Sunday, December 21, 2008




Conventional wisdom provides for economies of scale as a platform for energising trade and industrialisation. The two are critical ingredients for jobs creation, which East African countries urgently require.

This is precisely what Europe set out to achieve more than two decades ago. Western European states agreed to bring down economic barriers by forming an economic bloc with vast economic resources and broader market. The move has spurred production and market access because of the large size of the population. The bloc has a common currency — the euro — and uniform tariffs, which cut substantially the cost of production and living.

Despite some hitches, the European Union has spurred growth in erstwhile tame economies. Spain, Portugal and Greece have been posting high economic growth, proof of which is the numbers of illegal migrants from Africa and Asia.

The transformation of the Organisation of African Unity into African Union was inspired by the economic benefits that accrue from the economies of scale — the more, the better. The larger the size of population, the more the economic benefits.

It is this economic concept that necessitated the formation of the East African Common Market, which according to the EAC treaty should come into force next year. However, political leaders have poisoned what was a good idea that would have been a major boost to the region’s weak economies.

The start of the process to collect and collate views on envisaged regional Common Market last week was marked with diffidence and apathy. This signals that the dream to integrate the economies of Kenya, Uganda, Tanzania, Rwanda and Burundi — with a combined population of nearly 130 million people — is evaporating.

First, there is the longstanding fear and mistrust among founder members — Kenya, Uganda and Tanzania. The three countries have, since independence, acted like strange bedfellows in matters economic. Unequal levels of development has also been cited as one of the factors that derail formation of a common market to facilitate cross-border movement of goods, services and labour. Generally, these are excuses rather than reasons for procrastination. It is an open secret that political chauvinism and misplaced patriotism have replaced the original dream — a single economic entity.

Members of EA Legislative Assembly, who are currently collecting views on formation of the common market, were appalled by the low turnout when simultaneous sittings began last Monday in the five states. It is premature to make any serious conclusions about the future and viability of the bloc, but it is a fact that the enthusiasm that the concept had initially elicited has faded.

This is as a result of differences in thinking and execution of the few projects the envisaged economic bloc has undertaken jointly. The EAC Customs Union, which came into being in 2005, is dysfunctional with members constantly trading accusations – and insults – over discrepancies in its implementation. Free movement of labour may never takeoff, save for between Kenya and Rwanda.

These are two instances of discord in EAC. The region and its leaders are locked up in a time warp that can only be undone by economies of scale. A regional common market is evidently a long shot.