A look at the Recent Sugar Debate between Kenya and Uganda and the Need for Continuous Education on Broader Regional Integration Process

A look at the Recent Sugar Debate between Kenya and Uganda and the Need for Continuous Education on Broader Regional Integration Process

The ‘loud sugar debate’’ between Kenyan and Ugandan ‘stakeholders’ may now safely be in the ‘’sea of forgetfulness’’ and what was dubbed Presidents Uhuru’s and Museveni’s sugar is no longer making the headlines. But what we need to ask ourselves is whether indeed we did solve the underlying mistrust or whether we only massaged the symptoms.

 For those who may not have followed the ‘debate,’’ some background will help: hue and cry and a chorus of opposition was aroused after President Kenyatta came back from a State visit to Uganda in July with the news that Kenya would henceforth fill its sugar deficit with imports from Uganda, and that this would save the Kenyan national coffers a great deal of foreign currency costs expended while importing sugar from as far afield as Brazil.

 While Kenya’s opposition took the cue to score political mileage over the din of a government machinery trying to explain the merit of the deal, the bigger picture in my view of what emerged is the lack of access to key information and knowledge by the citizenry of the region regarding what the integration process is all about and the benefits and indeed opportunities that regional integration presents to all the peoples of the region. It also brought to light the need to help people understand what integration involves and what that means for the daily lives and opportunities as well as sacrifices that must be made to make integration work. We will make a small attempt to break down some of the issues.

 But before we do that, another good example of the ‘’conflicting interests’ on regional integration is how Kenyans were up in arms recently when Kenya Airways’ weekly flights to Tanzania were reduced from forty two to fourteen (this was later reversed) and then went up in arms when Uganda wanted to sell its sugar to Kenya. An independent outsider would ask themselves why Kenyans would find it bad to be denied the chance to sell their ‘flights’ to Tanzania but good for them to deny Uganda selling its sugar to Kenya(ns).

 To understand this dilemma, one needs to appreciate that even though the ‘new’ EAC is now a ‘’Teenager’ at 15 years old, many citizens of the region still haven’t reconciled to the fact that increasingly, we have all become ’citizens without borders’’ by virtue of the ‘Community at the regional level and more generally as result of the global multilateral trading system through the World Trade Organization (WTO).’ The absence of a structured way to help the citizens of the region, who are the real ‘’owners’’ of integration to follow and track progress perhaps is the Achilles heel of integration actors. You will be surprised to know for example that not many know that the EAC might one day end up in a political federation leave alone being concerned what that federation and its implications will be.

As a people of the region, we need to embrace ‘regionalism’ as the new normal. It is the era of integration and its benefits abound. We must bring ourselves to accept that the ‘region’ is not about the Presidents and the clique in power; who sign a Treaty here, attend a Summit there and pass a ‘head-of-state-resolution’ elsewhere. Yes the political leadership has its place in spearheading the process and ensuring the necessary political will. However, building a new shared regional culture, values and supra-national institutions are more enduring and do ensure that the integration process and all its benefit will outlast any of us. That will happen if all ‘the people’ are involved. Integration is indeed about us, the people.

 But it comes with new responsibilities. It implies learning to accommodate new ways and new cultures of not just those within our national borders (that should be obvious) but of others who might not look or behave like us. The good thing is that in many ways we are already interacting (albeit unconsciously) regionally. At least about one million metric tons of the maize eaten for example in Kenya and about 60% of our rice and wheat diets annually is sourced from outside (Uganda, Tanzania, Malawi, and Zambia, Argentina, Pakistan to name but a few external sources). We are sustained by the efforts of people (and their resources) we have never met. It thus behooves us to transcend our nationalistic thinking. Even the region let alone the world is bigger than us… and offers better and bigger opportunities.

 Every day we step out of our house nicely groomed is testament to the virtues of international trade; donning a suit made in Turkey, an American shirt accessorized with a tie from England. We then round off the picture with a leather belt from Ethiopia, a Swiss-made watch and pair of shoes from China. After we have logged in six hours or so at our work desk, over a computer made in Seattle (America), we then sit down over lunch to enjoy an Ugali meal made from flour milled by Mama Millers in Thika with maize imported from Zambia. After which we down it with Ceres Juice imported from South Africa. Yet being overly modest in this description, we are still more regional and international than we perhaps realize. We must learn to be more accommodative.

 ‘Regionalism’ helps us transcend our national constraints and limitations in more ways than one. It offers better markets for our produce…and gives us access to better products and better choices in service. But the story doesn’t end there. Our own Kenyan tea, coffee and the flower industries are sustained by other people’s money. Our tourism industry has been on sick leave because …well you guessed right,… we could not get enough foreign buyers of our white sand and pleasure-filled beaches! As a result, hotels closed down and jobs were lost. Consequently, tenants could not pay their rents and landlords lost income. If and when this system of interconnectedness fails to work, at the end of the day, we all lose. And when it works, we all benefit. It is called the Multiplier effect.

If we go further, we will see that, the hundreds of thousands of employees who depend on the flower industry and the billions in foreign currency that Kenya earns would come to naught if those ‘other people’ refused to buy from us. The bottom-line is that sustaining the regional and global trade and business interests calls for reprocicity…a give and take approach. We are all interdependent. This is to help make the point that Uganda and Kenya and indeed other members of the EAC have a right to trade with each other.

 But it gets even better than that. In June 2015, the three Regional economic blocs namely EAC, COMESA and SADC signed the Tripartite Free Trade Area Agreement which in principle sets the stage for expanding trade among the peoples of all the 26 countries that make up the three blocs. What is more? With the three RECs coming together, we potentially have a regional market size (and potentially access) of and to over 650million people and a combined GDP of over one trillion US dollars or roughly over half of Africa’s GDP.

 Ideally, this should only make all of us better, not worse. So how does regionalism benefit you in this sense? Imagine if the established clients of your product or service were a reliable 0.154% of the TFTA populace; that would translate to a whopping one million customers. Think about what your business could do with that sort of customer base. So let’s agree that Ugandans have the right to sell their sugar to Kenya (ns). Whether that sugar originates from Ugandan farms or is re-exported from Brazil is another level of discussion that we could discuss under another topic on the applicable rules of origin (ROO). Basically, importing sugar from Uganda should be as ‘’headache-less’’ as it is to import Toyota cars from Japan. In WTO lingua, we could discuss this under ‘’Most Favored Nation Treatment’’ but let’s look at what gives Uganda the right to trade with Kenya. Shall we?

The EAC came back into being at the turn of the century, some twenty odd years after the collapse of the original Community. Much has happened and been achieved since then, when, Presidents Daniel arap Moi for Kenya, Yoweri Museveni for Uganda and Benjamin Mkapa for Tanzania penned their signatures to renew the cooperation. Rwanda and Burundi were admitted much later. “One people, one destiny” – is the slogan of the East African Community (EAC), which was re-established in 2001. Unlike the other perhaps more well-known federations liken COMESA, SADC and ECOWAS, the EAC has enshrined a political union in its founding treaty. Ultimately, we may end up with a political federation.

 EAC’s ambitious timetable envisaged a common currency like the Euro by 2012 with the Common Market having been introduced in 2010. This is still work in progress. Other such bodies that would provide inspiration for the EAC include the EU, NAFTA and ASEAN. But let’s have a look briefly at the details.

The Protocol for the Establishment of the East African Community Customs Union was signed by the three East African Heads of State on 2 March 2004 in Arusha, Tanzania. The Republics of Rwanda and Burundi would later join the Customs Union in 2008 and started applying its instruments in July 2009. The objectives of the CU in brief were:

  • To further liberalize intra-regional trade in goods on the basis of mutually beneficial trade arrangements among Partner States;
  • To promote efficiency in production within the Community;
  • To enhance domestic, cross-border and foreign investment in the Community; and
  • To promote economic development and diversification in industrialization in the Community.

 Further the protocol defined the scope of cooperation to include: Customs administration, trade liberalization and trade related aspects including the simplification and harmonization of trade documentation, customs regulations and procedures, trade remedies, production and exchange of customs and trade statistics and information; and the promotion of exports by Member States and that dear friends, includes Ugandan sugar.

Without going into too much detail, that should help to shed light on the reason why we can’t deny Uganda or any other Member State for that matter, the opportunity to export to another.

Of course there are rules and provisions under ‘Anti-dumping laws’ that the member states must abide by and as long as these are adhered to, we should all be free to trade irrespective of the politics of the day. We live and let live.

 It is true that the benefits of cooperation do not arise automatically. Successful regional integration requires strong institutions, broad support among the population and a clear commitment to the project on the part of the elites. Only then will the potential that undoubtedly exists be unlocked.

 But the history of regional cooperation in East Africa goes back to pre-colonial times. The first moves towards cooperation between states were made in 1919. Kenya, Tanganyika and Uganda – all of them, then under British administration – formed a customs union.

In 1967, the first East African Community was founded. The three member states of Kenya, Tanzania and Uganda agreed to cooperate on a wide range of economic and social issues. The first EAC, and the extensive integration which it achieved, was hailed a success, but the project nevertheless collapsed in 1977. The failure of the first East African Community was attributed to a number of factors:

  • lack of steering functions like the current EAC Secretariat;
  • perceived unequal distribution of benefits;
  • purely intergovernmental structure; and,
  • differences of opinion between the leading players,

It is noteworthy that these issues have been addressed under the new Community through an improved management system of cooperation, greater attention paid to fair distribution of the benefits and the fact that the EAC now allows civil society and market forces to play a more prominent role.

 

After the collapse of the first EAC, important steps towards reviving cooperation and establishing a new Community were taken in 1993 and 1997 at two summits of the Heads of State. In 1993 the Permanent Tripartite Commission for Cooperation was set up: a coordinating institution that in 1998 produced a draft treaty for the later EAC. Cooperation on security matters was also initiated during this period. In November 1999, the Treaty for the Establishment of the East African Community was signed by the Heads of state of Uganda, Kenya and Tanzania. It entered into force on 7th July 2000. Two new members, Rwanda and Burundi, joined the Community in 2007 bringing the total membership to five. In due course, South Sudan may become the sixth member if she meets all the requirements.

 

Several lessons have been learned from the collapse of the predecessor Community, not just by the EAC institutions but the citizens of the region as well to ensure sustainability and key among these lessons is that major decisions affecting the Community must be taken by consensus of the Member States. You could safely say the EAC has grown through the classical stage by stage regional integration approach from a Preferential Trade Area (PTA), through Customs Union, a Common Market and eventually a Monetary Union and Political Federation. But the EAC was not the first bloc to attempt integration. There are and have been hundreds of others before.

 

Some of the achievements under the EAC CU include:

  • liberalization of the EAC region, (average applied tariffs have gradually come down in all Partner States;
  • Helped to enhance predictability for exporters and investors;
  • Led to an increase in imports under the 3 tariff bands, especially under the 0%-tariff band
  • Affected trade regimes in the three countries and led to an increase in tariff dispersions (a) from one product to another, (b) across products within sectors, and (c) across stages of production

 

The EAC’s Common Market protocol is currently underway. This came into being in July 2010 and was inaugurated by Presidents Mwai Kibaki, Jakaya Kikwete, Yoweri Musaveni, Paul Kagame and Pire Nkurunziza. Under the Common Market, some of the envisaged benefits include growth in internal trade within the region, increase in production capacity, accompanied by a fall in the unit price of industrial goods as a result of economies of scale, specialization of the economy and increasing concentration of businesses on particular areas in which they have competitive advantages (specialization effects), and improved coordination of foreign direct investment. It also envisaged the free movement of people, capital goods and services. While these haven’t entirely been achieved, Stefan and Moritz (2011) in their Report on EAC Integration note that ‘’a customs union and a common market could lead to an increase in trade between the members of the regional organization but they also caution that the ‘’realization of a common market requires all Member States and the populace to be prepared to accept a not insignificant risk. For regional integration not only creates trade, but also changes the overall economic structure. This entails some uncertainties, which in some cases may have negative consequences.’’

 

In spite of the challenges, still, considerable steps have been taken and significant progress made. Inter-EAC trade has grown significantly. There is now in place the East Africa Single Tourism Visa for foreign visitors and even the East African Identity Card for citizens, with which, one can now move freely across the region without requiring a national passport. Other member states like Rwanda have gone a step further to ease doing business so much so that it will take you only two working days to acquire investment land in Kigali. These need to be celebrated.

 

Credit is due of course to a number of agencies and organizations who have done a considerable job in getting the region trading. The EAC Secretariat has done a sterling job in coordinating regional programs. While a lot still need to be done in ensuring that every dollar and other resources give their real value, there is real progress with the regional integration process. Ministries charged with regional integration easily come to mind with respect to creating awareness. But there are others as well like TradeMark East Africa (TMEA) who have and continue to mobilize and invest immense resources in the infrastructural corridors and capacity (hard and soft infrastructure) of the region from the port of Mombasa to the revenue authorities of Burundi with the aim of enhancing trade and investment. But clearly, a lot more will need to be done. But kudos to them.

 

With the region now moving quickly towards a Monetary Union and ultimately a Political Federation, the least one would need is opposition from citizens who are ill-informed and therefore unwilling to support the integration agenda and to embrace the changes that will inevitably come with the new monetary and political dimensions (Lessons abound from the European Union).

 

Knowing that the region is home to a cocktail of cultures and ethnic groups, it is vital that the Member States move quickly to ensure unity and strengthen the capacity to accommodate one another including the diversity of opinion first at the national level and then eventually at the regional level. Otherwise the whole intended federation might as well wait. It won’t be desirable to export cheap local politicking, ethnic profiling and differences to the region. The very reason, why the unrest and upheaval in Burundi need to be addressed.

 

At the end of the day, a well-informed citizenry will be the best cadre of ambassadors for regional integration. After all, integration should be about the people and for the people and not just for their leaders. Then Ugandan sugar will be just as tasty as Mumias sugar.

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