Will a Powerful New Country Be Created in Africa?

The Daily Nation (Nairobi, Kenya) reports that a new initiative may strengthen relations, and even lead to the unification of, several major East African states


East Africa

What's happening?

Last week, the East Africa Community officially recognized a new commerce unification initiative that will promote trade between member nations: Kenya, Tanzania, Uganda, Rwanda, and Burundi. The agreement, originally signed late last year, eliminates tariffs, opens borders, loosens immigration and work-permit restrictions, reduces aviation restrictions, and streamlines customs. The move will require member nations to each change some of their own import-export laws to comply, and the legislation could take as long as five years to take full effect. With a combined domestic product that tops $70 billion, the EAC has already adopted common tariffs on non-member nations.

Kenya, by far the strongest economic and political power in the group, is exempt from some duty-free regional trade on the strength of its economy, but because it enjoys the majority of international investments in the region, the exemption is unlikely to sting much.

China followed up a week later with an announcement that it would further cut back its already-low tariffs on imports from EAC nations, abandoning import taxes on 60 percent of goods coming from Rwanda, Burundi, Uganda, and Tanzania, effective July 1. In the next few years it is expected to import 95 percent of goods duty-free from Africa's "least developed" nations, which excludes Kenya. A total of 26 countries will benefit from China's eased tariffs, including EAC trading partners in the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA). The announcement was angled toward helping Africa's "least developed countries."

What's next?

"I believe by 2015 all the barriers will be collapsed and East Africans will be able to move freely," says Amos Kimunya, Kenya's trade minister. While the step of "recognizing" the existing agreement is entirely symbolic, it's a sign that the five countries are very eager to assemble into a political federation, slated to happen as early as 2015. They hope to adopt a common currency as soon as 2012.

But tariffs and border customs may not have been the EAC's biggest problem. Economies are still hobbled by very weak infrastructures and unreliable energy supplies. Politically, there remains disagreement among EAC leaders about how to nurture nascent industries and small businesses.

In recent years China has been scurrying to build up cheap, quick infrastructure projects that will help ferry out extracted assets, and a lax tariff policy coupled with more vigorous intra-African trade, labor and production will put them right in the thick of East Africa's economic growth. If China starts building more infrastructure projects than soccer stadiums, EAC's own industries could reap benefits.

The EAC was originally assembled in 1967 but fell apart just ten years later due to similar political roadblocks and economic inequalities between member states. It was revived nine years ago and currently has a common court and Parliament. Democratic Republic of Congo (DRC) was recently given observer status, signaling willingness to expand the group, economically if not yet politically, at an early stage of the federation.