The East African Community (EAC) has spent twenty years of integration and admitted new members in the process. EAC Partner States signed the Protocol in November 2009, and it came into force on 1 July 2010. The common market is the first of its kind in Africa. The internal EAC market has about 146 million consumers.
This second offering, after the initial community collapsed in 1977 has worked to learn from the mistakes of the past community. However, as things change, the more they have remained the same.
There have been tensions between countries at different periods of time, some threatening the very core that set forth the community. Kenya has been at constant feud with Tanzania, Uganda has been also at loggerheads with Rwanda while Burundi has accused Rwanda of meddling in its affairs.
Overall trade disputes are now increasing in East Africa. Uganda’s trade with Rwanda is slowly resuming after a year-long frosty relations; Tanzania has locked out Ugandan timber, sugar and maize; while Kenya, which has been open to imports of maize and beans from Uganda has been reluctant to open its market to manufactured products from Uganda. It is reported use of ‘non-tariff barriers have intensified as member countries become competitors amid regional protocols that eliminate taxes on goods originating from within the economic bloc as conceived under the EAC Treaty.
The EAC has its internal problem-solving mechanism but sometimes this is bypassed as these countries push their ideas and at times seem to be perfectly pulling apart. In this edition of East African Trends, we look at how each of the East African Community member has pushed for their agenda exacerbating the pulling apart.
The EAC has a total of US$220.783 billion nominal GDP and a population of 183,625,246. Total EAC exports decreased by 4.7 percent to US$14.0 billion in 2018 from US$14.7 billion in 2017 of which intra-EAC exports accounted for 22.4 percent. EAC intra-regional imports grew by 13.9 percent to US$2.8 billion from US$2.5 billion in 2017 and accounted for 7.4 percent of total EAC imports.
Of these figures Kenya, traditionally has benefited from sale of mostly finished products to Uganda and Tanzania with net importation of raw agricultural materials. However, the other countries have of late started selling their finished products to the bigger economy, which at times has brought about conflicts.
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Kenya: The ‘frenemy’ next door
Kenya’s economy has been one of the most developed in the region. Its products are sold far and wide and Nairobi has acted as the commercial capital of East and Southern Africa. Kenya competes with most African countries in terms of industry, human resources, infrastructure and an advanced political system. With a GDP per capita of $2,010 (nominal, 2019 est.), the country is miles ahead of most countries in the region.
However, this advancement has been challenged by crippling corruption and over–reliance on several commodities. The emergence of Ethiopia and Rwanda as key magnets of FDI has challenged Kenya’s dominance. Rwanda in particular has taken in a huge portion of investments meant for Kenya in ICT given Kigali’s known ease of doing business.
Kenya and Tanzania were the main reasons that led to the collapse of the original EAC. The two countries, similar in resources but very different in their approach to issues have been in constant competition. Tanzania has always seen Kenya as an aggressive neighbour keen on taking advantage of any situation to make a kill. Kenya on the other hand has seen Tanzania as a protectionist economy.
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This feud has been brought forth by the emergence of COVID-19. While Kenya sought to secure its borders and protect its citizens, Tanzania saw this as drums of war. Kenya authorized border closure for all non-cargo movement and ordered testing at border points, something that was agreed to by other EAC communities except Tanzania. In turn, Tanzania responded by banning Kenyan goods from entering Tanzania. When it came to open the boundaries, Kenya did not list Tanzania as a priority country where foreigners can jet in from, angering Tanzania and leading to the ban of Kenya Airways from accessing Tanzania airspace.
This mistrust, coupled with various cross border disputes, has been described as the Achilles’ heel that might in the end bring the EAC to its knees. The two biggest economies in EAC are always finding a point of contention, putting a KSh61 billion ($563.4 million) Tanzania–Kenya trade in jeopardy.
There have been mediation talks to put the two countries back to trade, but there seems to be a little more mistrust running through them. With the COVID-19 spat, Kenyan companies trading in Tanzania have been put under extra scrutiny. President Magufuli has been on record questioning how Kenya was handling its COVID-19 situation.
Past the Kenya-Tanzania feud, Nairobi has also been at loggerheads with Uganda. Last year, when Kenya banned some dairy products from Uganda while managing its dairy crisis, Uganda protested to the EAC citing a breach of the EAC protocols. Uganda had also protested similar moves on maize products and eggs. While Kenya’s agricultural industry is diverse, it does not receive subsidies and is prone to attacks from cheaper imports. This dispute however did not last long as compared to the earlier narrated story of its Southern neighbour.
Tanzania: Calculative steps
When it comes to dealing with other EAC countries, Tanzania has been a calculative partner, knowing when to strike and when to walk away. Its main protagonist in the region has been Kenya, who as we wrote earlier has seen various differences. Tanzania is the second largest economy and is endowed with numerous reserves of minerals as well as a healthy agricultural economy. Most of the food consumed in the EAC region comes from Tanzania which is a net importer of agricultural foods. It is not just foods, but Tanzania has a vast interest in other sectors. Information from the Ministry of East African Cooperation shows the main exports to the EAC region include machines, fertilizers, cement, electrical equipment, ships and boats equipment, cereals, oil products and their distillations, paper and textiles.
Tanzania has always put on a display of a caring brother. It was instrumental in the growth of rule of law in Uganda in the early years of the EAC. The Tanzanian military was sent to Uganda to overthrow the government of Idi Amin and for a year occupied most of Uganda. There has not been much tension since between the two countries.
On the economic side, Tanzania and Uganda have agreed on most matters. Uganda has always supplied sugar to Tanzania and the latter has supplied maize when the season in Uganda is not productive. There has also been little or no known dispute between Tanzania and Rwanda or Burundi. The country has carefully navigated its relations with Burundi, at one time forming a coalition for development projects in parallel with the coalition of the willing featuring Kenya, Uganda and Rwanda.
Tanzania’s refusal to sign a new trade deal between the EAC and the European Union (EU) in 2016 also cultivated a love-hate relationship with her neighbours, especially Kenya, whose trade with EU depended on the pact.
Tanzania has been unhappy about the trade pact, arguing that the agreement will have serious consequences on its revenues and the growth of its industries.
Uganda: Losing markets as feuds with neighbours intensify
Uganda has had a rough walk in regional relations. It has had conflicts with almost all of the EAC members and is still active in political and social issues affecting the region. The initial disagreement occurred as mentioned earlier in this piece with Tanzania. It was followed by a near war with Kenya, with troops being amassed at the borders of these two countries in 1986. However, President Moi of Kenya and Uganda’s President Museveni held talks at the border and agreed to end hostilities. Uganda has since been at loggerheads with Rwanda over the war in Democratic Republic of Congo as well as skirmishes in Burundi. It has also had a hand in peace-keeping in South Sudan,
It is however a recent dispute that has been the hallmark of its conflict with its neighbours. In 2019, Uganda and Rwanda entered one of the most damaging conflicts of modern time EAC. This has involved the closure of their boundary, the deportation of MTN executives and raised tension between the two countries.
Two executives of MTN Uganda, Chief Marketing Officer, Olivier Prentout, and the MTN Uganda Head of Sales and Distribution, Annie Bilenge Tabura were expelled over what some security officials said were ‘intercepted intelligence over communication with a dangerous foreign group’.
In 2018, Uganda exported $257m worth of goods to Rwanda, but this dropped to $54m the following year, according to government statistics. The exports range from animal products to construction materials and many firms in the dairy industry that previously exported to Rwanda have closed down after the loss of an important market.
The Kenya-Uganda trade dispute on milk tariffs came in 2019 when Kenya introduced a 16 percent duty on Ugandan milk. In December 2019, the Kenyan authorities sent a delegation to Uganda to verify if milk imports coming into Kenya were of Ugandan origin and did not originate from a third country. There was also protestation after 23 tonnes of Lato milk was impounded in Kenya sending the Ugandan foreign ministry to write to Nairobi over this move. It was argued the Kenyan actions were in contravention of ‘the principle of good neighbourliness and Kenya’s obligation under the treaty establishing the East African Community, Customs Union protocol, Common Market protocol and World Trade Organisation trade facilitation agreement’.
Other agricultural disputes were over sugar and eggs.
Rwanda and Burundi: the warring brothers
Rwanda and Burundi are mainly made up of communities deemed similar to each other than any other region in the EAC. It has not been as rosy for the two countries over the years with each being accused of destabilizing the other.
However, these two countries have had just a few trade disputes and any slowdown in the growth of their cross-border trade has been as a result of political tensions.
Exports from Rwanda to Burundi rose to $5.2 million in the first quarter of 2019 from $1.1 million over the same period in 2018, according to the Rwanda Institute of Statistics. Imports from Burundi — mainly foodstuffs — declined sharply to below the $1 million mark, and represents only 0.8 per cent of Rwanda’s total imports from the region. Informal trade — especially foodstuffs — remains heavily restricted following a directive in 2017 by Bujumbura ordering Burundians to stop trading with “the enemy.”
