Is Federation Really the Future in East Africa?

The Economist is mildly encouraged that the East African Community (EAC) may turn into a viable and valuable "European-Union style federation."

Tanzania, Kenya, and Uganda created this version of the EAC in 1999. Rwanda and Burundi joined the group in 2007. The member states have agreed to create a customs union and common market (by 2010). They're also talking about creating a common currency. The ultimate goal would be a political federation along the lines of the EU that would create common policy on a host of issues.

A customs union and common market are especially useful for Rwandans. As a landlocked country all Rwanda goods (except those shipped by air) have to travel through Uganda or Tanzania and/or Kenya to get to a port for shipment. Being part of the EAC means that Rwandans now pay lower tariffs to move their goods through neighboring countries. This will help to make Rwandan products more competitive on world markets. It's probably also useful for these countries to work together to improve the transport infrastructure. Moving more products more quickly will also help with competitiveness. As the article points out, because the Rwandan government seems intent upon improving its relations with Congo there may also be opportunities to take Congolese commodities and process them (add value) then ship these out via EAC ports, further diversifying the Rwandan economy. This is essential if the country hopes to continue its relatively good track record (over the past decade) for economic growth.

But what about a political federation? Would an EU-style federation help reduce corruption, ease ethnic tensions, improve the rule of law and press freedom, all of which are crucial issues to tackle if these countries hope to grow more? This is far less clear. Although inclusion in the EU seems to have helped Eastern European countries to reduce corruption and improve the climate for doing business it's not clear what the incentive for change would be in the EAC. In Eastern Europe, countries had to amend their legal codes, their regulatory structure, and their approach to dealing with public sector corruption in order to be let into the EU club which, in turn, gave them access to EU grants and financial support. There's no comparable incentive (or sugar daddy) for the EAC countries.

But whether political union comes or not, we can still applaud efforts to promote regional integration and closer economic ties between these neighbors -- more regional trade will be a key to future growth.

- Karol