State of the Community: Bureaucratic delays, missed targets hurt integration

The decision by East African presidents on Friday to postpone key issues — mainly the Monetary Union and admission of South Sudan and Somalia to the bloc — has left the region’s journey to full integration looking longer than ever, and exposed the bureaucratic delays that continue to haunt the plan.

The Heads of State, in the summit in Nairobi, directed that the deadline for the establishment of the East African Monetary Union be pushed to November next year — a whole year after the earlier set target.

The final report on the monetary union was not submitted to the EAC Heads of Summit for approval, with the presidents directing that the document be presented during an extraordinary summit in April 2013.

They set a new date — November 2013 — by when the Monetary Union Protocol should be signed.

While the presidents did not give South Sudan the final nod to join the bloc, they approved a verification report on the country’s bid.

READ: South Sudan’s bid to join EAC up for discussion

Kenya’s President Mwai Kibaki, Uganda’s Yoweri Museveni, Burundi’s Pierre Nkurunziza, Rwanda’s Paul Kagame and Tanzania’s Jakaya Kikwete said the EAC Council of Ministers should start negotiations with South Sudan following the completion of the verification work.

They also directed the Council to look into Somalia’s application to be admitted to the fast-growing regional body.

READ: Kenya: Somalia seeks EAC membership

Government officials and delegates attending the Summit decried delays in implementing the EAC Common Market Protocol signed in July 2010, saying this was slowing economic growth in the region, which is reeling from delays in removal of non-tariff barriers (NTBs) to trade.

READ: Non-tariff barriers push up cost of doing business in East Africa

While the five EAC partner states have in principle agreed to remove NTBs by December 2012, in the absence of a legally binding framework, action largely depends on the willingness of the different countries.

So far, this push has suffered hiccups as businesses continue to incur huge costs arising from weighbridges, roadblocks, poor infrastructure, unnecessary delays at border posts, and lack of harmonised import and export standards, procedures and documentation.

Frustration is growing among landlocked countries like Rwanda, which are paying a heavy price for the unnecessary and costly delays caused by NTBs like weighbridges and port inefficiencies in Kenya.

Over the past seven years, reforms in the EAC have focused on simplifying regulatory processes, such as trading across borders and starting a business in the region.

Traders and truck drivers in the region complain of the numerous police roadblocks, especially on Kenyan roads, differing transit procedures, longer Customs and administrative procedures and varying trade regulations in the region.

The just-concluded second EAC Heads of State retreat on infrastructure development and financing, in Nairobi, highlighted inadequate regional capacities to co-ordinate and develop a sustained pipeline of infrastructure projects as a major challenge to the integration process.

The creation of the monetary union is the next step in the integration of the EAC after the adoption of a Common Market and a Customs Union.

However, experts have warned against the quick adoption of a monetary union, pointing to the different macroeconomic conditions of member states.

Further, they use the ongoing crisis in the Eurozone as a cautionary tale for the bloc’s ambitions.

The trading bloc also signed a letter of intent for the start of a commercial and trade dialogue with the US.

The presidents backed Burundi’s application to join the Commonwealth and Rwanda’s admission to the UN Security Council, while supporting regional efforts of the International Conference of Great Lakes Region, chaired by President Museveni, to ensure peace in the Democratic Republic of Congo’s North Kivu region.

It is understood that the decision by the Heads of State to defer the admission of South Sudan to the bloc was informed by the need to investigate the country’s governance, democracy, rule of law, respect for human rights and social justice credentials as per Article Three of the EAC Treaty.

Although the verification report carried out by the EAC team early this year, and approved by the EAC Council of Ministers, had indicated that South Sudan had put in place legal and institutional frameworks that would enable it to meet membership requirements as outlined in the EAC Treaty, these institutions were still in their infancy or not yet operational; the Heads of State indicated that more verification was required.

The Council of Ministers was also put under pressure to speed up the expansion of the East African Court of Justice to cover other jurisdictions apart from crimes against humanity.

READ: More teeth needed for East African court

The Council was also required to come up with a model for the establishment of a political federation.

The Council of Ministers’ Committee is expected to meet from December 10 to 15 to deliberate on the report on the monetary union.

Sources said one of the factors blocking the establishment of the monetary union is Kenya’s fear that its currency would be devalued to the level of its counterparts’ units.

Kenyan EAC Director for Economic Affairs Richard Sindiga said 63 out of the 77 articles of the East African Monetary Union (EAMU) have been dealt with, but members were yet to agree on a few issues in the remaining 14.

These include the creation of necessary institutions for the proper functioning of EAMU.

“The issue yet to be finalised here is which of these institutions should be temporary and permanent, and whether they should be established during the transition period or after,” said Mr Sindiga.

The other issues to be concluded include the macroeconomic convergence criteria, whether certain articles should be shifted, deleted or retained, allocation of roles to the organs and institutions of the community, and envisaged benefits of the EAMU.

Negotiations on the monetary union started last year, spearheaded by the High Level Task Force that was appointed by the Council of Ministers in 2010.

According to analysts, the EAC stands to benefit from a monetary union as it will reduce the cost of transactions by eliminating foreign exchange commissions. It will also end destabilisation of local currencies.

“The only fluctuation that could occur is between the EAC currency and other currencies such as the yen, dollar and euro,” said Mr Sindiga.

Adoption of a single currency will also eliminate the risks related to exchange rates between the member states, leading to a speedy development and integration of the financial markets in the region.

The EAC verification report on the South Sudan application had shown that senior government officials had different views on its joining, with the main issues being when to join and what agreements the country should sign.

The Council was mandated to engage the Sudan government and give a report in November 2013.

Last week, Tanzania, which was previously opposed to South Sudan joining the bloc, accepted the report on the admissibility of the new country to the Community following its request in the last Council of Ministers meeting held in Bujumbura that it needed more time for consultation with all the key stakeholders on the matter.

Among the things that qualify South Sudan to join the community as cited by the EAC Council of Ministers is its established mechanism for ratification and accession to international treaties — the country has already acceded to UN and AU charters, and it has been admitted to several regional and international organisations such as Igad, the Nile Basin Initiative and Unesco.

Somalia’s application to join the Community, which was received early this year, was not considered for approval.

Rwanda and Burundi formally joined the East African Community in 2007, 10 years on from their application, so, according to some experts, although South Sudan could know its fate sooner than that, it is not as easy to approve a new member’s application as it may seem.

The EAC leaders also approved a proposal advocating that the Infrastructure Development and Financing Retreat be institutionalised and held once every two years instead of every year.

Reporting by Scola Kamau, Lucas Barasa and Christabel Ligami