A case for regional economic blocs in Kenya

Lake Region Economic Bloc chairman Wycliffe Oparanya, joined by his colleagues, addresses the media during their third summit at Nandi Bears Club in Nandi County on September 21, 2018. The bloc consists of 14 counties. PHOTO | FILE | NATION MEDIA GROUP

What you need to know:

  • The plan is to leverage existing assets, addressing constraints and defining key steps that leaders and citizens of the region can take to transform the shared vision of prosperity into reality.
  • Further, with rivers Nzoia, Yala and Nyando bursting their banks causing discomfort and loss of water and fertile soil, the bloc envisions modern irrigation projects to contain flooding.

States and communities yearn to come together under the framework of economic integration for various reasons.

The key rationale for establishing such groupings the world over is to take advantage of economies of scale and expanded market or space for goods and services within jurisdictions of the economic blocs.

This underpins the idea of strength in numbers and the fact that the world is becoming increasingly interdependent.

Economic cooperation foresees some degree of commercial preferentialism, but with harmonised domestic rules.

There are also agreements of a political and security nature. My focus here is on regional cooperation with focus on economic growth.

Regional integration, as a process, involves the growth of linkages and transactions derived primarily from economic activity but involving social inter-connections.

DEVELOPMENT

The emerging trend of regional bloc groupings in Kenya is a concept that should be embraced by all, if not most, of the 47 counties noting that the constitutional allocation of 15 percent sharable revenue from the national Treasury is not enough.

Six regional blocs have emerged across the country, but I will restrict myself to the Lake Region Economic Bloc (LREB).

In 2015, a few governors in the region realised the need to leverage economies of scale — including tapping into the region’s natural resources, markets and agricultural produce among others to change the lives of the people.

A blueprint was borne out of the common understanding that strategic connections between the 14 counties is good for development across the region.

The LREB plan outlines access to new and expanded markets in addition to advantages of economies of scale.

These include a large labour force, comparative county strength, youth demography dividend and shared resources.

PROSPERITY

The region is the most densely populated and constitutes about 25 percent of Kenya’s population.

It presents the socio-economic aspirations of 14 counties seeking to shape the region’s destiny.

The plan is to leverage existing assets, addressing constraints and defining key steps that leaders and citizens of the region can take to transform the shared vision of prosperity into reality.

The blueprint has identified 10 economic pillars divided into three: Productive sectors (agriculture, tourism, trade and industrialisation, social sectors (education, health, water, environment, climate change, gender, people living with disabilities and youth), enablers (ICT, financial services and infrastructure).

Four flagship projects were identified in Busia County during the bloc’s second summit meeting.

These included establishment of the regional bloc’s bank, marine transport, revitalisation of sugar and tea sectors and conservation of forests, rivers and other water towers.

CAPITAL

There was consensus that the regional bank is the most important and immediate initial step.

Just like the International Monetary Fund, the World Bank or the African Development Bank, LREB needs a mixed grill of a development and commercial financial institution.

Small traders, investors and member counties will all benefit. The envisaged bank is to improve capital borrowings at low interest rates for small and emerging entrepreneurs.

It is estimated that aside from investment value from regular regional customers, the member counties national allocation is over Sh80 billion, which will be transacted through the bank.

The financial market trajectory is envisioned to house a major regional insurance company, various saccos and trading groups.

FLOODING

In agriculture, there are opportunities in commodities exchange, large-scale irrigation of high value crops, fish farming, food security value chain and agro-processing factories among others.

Almost all counties in the region are endowed with these opportunities. The 14 governors from the member counties also intend to focus on the revitalisation of tea and sugar sectors.

Further, with rivers Nzoia, Yala and Nyando bursting their banks causing discomfort and loss of water and fertile soil, the bloc envisions modern irrigation projects to contain flooding.

In tourism, the circuit boasts attractive nature, wildlife, culture and heritage.

The writer is CEO, Lake Region Economic Bloc