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Pipe-dream or reality?

The East African Co-operation ideal was taken a little further along the line when senior Ministers from Kenya, Uganda and Tanzania announced ambitious plans in London recently. The question on everyone's lips, however, is whether theory will be put into practice or whether it will remain all talk.

Trying to inject life into the defunct East African Community, now the East African Co-operation (EAC), is a bit like giving the kiss of life to a rubber doll: No matter how hard you try, it's only ever full of hot air. The EAC, nonetheless, is currently undertaking some serious discussions with experts and foreign governments with a view to achieving greater harmonisation and collaboration among its three constituents, Kenya, Tanzania and Uganda. In particular, the EAC is promoting the idea of a competitive, regional market and recently held a seminar in London to discuss this.

The conference, 'Towards a Single Market in East Africa', sponsored by the Financial Times and Standard Chartered Bank, was held on 6 and 7 November. It brought together East African Ministers and members of the business community to hear and discuss speeches concerning the Co-operation's bid to function effectively for the benefit of the region and Africa itself. "Three for one," remarked Mr Mayanja Nkangi, Uganda's Minster of Finance. This is precisely the challenge that lies ahead for the EAC - can the three countries work together to assist each other or not?

A real pace-setter?

If Mr Nkangi's opening speech is anything to go by, the answer is 'Yes'. "We fully intend the East African Co-operation to become an African success story, a pace-setting development for our continent which, for too long, has been damaged by negative and patronising comment and publicity," he said on behalf of the panel which included, Mr Jakaya Kikwete, Tanzania's Minister of Foreign Affairs and International Co-operation, Mr Musalia Mudavadi, Kenya's Minister of Finance, and Ambassador Francis Muthaura, Executive Secretary of the Secretariat of the Commission for East African Co-operation.

Mr Mudavadi also spoke of the EAC's role in the larger context of the African continent. Co-operation, he asserted, should be understood as a means of establishing alliances, not only within the EAC, but between eastern, central and southern Africa.

Prior to the conference, Mr Malcom Rifkind, UK Foreign Secretary, expressed his approval of the EAC's intentions. "The revitalisation of links between Kenya, Uganda and Tanzania is increasingly being seen as a regional market," he commented in a message to the Financial Times. "Moves to improve regional stability and cooperation can only help to encourage investment in all three countries."

Baroness Lynda Chalker, UK Minister for Overseas Development, attended the seminar and also expressed Britain's approval of the Co-operation which, she believes, demonstrates the three countries' commitment to regional stabilisation.

Indeed, it is a sentiment common to the European Union which is encouraging regionalisation as a way forward for Africa. Few delegates in London last month would disagree that harmonisation is essential for the EAC's success.

There was a consensus among the partner states on the problems that need to be tackled to achieve greater unity. For example, border controls should be relaxed, foreign exchange controls should be removed, and the old colonial trunk roads, the railways and the telecommunications structure all require extensive work.

Who will foot the bill?

But where will the money come from to finance these ambitious projects? Definitely not Kenya, asserted Mr Mudavadi, who argued that it has too many of it's own problems such as "a shortage of power, railway problems and water shortages in tourist camps". Instead, he pointed to the World Bank, bilateral agreements and increasingly, local businessmen, as more suitable sources of finance.

He also indicated that Uganda holds a comparative advantage of energy resources which could be distributed throughout its two partner countries.

One possibility, he mentioned, is a plan to tap the source of the Nile in Uganda in order to supply communal energy needs; another intervention could be the development of the existing Mombasa-Eldoret pipeline for oil explorations. However, both cases would require a lot of time and even more money, neither of which is readily available at present.

Although Mr Mudavadi may be correct that Kenya is not in a position to singularly foot the bill, future external financial support is likely to be fraught with complications.

Any international financial institution would prefer to deal with individual governments and allocate funds to individual countries, rather than to an umbrella organisation like the EAC Secretariat.

Signs of discontent

Delegates at the seminar showed signs of discontent at the slow rate of progress by the Co-operation. While the panel spoke about implementing a "bottom upwards" approach that involves the people, many in the audience remained frustrated.

As one delegate put it, "We Africans are long on speeches and short on action." Another expressed the amount of work the three Government's face if they are genuinely committed to making the EAC work as a success.

Uganda is perceived to be making the most effort and providing the greatest degree of initiative to get the EAC functioning again. Some observers believe this is down to the fact that, being a landlocked country that faces intensive competition for international investment, Uganda stands to gain substantially from regional co-operation.

To contrast, Tanzania was criticised for falling behind its two partner countries on the path to fully opening its economy to foreign investors. In a bid to arrest such fault-finding, Mr Kikwete said that his Government will reassess its decision to exclude foreign interests from the Dar es Salaam stock exchange which is due to open soon (see story on page 27).

One delegate summed up the Tanzanian problem as one that is common to most African countries - a lack of self-conviction. "The Tanzanians must stop thinking that they are selling off state properties. Although they have been in a liberalised market economy since the mid-1980s, they still don't believe it is a reality," he concluded. "This need for believing in ourselves is not restricted to Tanzanians either. Although our local currency has now floated, people who run the hotels still demand payment in dollars. We have to change this kind of attitude."

Nevertheless, talk of a single currency was dismissed by the panel as a more long-term development rather than one to be implemented immediately.

At the moment, the EAC Headquarters in Arusha have simply recommended that the region be promoted as a single competitive area in order to ease the bureaucratic tendencies that afflict the flow of trade and investment. The present crisis in Rwanda and, lately Zaire, was discussed in terms of the EAC's role as a potential regional stabiliser. Mr Kikwete favoured the idea and said he believed that when the international community is ready to supply a military solution - such as a humanitarian corridor - to allow Rwandan refugees to leave east Zaire, the EAC Secretariat would assist in providing African soldiers.

In theory, a fully functional EAC makes sound economic sense given the colonial history and infrastructural layout of the region. In reality however for this to be achieved, immense will-power from the leaders of the three states will be required.

Their speeches reflected good intentions on the whole, but to what extent they are prepared to put their words in to action is another question. In short, unless they take off their expensive cuff-links, roll up their sleeves, loosen those designer ties and get down to some serious work, they will be accused of blowing a lot of hot air to very little effect.

RELATED ARTICLE: Bring back the Community!

One man in favour of the EAC's call to revive regional economic co-operation is Mr Peter Lindstrom, one of six partners to own Kirurumu Luxury Tented Lodge above Lake Manyara in the village of Kilima Moja, Tanzania. The venture was first dreamed of seven years ago but soon became a nightmare of bureaucratic hurdles and political interference.

"Originally our proposal stated that the camp would make a profit in five years," explains Mr Lindstrom. "But because of Tanzania's inadequate business infrastructure, it will be at least 10 years." This problem relates to Tanzania's history within the region. In 1961, it joined Kenya and Uganda to form the East African Community. The countries became economically linked; currencies were freely convertible and they shared a common airline, telecommunication, transport system and customs.

However when the Community disintegrated in 1977, Tanzania closed its borders with Kenya, which had claimed most of the Community's assets, which led to large losses in foreign investment. The country's dependence on its former partners made matters even worse: Tanzania remains one of the poorest countries in the world. This, plus the fact the Government owns all the land, makes setting up a business something of a struggle.

Mr Lindstrom recalls how he successfully negotiated with local villagers to establish the Lodge but was soon bogged down by Government officialdom. Despite his intentions to invest in the community, it took 18 months to wade through all the bureaucracy and finally gain consent to set up the business. He is currently spending $10,000 on new classrooms and provides the village with piped water.

Initially, he and his partners invested $300,000 plus a further $400,000 gained from Tanzanian Development Finance Ltd and National Provident Fund. However, the miles of red tape led to long delays which cost money, leaving the total amount of investment far higher than the initial estimate.

But Mr Lindstrom is an optimist. He smiles enthusiastically about the free trade winds that are gusting around the globe and hopes that the new EAC will improve the flow of capital and attract investment in to Tanzania. "Of course I have reservations," he admits, "but we have to look at the success of the EU: The world is changing. Maybe we should bite the bullet and see what happens."
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Title Annotation:East African Co-operation
Author:Hussain, Tabasim
Publication:African Business
Date:Dec 1, 1996
Words:1643
Previous Article:Anatomy of a national menace.
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