There are 5 members in the EAC:
Kenya
Tanzania
Uganda
Rwanda
Burundi
Potential Members:
South Sudan
Sudan
Ethiopia
- Rwanda has done the most in the shortest possible time to integrate or become a true EAC citizen by opening up its borders to other EAC members. A progressive leadership knows Rwanda needs the EAC & is working hard to make it the place to be as a launching point into the EAC.
- Kenya has the largest economy in the EAC & has done well compared to the others but it can (& needs to) do much more. At the minimum, the operations at the port in Mombasa and the border (Malaba, Namanga, etc) need improvement. A lot of it.
- Uganda has done OK and even though it still 'fears' Kenya's economic weight, it has a renewed confidence after the confirmed discovery of 2 billion barrels of oil. The political bickering, corruption and decimation of the Constitution to allow Museveni a third term remains problematic.
- Tanzania is a laggard. It has always been and will continue unless there is a HUGE shift in attitudes. I do not see any progress any time soon even though it can be EAC's powerhouse and surpass Kenya's economic might since it has lots of natural resources e.g. gold, natural gas, iron ore, coal, diamonds and lots more. There are huge rivers, plenty of arable land, a long coastline with many harbours and access to a huge hinterland including Zambia, Rwanda, Burundi, etc
- Burundi is a poorly managed Rwanda. Not very consequential but its inclusion into EAC will benefit the region with an emphasis on stability.
My roadmap is simple...
- Rwanda & Kenya need to 'open' up their borders/trade completely. There remain a few barriers. A joint Customs Union, with electronic paperwork, can benefit the transport of goods to/from Mombasa-Rwanda even though the physical route goes through an unstable Uganda. Kenya should not let Tanzania steal a march on this important trade route.
- Uganda needs to build the oil refinery ASAP. Then supply Kenya, Rwanda, DRC & Tanzania.
- Uganda and Kenya need to fix/upgrade/build the railway between Mombasa & Kampala. Then to extend it to Hoima and Kigali.
- Burundi needs to follow what Rwanda is doing. Not rocket science. Copy the good. Avoid the bad. Simple.
- Fast-track South Sudan into the EAC. Kenya, Uganda & SS need to extend the railway north to Juba. Perhaps an integrated oil pipeline as well.
- South Sudan needs to build a refinery. The geopolitics make it difficult but why export crude oil when the processing can be done in situ to create local jobs & opportunities.
- Tanzania will plod along at its pace but there will some integration though much slower.
- Ethiopia is a socialist country. Period. It will plod along but Kenya is the natural supply route for southern Ethiopia. It is a huge market/supplier for EAC's goods & services.
- Sudan is just trying to upset the apple cart for South Sudan. The real market for Sudanese goods/services is South Sudan. Cordial relations with Ethiopia will help both countries. Not a real contender for the EAC.
Monetary Union? Forget it until the trade barriers are removed.
Political Union? Laughable till 2020. Kenya's constitition is untested. Uganda's constitutional Term Limit was shredded to bit. Tanzania is the only EAC country with 'tested' political stability. Rwanda's first change in the Presidency comes up in 2017. No idea about Burundi. South Sudan remains unstable. Ethiopia is a virtual dictatorship. (Arab/Muslim) Sudan will not allow a non-arab or non-muslim to be president/imam/sheik.
Fiscal Union? A pipe dream until "Open Trade" is implemented. We saw what happened in Europe where the Monetary Policy is managed by the ECB but Fiscal Policy was left with Greece, Italy & Spain.
Bottomline: No-one is giving up 'power' to someone else in the near future.
5 comments:
Good insight.
It would be lovely if Uganda and South Sudan would get their act together and get us some oil.
Across the board, throughout the EAC, energy is a major issue.
This may be another avenue for collaboration.
I know TCL is looking at it as an opportunity.
The loser/beneficiary in this whole deal is Kenya. We own most of manufacturing, we have a very well educated work force and best of all, we are the Nigeria of the east. The poor humble east Africans dont know whats coming to hit them.
Unified currency, well we could go the CFA way, trade is much easier with a single currency.
But I think while we wait for this union to materialize, Kenyans need to improve their competitiveness. We can work to make those countries fully dependent on us for everything and we have the capacity.
#Ay1m
Rwanda is developing Methane production. It could be HUGE for the entire region.
The CFA is linked to the Euro i.e. backed by Euro Reserves or France. I am not sure. So unless EAC Shilling is backed... with hard reserves, it can be a problem.
The Eurozone crisis has shown that monetary union cannot work unless fiscal and monetary policies are unified. EAC should focus on operating as a free trade area. Monetary union is impractical and the less said about political union the better.
The loser/beneficiary in this whole deal is Kenya. We own most of manufacturing, we have a very well educated work force and best of all, we are the Nigeria of the east. The poor humble east Africans dont know whats coming to hit them. Unified currency, well we could go the CFA way, trade is much easier with a single currency. But I think while we wait for this union to materialize, Kenyans need to improve their competitiveness. We can work to make those countries fully dependent on us for everything and we have the capacity. #Ay1m
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