Lessons EAC can learn from Brexit

Lessons EAC can learn from Brexit

The impending referendum on whether Britain should leave the European Union has dragged in even the leader of the most powerful nation on earth.

So high are the stakes that President Obama, while on a State visit to the UK recently, warned that a vote to exit the EU would see Britain move to the back of the queue in America’s trade negotiations with the world because, in his words “our focus is in negotiating with a big bloc, the European Union”.

The EU, with 28 members, is a single market that allows goods and people to move around, basically as if the member states were one country, and it has one currency, the euro, which is used by 19 of the member countries.

Reaction to Mr Obama’s comments came fast and rather dismayingly racist. This underlines the stakes associated with regional integration, not just in Europe but more importantly in Africa, where several such blocs now vie for attention.

 

Across Africa, several countries have overlapping memberships. Hopefully, the planned integration of the EAC, Comesa, and SADC, which was signed in Cairo in June 2015, will help bring a sense of harmony while focusing and deepening integration and its attendant socio-economic benefits to the people.

Whether the British decide to stay in the EU or not, the point has been made that regional integration, like a marriage, needs to be entered into advisably and soberly. There is no question that regionalism is recognised as the new normal in a world aspiring to build a shared regional culture, value system, and supra-national institutions. I

t is also seen as one of the surest ways to sustainable and equitable development through trade and shared resources.

It is this understanding and ambition that has driven and fostered the growth of the EAC. From the treaty signed in 2000, the bloc has grown steadily, deepening cooperation and breaking barriers for free movement of goods, people, and capital. Its Monetary Union Protocol was signed in 2014.

A recent report notes that the EAC is the most advanced of the blocs and is moving well towards its goal of becoming a political federation with high real income per capita growth and attracting over $24 billion in foreign direct investment since 2000.

The EAC has often looked to the EU for lessons in success.

So as the technocrats work to tie up all the loose ends in what the EAC monetary union will entail, it would pay not to repeat some of the pitfalls of other blocs elsewhere. As Britain has shown, the leaders and, indeed, the citizens of the region must understand what they are getting into as a region.

NATIONAL INTERESTS

Obviously, the dynamics of national interest are bound to change, but the crafters of the union must ensure that the broader framework is not only acceptable to the majority but that it is flexible enough to anticipate a rapidly growing region as well as accommodate national interests that are likely to shift, as we have seen recently with some infrastructure projects.

Britain refused right from the beginning to be part of the euro, not willing to abandon control of its own interest rate policy, which would have occurred under a common currency.

This and others are some of the questions that those given the responsibility of thinking through the process of East African integration must bear in mind.

Without a doubt, a currency union in the EAC backed by strong institutions that have the goodwill of the people will be attractive as this will provide a more stable currency in terms of purchasing power, while currency volatility and fluctuation will be minimised. It could also help eliminate transaction costs, quicken cross-border payments, and make investments and the movement of people more viable. In the same breath, issues of national sovereignty, which African governments have been particularly reluctant to cede, could become challenging if the anticipated regional banking institutions and related policies are deemed to be less than favourable to respective national interests. This is the reason we must invest in an awareness campaign to bring on board as much support as possible before serious implementation begins. As Britain is clearly showing us, you can pay now, or you can pay later. Mr Kiraka is a consultant for Comesa and the executive director, RiimNet-Africa. This email address is being protected from spambots. You need JavaScript enabled to view it..

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About RIIMNET-Africa

RiimNet-Africa is an independent regional Research, Policy and Advocacy think-tank which brings toge...

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