EAST AFRICAN COMMUNITY (EAC)



The East African Community (EAC), an economic cooperative, was formed by the African countries of Kenya, Tanzania, and Uganda in 1967. Prior to gaining independence these three countries had been under British colonial rule. One of the purposes of the treaty was to keep intact cooperative regional trade as mandated under British rule. The East African Federation, an earlier attempt to form a cooperative, failed to get off the ground in 1964 because of strong nationalism and the diverging economic and political priorities of the countries. By June 1967 these differences were set aside and the Treaty for East African Cooperation was signed, creating the East African Community. A long-term goal of the EAC was to establish an East African common market. The purpose of the EAC and the hoped-for common market was to promote, strengthen, and regulate common industrial and commercial developments. This was to be accomplished by cooperative and regulated development and trade. The economic results of this policy would be shared equally by all member states. EAC headquarters were established in Arusha, Tanzania.

EAC policy was governed by the East African Authority, which consisted of the president of each respective member country. Policy decisions were to be unanimous and each member nation appointed a minister for East African affairs who served in an advisory capacity to the East African Authority. The EAC also had five councils: the Common Market Council, the Communications Council, the Economic and Consultative and Planning Council, the Finance Council, and the Research and Social Council. There was also an East African Legislative Assembly, a Common Market Tribunal, and a Court of Appeal.

In the hope of attaining a viable East African common market, the treaty called for regulations covering intracommunity trade and trade with nonmember states. The three nations had to retain a common customs tariff and could not establish privileged or unilateral trade agreements with nonmembers. The treaty also called for transfer taxes in lieu of internal tariffs; these taxes served to regulate intracommunity trade. There were also coordinated investment programs and attempts to stabilize currency exchange rates. The community also created four corporations: the East African Railway Corporation, the East African Harbors Corporation, the East African Airways Corporation, and the East African Posts and Telecommunications Corporation. These corporations grew out of the formerly British infrastructure that remained intact after independence and included roads, rail systems, airways, port facilities, a telegraph and postal system, and a common currency.

Although the existing infrastructure served as a framework for the EAC to build on, the community was soon overwhelmed by political strife, ideological rifts, and severe economic problems. In February 1971 General Idi Amin seized power in Uganda in a military coup. The deposed Milton Obote was granted political asylum in neighboring Tanzania. In 1976 Amin claimed that part of Kenya belonged to Uganda before the 1902 British land transfer to the old British East Africa Protectorate. In the intervening years this area had become a focal point of Kenyan farming, transportation, and economic development. Kenya responded to Amin's threats by curtailing the movement of Ugandan goods across its border.

There were also ideological differences between member countries. Kenya was developing a free market economy and much of its resources went toward capital improvements. Tanzania, however, was developing a planned socialist economy and much of its resources went toward welfare programs. Each country respectively felt it was bearing an unfair economic burden within the EAC. The problems between Tanzania and Kenya were intensified by Amin's 1971 and 1972 nationalization of the commercial assets of Uganda's mostly Asian merchants and entrepreneurs. The resulting Asian exodus from Uganda to Tanzania and the subsequent decline in foreign investment exacerbated an already tense situation.

The three nations were also facing severe balance of payment problems because of the rising cost of energy and imported and finished goods. Trade throughout much of East Africa declined while nationalistic goals overshadowed economic integration efforts. By June 1977 the three member nations could not agree on the EAC budget for the coming fiscal years, and the EAC for all intents and purposes ceased to function. Tanzania, Uganda, and Kenya claimed whatever EAC assets remained within their respective borders. It wasn't until 1983, however, that the three countries came to a formal agreement on the division of EAC assets and obligations. Kenya and Tanzania initially gained more at the breakup but agreed to reimburse Uganda $191 million in goods, services, and cash. They also helped with Uganda's International Monetary Fund and World Bank debts. Simmering border problems between Kenya and Tanzania were also resolved by an agreement concluded at Arusha, Tanzania, on November 16, 1983.

In 1994 the leaders of Kenya, Tanzania, and Uganda announced that plans were underway to revive the defunct EAC. They pledged a joint effort to bring about regional political and economic stability. The leaders felt that Africa had become much too dependent on foreign aid and that Africans must solve Africa's problems. In late 1993 Daniel Moi, Kenya's president, told his nation: "This newly found cooperation calls for a unified approach to issues that affect the lives of the people of our three countries. We are brothers and sisters, and we must partake of our successes and failures as such."

In 1996 Kenya, Tanzania, and Uganda officially announced the creation of the Secretariat of the East African Co-operation, also based in Arusha. This came about as the result of three meetings: the East African Commission meeting in Kenya in 1995; the Heads of State meeting in Uganda in 1996; and the Fourth Permanent Tripartite Commission Meeting in Tanzania in 1996. A driving force behind the creation of this new cooperative endeavor was the collapse of the Soviet Union and a subsequent shift in Western aid and attention from Africa to the emerging democracies in eastern Europe. Another unifying factor was the emergence of global trading blocs such as the European Union and the North American Free Trade Agreement.

"The emergence of the growing economic strength has compelled us to re-examine the issue of regional integration as a means towards creating a larger market and a stronger negotiating basis for the prosperity of our region," Moi told an interviewer in 1996. It was hoped that the reestablished EAC would offer an attractive environment for trade, investment, employment, and sustained economic growth. Funding for the cooperative comes from the national budgets of the member countries. One of the first priorities was to work towards the reestablishment of the joint operation of railways, harbors, airlines, postal systems, and telecommunication networks. Included in these plans are standard travel documents for each country's citizens.

The creation of the East African Community in 1967 also established the East African Development Bank (EADB). The EADB survived the dissolution of the EAC because it did not rely on the EAC for funding. Headquartered in Kampala, Uganda, the bank was revitalized in 1977 by a then rare show of unity when Kenya, Tanzania, and Uganda momentarily set aside their differences in an effort to bolster the bank's activities. The original purpose of the EADB was to provide funding and technical assistance for the promotion of industrial development. Under a new charter adopted in 1980, however, the bank could also provide funding and technical assistance for agricultural, forestry, tourism, transportation, and infrastructure development projects. In 1984 the International Monetary Fund agreed to provide further financial backing and by the late 1980s the African Development Bank and the Japanese government agreed to channel $56.4 million in credit through the EADB for regional projects. By 1990 the EADB had lent $28 million for 19 separate projects, but many of these and other loans were soon in arrears. Many of the bank's problems were blamed on currency devaluations and various technical financial adjustments. In 1993 the EADB agreed to a complete restructuring under the guidance of a new director general.

SEE ALSO : African Management Methods ; Economic Community of West African States (ECOWAS)

[ Michael Knes ]

FURTHER READING:

Aketch, Nyakwar. "East Africa: Revival of the East African Community." Africanews, April 1996. Available from www.freeworld.it/peacelink/afrinews/I_issue/p6.html .

Cox, Thomas S. "Northern Actors in a South-South Setting: External Aid and East African Integration." Journal of Common Market Studies, March 1983, 283-312.

"East African Cooperation Resumes." African Business, February 1994, 15.

Hazlewood, Arthur. Economic Integration: The East Africa Experience. New York: St. Martin's Press, 1975. International Monetary Fund. "East African Development Bank." Washington: International Monetary Fund, 1997. Available from www.imf.org/extemal/np/sec/decdo/eadb.htm .

Umbrichet, Victor H. Multilateral Mediation: Practical Experiences and Lessons. Mediation Cases: The East African Community. Dordrecht, Netherlands: Martinus Nijhoff, 1989.

World Statesman. "African Development." London: World Statesman, 1996.



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