Kenya finds going tough with its regional partners

Uncertainty over future access to the European market and losses incurred in the recent military flare-up in South Sudan have raised fresh queries on the benefits of the regional integration to Kenya.

Just when local businesses thought the road was finally smooth for the conclusion of the economic partnership agreements (EPAs) with European Union, Tanzania pulled the plug.

The neighbouring country made it known that it would not sign EPAs during the United Nations Conference on Trade and Development forum held in Nairobi two weeks ago putting the fortunes of Kenyan firms on the line.

Arusha’s intransigence has complicate efforts to salvage the deal that has dragged on for more than 10 years. Worryingly, the October deadline is almost here.

Kenya’s predicament is worsened by the fact that it cannot go it alone without its integration partners with which it now shares a customs territory. It either has to adopt the position of its neighbours or pull out of the regional integration altogether in order to safeguard its key EU market.

“Tanzania as current chair of EAC Heads of State Summit should take a leadership role in signing the EPAs as it has been committed to the negotiations since October 2007,” says Ms Lilian Awinjo, chief executive of East African Business Council (EABC), a lobby for the region’s businesses.

As a developing State, Kenya can only safeguard its export market of commodities such as tea and flowers by signing EPAs to continue trading without facing tariff and administrative restrictions after October.

Tanzania – like other landlocked neighbours – are however grouped as least developed States which can still export to the EU on concessionary terms without having to sign EPAs.

“Failing to observe the EPAs October deadline as set by the EU on ratification will prove costly even to Tanzania,” Ms Awinjo said in a statement to Smart Company.

The move by Tanzania comes just weeks after Uganda and Rwanda pulled out of joint crude oil pipeline and railway deals, leaving Kenya on its own.

The two landlocked States had earlier joined Kenya in the initiative called the Northern Corridor Integration projects to speed up construction of infrastructure projects. Burundi and South Sudan later joined the initiative.

The joint infrastructure projects, among them railway and ports, as well as initiatives in ICT and energy were expected to cost at least Sh10 trillion ($100 billion), according to a communiqué from Arusha-based EAC Secretariat.

Immediately Kenya built 60 per cent of its track using part of the Sh327 billion loan from China, Uganda pulled out of the corridor in March, followed by Rwanda weeks later.

It is believed that the modern railway can only be of economic benefit to the Kenya if it runs the full length from Mombasa through to Malaba, Kampala, Kigali and Bujumbura.

Kenya’s Transport ministry officials are currently mulling terminating the line either in Nairobi, Naivasha or diverting it to Kisumu port should neighbours fail to rethink their decision to pull out.

These events, together with losses that businesses have incurred in recent political clashes in Burundi and South Sudan, have raised questions over the quality of the regional integration decisions that leaders make.

In the case of Sudan, the EAC Heads of State Summit reached the decision to admit it into the bloc in April this year despite widespread concerns over its political stability.

Under article Three of EAC Treaty, a State can only be admitted into the bloc if it has compatible social and economic policies. Many observers feel South Sudan – which was just emerging from over two decades of civil war – should have been given more time to build a market economy before joining the regional integration.

It states; “Such States should have demonstrated progress in building a market-driven economy, ability to strengthen region’s economy, geographical proximity and interdependence of the bloc.”

It goes ahead to peg approval of membership on applicant’s adherence to “universally acceptable principles of good governance, democracy, rule of law, respect for human rights and social justice.”

Queries were raised as to whether the EAC presidents had ignored these requirements when they admitted Burundi in 2007 and South Sudan in April this year.

Kenya and Uganda were particularly seen as overly keen on having South Sudan on board as most of their citizen had established market linkages to the new State.

At the moment, discussions on admission of Somalia have reached advanced stages. With the on and off peace in the country, the bloc could soon be welcoming another headache.

In the meantime, firms and citizens who took admission of South Sudan into the bloc as a sign economic stability to widen search for opportunities have suffered losses in the recent military clashes.

The government was itself forced to evacuate hundreds of people from the country not to mention resultant loss of money and property.

But even within the stable States of the region, firms have said they face delays in clearance of goods, corruption, high fees charged by national agencies and influx of substandard goods.

“We need to put our hands together in finding solutions to the existing challenges if we are to make our integration a fruitful one,” says EABC Vice Chairman, Mr Felix Mosha, a Tanzanian national.

The region- now a common market - hopes to implement a monetary union protocol which it signed two years ago before eventually becoming a political federation.

Kenya appears less bothered by a series of missteps in the joint deals with neighbours that have exposed its firms and economy to serious financial consequences.

Last week, Kenya took a major step towards the envisaged political federation when the Cabinet directed all government officers and public institutions to start hoisting the EAC flag with immediate effect.

“As further set to the EAC integration, all schools will be required to hoist the EAC flag and sing the EAC Anthem alongside Kenyan Flag and National Anthem,” the cabinet said in a statement dispatched on Thursday.

The statement added: “The EAC flag and Anthem will be hoisted and sung respectively in all public events alongside the Kenya National flag and Anthem. This is intended to boost and promote the EAC integration.”