Making the East African Common Market More Than Just a Pipe Dream

by Yemisrach Kifle · 2010-07-08 15:47:00 UTC
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Last week, members of the East African Community (EAC) — Burundi, Kenya, Rwanda, Tanzania and Uganda — announced the launch of an idea that looks good on paper: the creation of a common market. The goal of the new agreement is to allow unrestricted, untaxed movement of people, goods and capital among the five countries.

Sounds good, right? The agreement will create an integrated market spanning a population of 127 million people and a total GDP of $73 billion. Removing constraints will mean increased intra-regional trade. When done correctly, such a move can translate into an efficient market in which more cash circulates within the five-country zone, instead of simply bouncing against barriers and flowing out. It will mean growth in overall economic activity, too — all good stuff.

But if the history of the European Union has taught us anything at all, it is that properly implementing such policies takes a long time and a lot of hard work. While the EAC legislation has already been written and signed, actually implementing it may take as many as five years, according to Kenya’s Trade Minister Amos Kimunya. The declaration of the market on the 1st of July was just a “recognition,” as he explained in a speech aired on a Kenyan TV channel.

In the same vein, the Ugandan Revenue Authority has had to clarify to excited entrepreneurs that cross-border goods and services will still be taxed for the time being. Indeed, basic details such as whether or not goods that have been taxed upon entry into the common market should move freely within the zone have yet to be worked out among the participant countries.

What's more, even after the countries come to an agreement on the details of the legislation’s implementation, there are other bigger problems that need to be tackled along the way to ensure success. For starters, as the Kenyan Institute for Public Policy Research and Analysis notes, EAC members need to improve the poor condition of intra-regional roads. They must also simplify complex customs procedures that make trading difficult, and also work to create a reliable energy supply.

Don't get me wrong: The announcement of the East African Common Market is a big deal, and maybe even something to celebrate. But its success is far from assured.

Photo Credit: meaduva

Yemisrach Kifle was born and raised in Addis Ababa, Ethiopia. She currently lives in Dalian, China and works as a freelance writer sometimes covering global poverty.
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