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Competition, political interests killing EAC integration

the East African member states flags

Kampala, Uganda | THE INDEPENDENT  |  The faltering of the East African member states is an indicator that leaders have to launch a new and comprehensive consultation for solutions that will make it work. 

The observation was made by professional bodies, economic analysts and government officials in the wake of trade standoffs and political quarrels, amongst EAC member states. Currently, in the region, Uganda is facing trade barriers with Kenya as several Ugandan products like sugar, poultry, milk and grain, are either blocked or restricted by quotas and tariffs. 

Kenya also accuses Uganda of imposing tariffs on some Kenyan products, even where such products are protected from tariffs by the EAC and COMESA treaties. Some experts have even challenged the importance of regional integration or integration with neighbouring states instead of integrating with countries with which one shares economic interests.

But regional and economic experts say that the failure by the partner states to shed some sovereignty to the EAC Secretariat is one of the main hindrances to the integration process. Yet, according to them, the more sovereignty and national interests the countries agree to surrender to the bloc’s secretariat, the stronger the bloc becomes. 

University Don Dr Fred Muhumuza says that integrating with countries that are at the same level of industrial development or produce similar goods, might not make sense today. He cites countries that are moving beyond neighbourhoods to seek business partnerships with others where they expect better business returns. 

Dr Muhumuza cites Russia and Venezuela which are thousands of miles apart, but military and oil interests have drawn them together, while the The UK is seeking renewed integration with commonwealth countries after Brexit. 

Dr Muhumuza argues that the political leaders have concentrated on the political aspect of leadership to drive integration, yet the process is more about trade. He says most of the trade standoffs are instead created by political competition, citing nationalist policies which are seeking to protect local industries by promoting local consumption, yet there is a need to open up. 

Dr Muhumuza says Uganda is investing heavily in the electricity sector, apparently to ensure that Ethiopia does not beat it to the regional market from its mega-project; the Grand Renaissance Dam. 

At the just-concluded 3rd East African Congress of Accountants, the Institute of Certified Public Accountants of Uganda, ICPAU, urged the political leaders to listen to professional advice for different aspects of the integration process. ICPAU President Frederick Kibedi says while some areas, of the integration process, are lagging or stalled, the professional side is progressing well, citing the harmonization of qualifications and syllabi. 

He says the current misunderstandings within the EAC need urgent comprehensive discussions involving professionals. 

Finance Minister Matia Kasaija acknowledges that the integration process has a problem and the delay to harmonize various areas has affected the returns expected. He wonders why countries are still maintaining restrictions on the movement of nationals from other countries, if their travel is for genuine business and other activities, citing the hustles one goes though at airports.  

Kasaija argues that competition for superiority in the EAC can even lead countries to make mistakes that will cost them economically.  He cites the electricity industry where the country has invested a lot in a generation, yet the power cannot be taken to the neighbouring countries currently.

Uganda’s current installed capacity is about 1,300 megawatts, yet the country consumes about 750 megawatts. With Karuma and Isimba Dams coming onboard alongside other smaller dams, capacity could go up to 2,000 by the end of this year. The government is also spending more than USD 20 million a year to pay the electricity companies for the excess capacity.

Dr Muhumuza advises that the practice of fighting for markets and at the same time guarding the local industry is ironic. Instead, he says integrating with other countries, like the The United Arab Emirates that is now Uganda’s biggest export market, will strengthen the economy and its negotiating power. This, he says is easy for a poor country because it puts on the table its point of strength, like gold in the case of the UAE. 

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