KAMPALA, UGANDA – The signing of the East African Monetary Union Protocol that paves way for preparations for the introduction of single currency over the weekend undoubtedly stamps the partner states’ commitment towards achieving regional integration.
Having already signed the Customs Union and Common Market protocols, the signing of the Monetary Union protocol by the East African leaders shows that there is a clear path that the partner states are taking towards achieving the ultimate goal…political federation.
The EAC is now at the third stage of the regional integration process with the fourth and final stage being the political federation.
According to the United Nations Economic Commission for Africa (UNECA) the EAC is the fastest growing Regional Economic bloc given that the three pillars — economic development, social inclusion and environmental protection are progressively being integrated well in the region.
Despite the impressive strides made by the leaders, the EAC secretariat is grappling with budgetary constraints largely because the partner states are not willing to up their contributions, moreover even the little they contribute does not come on time.
Currently, the secretariat is at the mercy of the donor community who fund up to 70% of its budget which therefore brings about the commitment versus the dependency question again.
Dr. Enos Bukuku, the EAC Deputy Secretary General (Infrastructure and planning) says that they have no choice but to depend on donors because the partner states are not willing to increase their contributions and even then their contributions do not come on time.
“Yes we realize it (dependency syndrome) and we would like to get rid of it. Currently, I am sorry to admit that the budget that runs the EAC secretariat is about 70% dependent on donors. It should not be like that, there is no reason for it to be like that.”
Bukuku adds that the reason given by the partner states is that they have similar Fiscal Years (July 1 – June 30) and that therefore their (partner states’) budget negotiations go on till October.
“So do we have a solution and have we proposed it to partner states? Yes as secretariat we have a solution. The solution that we have, has worked very well in the West African Economic and Monetary Union (WAEMU),” he explained.
According Bukuku, in the WAEMU region, the financing of the commission is 1% of the total levy on imports from outside the WAEMU region.
“So we suggested to the partner states that 1% of the levy on imports from outside the EAC would go into financing the secretariat’s activities. If we did that in the FY2011/12, we would have collected $340m. Our budget for that particular year was $130m. We would have been able to embark on regional projects,” he said.
Bukuku disclosed this during a Media training on EAC Regional Integration at the Imperial Royale Hotel in Kampala last week.
“When we suggested this, they said, ‘How much will you collect…$340m and you need only $130m…(whistling) that’s a lot of money.’ No we are not going to run away with this money. We collect it, we belong to you, we are your secretariat and we’ll implement regional programs at your behest. I don’t know what is wrong with Africans, why would anybody all of a sudden begin saying that that is a lot of money,”
He added that financing secretariat using that method would give them predictable and assured funds to embark on financing regional projects.
“It is not that we collect it and pay ourselves…no. We would collect it, go to council and the East African Legislative Assembly (EALA) to do the right appropriation just as it is done at partner states level. We would be able to fund all those institutions plus others and have reserve funds…any surplus would then be set aside or invested wisely. Our investment manager, the East African Development Bank (EADB) would then help in that regard.
“The EADB has also been given the mandate to manage the East African Development Fund (EADF) as well as implement the EA Public Private Partnership framework. So it is possible for us East Africans on our own to finance everything we do using our own resources. This is a good thing. The five partner states should agree,” he concluded.
Ambassador Jeremy Ndayiziga, an expert on regional integration issues on his part said that the problem lay in some politicians who for selfish reasons did not want the EAC secretariat to receive additional financing.
“The problem is that these people (politicians) look at this money as if it is going into the pockets of their colleagues at the EAC. How can you expect to get the maximum out of the minimum contributions you make? How can you manage a population of 135 million with a $12m contribution? That is nothing.”
He suggests that each country instead of sending equal contribution should instead contribute 1.5% of its total national budget.
The EAC regional integration process is without doubt on the right track to achieving the aims of the integration. The five East African leaders have shown they are committed to the process and since they are committed, the wanainchi simply have to follow.
In the past, Kenya, Tanzania and Uganda have enjoyed a long history of co-operation.
These included the Customs Union between Kenya and Uganda in 1917, which the then Tanganyika joined 10 years later in 1927; the East African High Commission (1948-1961); the East African Common Services Organisation (1961-1967); the East African Community (1967-1977) and the East African Co-operation (1993-2000).Following the dissolution of the former East African Community in 1977, the Member States negotiated a Mediation Agreement for the Division of Assets and Liabilities, which they signed in 1984.
However, as one of the provisions of the Mediation Agreement, the three States agreed to explore areas of future co-operation and to make concrete arrangements for such co-operation. Subsequent meetings of the three Heads of State led to the signing of the Agreement for the Establishment of the Permanent Tripartite Commission for East African Co-operation on November 30, 1993.
The Treaty for the re-stablishment of the East African Community was signed on November 30, 1999 and entered into force on 7 July 2000 following its ratification by the original three Partner States – Kenya, Tanzania and Uganda. The Republic of Rwanda and the Republic of Burundi acceded to the EAC Treaty on 18 June 2007 and became full Members of the Community with effect from July 1, 2007.
South Sudan and Somalia have also applied to join the community and the process to assess them is ongoing. The EAC is the only Regional Economic bloc that has the ultimate aim of getting a political federation.
Currently, the combined GDP of the EAC partner states is about $100b while the GDP per capita of above $730. The Customs Union that was established in 2005 and became fully fledged in 2010 has seen intra EAC and International trade growing by between 20-30% annually. Over the past five years, Foreign Direct Investment (FDI) inflows have increased from $683m to $1.7b.
According to statistics from the EAC, Kenya is currently the second largest investor in Tanzania, it is also the third largest investor in Uganda. Tanzania is the largest investor in Burundi.