that date. The Democratic Republic of Congo, the newest member of the Community, ratified the EAC Treaty on 8 April 2022 and was admitted as a full member on 11 July 2022.
The EAC, one of the world’s fastest-growing regional economic blocs, is expanding and deepening cooperation among its Partner States in several crucial areas for their mutual benefit. The political, economic, and social realms are among them. The East African Customs Union is making positive strides, the Common Market was established in 2010, and the East African Monetary Union Protocol has been put into effect, all of which show that the regional integration process is currently in full motion.
According to Article 75 of the Treaty for the Establishment of the East African Community, the Customs Union is the first Regional Integration milestone and a crucial component of the EAC, which has been in existence since 2005. It denotes that the EAC Partner States have decided to establish free trade (or no duty imposed) on goods and services among themselves and have also decided on a common external tariff (CET), under which imports from nations outside the EAC zone are subject to the same tariff when sold to any EAC Partner State. The EAC Rules of Origin and specific requirements of the Protocol for the Establishment of the East African Community Customs Union must be followed by goods traveling freely within the EAC.
The EAC, which has been in operation since 2010 under the EAC Treaty, has reached its second regional integration milestone with the establishment of the Common Market. It requires that the EAC Partner States maintain a liberal position toward the two Rights among themselves and the four Freedoms of movement for all the elements of production to hasten economic growth and development. The operational tenets of the Community, namely:
- Non-discrimination of nationals of other Partner States on grounds of nationality;
- Equal treatment to nationals of other Partner States;
- Ensuring transparency in matters on the other Partner States; and
- Sharing of information for the efficient implementation of the Protocol, form the basis of the EAC Common Market.
The East African Monetary Union (EAMU) is a crucial step towards the regional integration of the EAC. The EAC Partner States may gradually converge their currencies into a single currency in the Community under the terms of the EAMU Protocol, which was approved in line with the EAC Treaty and signed on November 30, 2013. The EAC Partner States seek to harmonize monetary and fiscal policies, financial, payment, and settlement systems, financial accounting and reporting practices, policies and standards for statistical data, and the establishment of an East African Central Bank in the lead-up to achieving a single currency.
The East African Community (EAC) has received praise from the International Monetary Fund for the steady progress it has made toward the creation of the East African Monetary Union. The announcement was made in Washington, DC, during talks between the EAC and IMF that were held concurrently with the Annual Meeting of the Boards of Governors of the World Bank Group (WBG) and the International Monetary Fund (IMF).
The fourth phase of the EAC Regional Integration process, following the Customs Union, Common Market, and Monetary Union, is the Political Federation. Three pillars serve as its base: unified foreign and security policy, successful regional integration at the earlier phases, and excellent governance. It is important to remember that achieving the Political Federation is a process, not an immediate result. Even though the process has been lengthy, the EAC Heads of State decided to investigate methods and means of strengthening and expediting the process through a fast-track Mechanism at a Special Summit held in Nairobi on August 27–29, 2004.
The post of the Deputy Secretary-General responsible for the Political Federation was formed in 2006 as a consequence of the consultation process to oversee this process. Between 2006 and 2008, national stakeholder discussions, summit directives, and several studies were conducted to look into, streamline, and accelerate the process. It was made apparent throughout the consultations that the people of East Africa want to be fully involved and have a role in the choices and policies made by the East African Community. The Political Confederation was chosen as the East African Political Federation’s interim model by the EAC Heads of State on May 20, 2017.
The first in a series of strategies to accomplish EAC Vision 2050 was the fifth EAC Development Strategy. According to Vision 2050, the years 2015–2030 should be devoted to the consolidation and transformation of the regional economy by creating the conditions and incentives necessary to turn the EAC into a production-oriented region and removing obstacles that are known to work against joint development that is integrated and geared toward regional transformation. As a result, the programming priorities for the 6th EAC Development Strategy (2021/22-2025/26) remain the development of infrastructure, human capital for long-term skills development, consolidation of the EAC Common Market, funding of regional initiatives, strengthening of the financing and banking systems, expansion of savings and investment, Research & Development, and security and governance.
The Medium Term Strategic Responses for the region to Control the Devastating Effects of COVID-19 will also be taken into account in the Strategy. Partner States Medium Term Plans (MTPs) will also incorporate regional priority initiatives to maximize regional synergies. The Strategy will also take into account the important goals of the AU 2063 Agenda, SDG 2030, and the trade agreements that the EAC has signed as a region.
The EAC has seen consistent and strong economic growth of more than 5% over the past ten years, making it one of Sub-Saharan Africa’s fastest-growing areas. The expansion of EAC export baskets into the region and the rest of the globe advances in the agricultural and manufacturing sectors, and other reasons are some of the causes of this development. Improvements in the services industry, ICTs, financial services, and construction all make good contributions. A prospective destination for foreign investment and production is the EAC, which is working to progressively build a welcoming business climate, deepen regional integration, expand collaboration, and a stable economic and political environment (6th EAC Development Strategy).
Analysis of the inflationary trends across the EAC Partner States reveals a positive development and progress in the direction of achieving the convergence requirement of the Monetary Union, where headline inflation is set at 8%. A broad dip in annual headline inflation for 2019 was seen in the East African Community Partner States; for example, Kenya’s inflation dropped from 6.27% in July to 5.0%, and Tanzania’s from 3.7% to 3.6% in August 2019. Rwanda’s annual inflation, in contrast, increased to 2.8% from 1.6% in July, its highest level since October 2017. 3 As a result, South Sudan’s inflation rates are still quite high (far above the desired threshold of 8%). (6th EAC Development Strategy).
Fiscal deficit, including grants, shall not exceed 3% to show the development of monetary union convergence. In general, the region’s budget deficit remained small; it was forecast to be 4.1% of GDP on average in 2018 and was projected to fall to 3.5% in 2020. The EAC Partner States are making progress in this area, and signs point to a steady reduction in the deficit. Kenya’s deficit is decreasing, down to 4.7%; Uganda’s, to 3.9%; Tanzania’s, to 2%; Rwanda’s, to 8.8%; and Burundi’s, to 8%. Burundi and Rwanda have the greatest budget deficits, which is a reflection of their less robust economies. All EAC Partner States are heavily dependent on exporting primary commodities, so the decline in global commodity prices and the drive for rapid economic growth achieved through high investment, which is above domestic savings, have adversely impacted their terms of trade and resulted in persistent current account deficits (6th EAC Development Strategy).
While intra-regional exports increased by 5.6% to US$3.2 billion in 2018 from US$2.9 billion in 2017, EAC’s intra-regional imports increased by 13.9% to US$2.8 billion in 2018. Coffee, tobacco, cotton, rice, maize, and wheat flour continue to be the main agricultural commodities traded inside the EAC. Cement, gasoline, textiles, sugar, candy, beer, salt, fats and oils, steel and steel products, paper, plastics, and medicines were among the manufactured items that were traded throughout the region. In 2018, the zone continued to run a trade deficit with the rest of the globe, in part because of a rise in imports. From US$17.4 billion in 2017 to USD 24.3 billion in 2018, the EAC’s deficit soared by 39.4%. (6th EAC Development Strategy).
A favorable climate for investment has developed in recent years, and their GDPs have grown more rapidly overall. The countries with the highest GDP growth rates and increases in household spending are Kenya, Rwanda, and Tanzania. Investment from both domestic and international sources has been attracted by programs like “Buy Uganda, Build Uganda” (BUBU), “Buy Kenya, Build Kenya” (BKBK), and the “Made in Rwanda” campaigns, as well as by provisions like industrial parks, generous tax holidays, and spatial targeting, which involves strategically directing and prioritizing investments and interventions to take advantage of spatial advantages like urban centers for industrial development (6th EAC Development Strategy).
By the conclusion of the financial year 2018/2019, there were over 91 billion dollars in total FDIs inflows, compared to 3.1 billion dollars in green, brown, or merger and acquisition investments made by EAC into other economies. With EAC as a source, greenfield investments totaled more than 1.2 billion dollars (6th EAC Development Strategy).
The Community adopted an industrialization policy from 2012–2032 to quickly transform the EAC into a modern and industrialized region. This policy anticipates leveraging the potential market created by the Common Market Protocol as a source or stimulus for demand while benchmarking the opportunities created by the rapidly expanding global and emerging markets for manufactured value-added products (MVAs). The industrial sector’s potential to create jobs and stimulate the growth of other sectors through forward and backward linkages could give the region’s industrialization the much-needed boost it needs in preparation for a fully operational Common Market and deepening regional integration through a monetary union (6th EAC Development Strategy).
It is impossible to overstate the importance of the agriculture sector in the economic growth and welfare advancement of the EAC Partner States, which makes up around 65% of all intra-regional trade in terms of volume. This suggests that enhancing agricultural operations in the area is probably going to have a big impact on the region’s economic development. Additionally, as 75% of women worldwide reside in rural regions where agriculture predominates, enhancing agricultural commerce would also help women achieve economic emancipation (6th EAC Development Strategy).
The population of the EAC was 177 million in 2019 and is expected to grow to 440 million by 2030. The proportion of people under 35 in the area varies between 75% and 84%. With such a young population, the EAC needs a solid strategy to not only make use of it as a potential domestic market but also as a source of entrepreneurs, inventors, and workers who can completely change the economies of the EAC. However, such a structure suggests a heavy reliance load, which if not converted into useful human capital might lead to further problems with economic development. To prevent a situation of significant unemployment and underemployment in the area, EAC must concentrate on educating the young and promoting their integration into the labor market (6th EAC Development Strategy).
The EAC Heads of State prioritized 286 regional projects in a variety of sectors, including railways, ports, roads, energy, and airports, for development over 10 years from 2018 to 2028 to close the infrastructure gap in the region during their 4th Retreat on Infrastructure Development and Financing held in February 2018. Seventeen (17) of these were designated as high-priority (Flagship) projects, and it was suggested that their development be accelerated owing to their significance for regional integration. Among these are the Standard Gauge Railways (SGR), crude oil pipelines, electrical interconnectors, and improvements to the capacity of the roadways.
A recovery plan has been prepared for the region to respond to and address the difficulties posed by the COVID-19 pandemic and refocus the economies back on their long-term growth path in light of the devastating impact of the pandemic on the EAC economy. The EAC COVID-19 Recovery Plan gives priority to the short- and medium-term support measures and initiatives for both recovery and pandemic containment. The strategy is based on the hopeful premise that the epidemic would end at a time when the harm done to the global economy has been progressively repaired to allow adequate resource flow and normality in important economic activities driven by foreign commerce (6th EAC Development Strategy).
The majority of the funding needed to implement the EAC Development Strategies comes from non-Partner State contributions, receipts from regional and international partners, grants, donations, funds for projects and programs, technical assistance, income from Community activities, and other sources as may be decided by the Council. However, these financing sources have been limited by the irregular and sporadic character of inflows, especially contributions from developing partners, which are primarily impacted by, among other things, the global financial crisis that is hitting their economies. Furthermore, due to budgetary limitations, Partner States’ payments are typically late (6th EAC Development Strategy).
It is necessary to look into other financial possibilities. Policy, technique, and mechanism for money raising are all clearly defined in the EAC Resource Mobilization Strategy. To be more precise, the creation of an EAC Development Fund with guidelines for enacting a regional integration tax on imports. Some of the institutions can raise funds by forming alliances with equivalent national institutions and splitting the costs of the services they offer. Institutions in charge of managing investment and competitiveness, stock markets, and civil aviation are a few examples. Among the additional financial options is the mobilization of the business sector to create an EAC Private Sector Fund (6th EAC Development Strategy).
The Monitoring and evaluation framework for the 6th Development Strategy will assess the execution of key actions in addition to tracking regional, continental, and global variables. Monitoring the success of the collaborations with the corporate sector and civil society in carrying out regional programs and pledges will get special attention. Monitoring the amount of Partner State capacity-building activities and the degree of program achievement in regional integration will be necessary. The EAC, One People! One Destiny!
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- East African Community Secretariat. (2016). In East African Community: Vision 2050. essay.
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- Reiss, M. (2022). Construction of the east african community. Constructing the East African Community, 95–161.
- Strategy. (n.d.). Retrieved November 6, 2022, from https://www.eac.int/documents/category/strategy
- https://www.researchgate.net/publication/343627530/figure/fig4/AS:[email protected]/Role-of-partners-in-the-EACs-MRH-initiative-AUDA-NEPAD-African-Union-Development.png