The East African Community

The East African Community (EAC) consists of six, which occupy 15.9% of Africa’s land area and, in 2019, accounted for about 21% of Africa’s total population and about 10.5% of its total gross domestic product (GDP). Although it had colonial roots, the Treaty of EAC was signed in 1967. However, after 10 years of existence, the community collapsed due to several reasons, including lack of political commitment, use of different economic systems that made it difficult to conduct transactions, disproportionate share of benefits due to different levels of development, lack of private sector participation, and ideological differences under cold war politics. On November 30, 1999, the EAC was reborn by a new treaty. In terms of regional integration, the EAC has been commended for being the most successful of Africa’s regional trade agreement (RTAs). It has been reported that compared to other regional trade agreements, EAC has been quite successful in implementing its policies, especially when it comes to trade. These include free trade, a customs union, and a common market. In 1995, only 17.8% of EAC’s export trade occurred among its members. In 2019, it was 17.7%. The trade with the rest of Africa was consistently between 17.7% and 19.1%. Combining this with intra-EAC trade, EAC’s trade with Africa appears to have increased slightly from 1995 to 2019. In 1995, it was 28.2%; in 2019, it was 33.7%. This is more than all the other regional trade agreements discussed in this book. In contrast, trade with partners outside Africa has dominated the EAC’s trade, even though its volume may be decreasing. For example, in 1995, about 71.8% of EAC’s trade was with partners outside of Africa. In 2019, the percentage of trade with outside Africa was down to 66.3%. The composition of EAC’s export trade is dominated by primary commodities, while its import trade consists more of manufactured merchandise. Several reasons have been given for the relatively weak intraregional trade within the EAC, including institutionalization of rules, interference of policies by bureaucracies and politics, reliance on donor financing, a clash of interest between Kenyan hegemony and Tanzania, overlapping membership, and most importantly infrastructure and lack of economic complementarities and competitiveness. EAC countries export mainly primary unprocessed products and import mainly finished consumer and capital goods. Not only that but like other African countries, they import twice as much as they export or consume twice as much as they produce in trade value terms. The result is that there is no incentive to be committed to enforcing the rules of the common market. This is because, without any member state that can count as an industrialized country and given the situation where the countries produce and export primary goods and consume a lot of manufactured goods, it is not surprising that there is little intraregional trade. To boost intraregional trade, EAC members must industrialize.