Commentary

The Tripartite Free Trade Area Decision Deserves More Credit Than It Is Getting

On June 10th three African Regional Economic Communities (RECs) have finally achieved what Cecil Rhodes never did by truly connecting Cape to Cairo. Rather than by railway lines and exploitation they have done this by forming the Tripartite Free Trade Area (TFTA).

The Southern African Development Community (SADC), the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA) represent 26 countries with 625 million people and more than 50% of the continent’s GDP.

It’s a remarkable step towards the Pan-African dreams of the founding figures of modern African states even though ratification and implementation will probably take years.

However, the global media’s commentary on this development has been pretty critical. Hilary Matfess writes on Quartz Africa that the TFTA is “bound to disappoint” like the other RECs have in the past. The BBC’s Lerato Mbele is a bit more optimistic, but points out that “despite so many regional bodies, trade has not benefitted”.

Admittedly, intra-continental trade has been quite stable at around 12% of total trade compared to Europe or Asia where it reaches up to 60%. Yet the pessimists are making two age-old mistakes in reporting on African economic development: they don’t contextualize and they are not specific enough.

The context of Africa’s under-performance in intra-regional trade is still deeply connected to colonial pasts and the dominance of neoliberal development economics.

Transport is a major hurdle to trade on the continent as the existing infrastructure has been designed by colonialists and western development consultants after independence to bring raw materials to the coast and ship them to Europe. For example, nobody ever built a decent road link between the two major coastal cities of the East African Community, Dar es Salaam and Mombasa. The five EAC countries estimate that they will need between USD 68 and USD 100 billion to reach their infrastructure development goals for 2025.

Furthermore, Matfess sees a problem in a missing comparative advantage between commodity-dominated economies. This economic structure is a legacy from colonial times and international trade regimes. Exports of raw goods met much lower duties in the rest of the world than manufactured products. Value-addition was punished. Luckily, this structure is changing. In the EAC services make up already 41% of total exports and the trend is pointing upward across most of the continent (see WTO Database).

Moreover, the critiques are throwing around continental statistics, while the TFTA is composed of less than half the continents’ countries and three very different Regional Economic Communities. Good old “Africa is a country” reporting…

Have a look at the numbers for the TFTA members: The share of intra-regional exports in SADC increased from the famous 12% in 2000 to 17% in 2013. COMESA was at a much worse 4.8% in 2000, which is not surprising when you see that membership stretches from Libya to Swaziland. Yet, COMESA’s intra-exports eightfolded in total numbers and climbed to 9.4% of total exports in 2013. The EAC was the most successful rising from 17.5% to 19.5% over the same period. (All numbers from UNCTAD).

The latter in particular should be applauded – this progress has come since the EAC’s relatively recent creation in 1999. Burundi, Kenya, Rwanda, Tanzania and Uganda have managed to not only establish a Customs Union and a Common Market, but they have also ratified a Monetary Union Protocol, improved movement of workers and are working closely together in political affairs in general.

Of course regional integration in Africa has its troubles and I have written about it myself. Similarly, the TFTA roll-out will not go smoothly and should not be seen as the panacea for intra-African trade.

You can certainly be critical of the RECs and their performance so far, but do it in a precise and contextualized manner.

For a more nuanced analysis of the TFTA, check out this interview with Razia Khan, head of Africa economic research at Standard Chartered.

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Experiences, Learning

Development Hotel-ology

The closer I’m getting the end of my internship the more I reflect on what I have learned in 10 months working in the development industry in East Africa.

Besides the big important life lessons (I will probably write about that once I am back home) there are hundreds of small things I encountered that I would have never imagined to play a big role in my work. One of these interesting little characteristics of aid work is the importance of that one big question: Which hotel do we go to?

I always used to have quite a pragmatic relationship with hotels. Usually when I travel I want them to be cheap, more or less clean and in the best case offer a relaxed atmosphere that attracts like-minded backpackers. When I started working here I assumed that the choice for venues and accommodation would be driven by a similar kind of pragmatism. You want them to offer the service you need and the choice should be cost-efficient. Any average hotel with a conference room should do the trick, right?

Boy, was I wrong.

I work for a regional integration program and a big part of the job is to organize trainings, stakeholder meetings or policy development workshops all across the East African Community. With every new event the delicate question came up which hotel should serve as host. What I didn’t know: The chosen venue is so much more than just some venue. After 10 months of interning I present you a check-list for picking the right hotel for a fancy development meeting.

1. Think location.

All the three major cities of our region are crazy with traffic.

A commute from the airport to Dar, Kampala or Nairobi will leave you pounding your forehead on the dashboard and then slowly curling up on your seat sobbing about your stolen lifetime.

So, more than 3 participants coming from outside Nairobi? Pick that charmless hotel along that horrible airport highway instead of the nice one downtown. Similarly, you might want to find a place in the outskirts if your meeting promises to be long and boring. A small retreat at the lakeside in Entebbe (30 kilometers from downtown Kampala) makes it less likely for your participants to leave once they signed the attendance sheet.

2. Status matters.

I really don’t care if my hotel door has golden handles and staff in tuxedos. Turns out most of the people around me think differently. When I naively asked why we could not simply take the cheapest decent option on the menu, my colleagues smiled at me and told me that simply nobody would show up. The name of the place needs to be known – unfamiliar hotels often raise some eyebrows.

Then it depends on whom you want to invite: You want the ministry’s Permanent Secretary? You better add another star. I have the feeling that counts especially for public sector people. Private sector managers aren’t convinced to attend by a purpose of the meeting but by the venue’s marble columns.

3. Individuals and their distinct tastes

You won’t believe the amount of small talk I come across among my coworkers about their favorite hotels: the nicest hotel garden, the conference hall with the great view or the one time when their favorite cheese was not on the breakfast buffet…everybody’s got their favorite.

Our partners behave the same way. My most baffling moment was when a representative of our Partner Organisation just ignored that I had rented a room for him at a perfectly nice (and expensive) hotel and decided to rebook himself into a fancier venue. What really left me in awe was that once I asked him if everything was in order, he started complaining about details like water pressure in his shower like a spoilt child. None of the other participants staying in the original location ever complained – I guess they don’t travel too often to development industry meetings.

4. A word to costs.

As I wrote above, I thought, with limited budgets for development aid, we would go for cost-efficient solutions. That’s pretty impossible with the local conference hotel industry mostly charging rates of 100-150 US Dollar per night for something that most of the people involved find acceptable (I think they are pretty fancy). Our headquarters force us to get three quotations, but if you prefer a different venue, that’s fine too. It is only when budget pressures get too high that we begin to start thinking about some “innovative solutions” to hosting (like using our partner’s facilities… crazy thought).

I never imagined that I would learn so much about hotels in East Africa.

Sometimes it really felt as if some participants in these meetings  cared much more about where they were discussing a policy than about the policy’s content.

Initially, I was quite sceptical of the development industry and wanted so see the truth behind the stereotypes. While I have been positively surprised in some aspects, the strange concept of discussing poverty reduction in a 4-5 star hotel seems to be the reality. If I think only about the total amount that we spent on my own hotel nights for the five meetings I attended in these 10 months, I get to about 20% of what I earned during my whole internship!

To most East Africans who – like me – usually opt for pragmatic solutions to accommodation and venues, all this has a weird feel. Regardless, if you want to play the East African policy game, you better have a PhD in the science called Hotel-ology.

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Commentary

When Nationalism Comes Knocking (Part 2)

See Part 1 here

If the economic argument for protectionism does not make sense, it seems like Tanzania’s latest anti-regional decisions are based on nothing more but good old nationalism.

Tanzania has a long (positive) history with nationalism since its first legendary president Julius Nyerere put a lot of effort in uniting the nation after independence: by pushing for Kiswahili as a uniting language for all tribes (there are more than 120 languages spoken in Tanzania), but also by pursuing a relatively closed socialist economic model. An initial attempt to create a united East Africa failed in 1977 also because Tanzania felt it was not getting the best deal out of it and nationalist sentiments (in most EAC countries to be fair) destroyed the regional spirit.

Whilst nationalism was definitely beneficial and a good idea after decolonization to avoid ethnic tensions that wrecked so many other young African states, it seems to make much less sense nowadays. Yet, it is highly in fashion: besides the anti-EAC decisions Tanzania’s Minister of Finance has announced to plan the next budget without donor money (without mentioning how to close that gap) after partners have withheld funds over a corruption scandal and announced steps to fight against the use of the US Dollar in domestic transactions (without addressing the reasons for the Shilling’s instability). The only one really profiting from this wave of nationalist policies is the ruling CCM party, as elections are coming up in fall and a nationalist platform tends to pay-off at the polls.

Here is where the actual problem lies. Tanzanians will vote in favour of anti-Kenyan policies and could not care less about the EAC. There is no party that is actually actively campaigning with a pro-regionalism stance. While the public and private sector are trying to progress integration on the technocratic level and President Kikwete speaks in favor of the EAC at regional gatherings, I doubt that any CCM politician will even mention the Community in a speech in front of the “Wananchi” (the ordinary people) – the EAC is not a vote catcher.

Many Tanzanians have never even heard about the EAC, let alone understand what their people actually do besides living in nice houses and driving big cars (a motorbike-taxi driver found it hilarious that I work at the EAC, but am still riding along on his bike). Though, this is understandable.

Besides businessmen or people in border areas that might do some trading, the East African Community does not affect their life at all. Their socio-economic situation does not allow trips to neighbouring countries and EAC regulations have not really reached the daily life yet, as they do in the EU. I can only really speak about the situation in Tanzania, but I assume that this issue looks similar in the other four Partner States. You might realize now that I had left out “the people” when I listed all stakeholders in the beginning that are keen on regional integration on the African continent.

Presidents Museveni (Uganda), Moi (Kenya) and Mkapa (Tanzania) at the launch of the EAC in 1999. (Source: EAC website)

AND WHEREAS in 1977 the Treaty for East African Co-operation establishing the East African Community was officially dissolved, the main reasons contributing to the collapse of the East African Community being lack of strong political will, lack of strong participation of the private sector and civil society in the co-operation activities…”, Preamble of the EAC Treaty 1999.

Ironically, the EAC sees itself as a “people-centered” union: A term that also we at GIZ gladly put in the reports about our work. Seeing that, we should not be surprised about the nationalist sentiments, but about such misconceptions created by the bubble that we work in. I don’t want to say that our project has not realized this shortcoming.

In fact, the opposite is true: One module focuses on improving the communication strategy of the EAC Secretariat and another one works on integrating the civil society in the EAC processes. However, the latest examples support my impression from talking to regular Tanzanians that we are still god-damn far away from making regional integration in Africa a truly people-centered project. While the EAC’s benefits are already indirectly felt by most citizens, the project planning and execution itself is carried and informed almost entirely by elites.

If you complain about the EU being detached from the citizens, you’ll feel better after a look at the EAC.

In a Community of five democracies in which politicians will try to appeal to voters, it is dangerous if the people are utterly unaware of the possibilities of opening up and uniting on a regional level: The results are noticeable in Tanzanian politics at the moment.

I can only hope that governments and development partners step up their efforts on bringing the regional integration project closer to the people and begin to work on creating a deeper East African identity. Looking back at my own case and seeing what has made me the European that I feel I am today, is that I studied abroad. Many have said that after decades of European elitism, finally the first generation is taking over that has adopted a true European identity partly created by the pan-European Erasmus exchange program.

Recently, German President Gauck visited Tanzania and gave a speech at the EAC Secretariat. At one point, he spoke about issues of identity and suggested that the EAC should think about introducing their own version of the Erasmus program. I think that is a great idea and maybe in 30 years I will be able to meet Tanzanians who feel as estranged by nationalism as I do now.

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Commentary

When Nationalism Comes Knocking (Part 1)

I like the European Union. I enjoyed studying abroad, I appreciate not having to go to a Forex when I travel from Berlin to Rome, I am able to buy affordable duty-free yummy French Camembert in Germany and I like that I have the opportunity to apply for jobs anywhere around the EU without thinking about permits, visas or the like.

Of course, I know that nationalism has seen a revival in Europe.

I have watched the news and seen Front National growing strong in France or Islamophobic ‘Patriots’ marching in the streets of Dresden every Monday night. Yet even among those die-hard critics of the EU there is consensus that at least the economic integration process (let’s not include the single currency here) of Europe has been beneficial to all Member States and to the large majority of their citizens (Greeks might disagree).

To me this has always been a hard fact and even one that can be generalized to other areas of the world: regional economic integration will pay-off.

In fact, it is one of the few projects for economic development in Sub-Saharan Africa on which almost all politicians, donors, businesses, civil society actors of different camps can agree easily. African Regional Economic Communities (RECs) are praised by the African Union for healing the scars of arbitrary colonialist borders, supporting local business development, fostering cultural exchange, supporting intra-African trade and other wonders. The latest African Development Report by the African Development Bank presents the arguments well and gives a solid overview about the status quo.

Active REC Pillars of the African Economic Community (notice the overlap) – Pink: Ecowas; Red: SADC; Dark Blue: ECCAS; Light Blue: COMESA; Orange: EAC (Source: Wikipedia)

As a convinced European I thought it would be interesting to see how this wonderful idea is put into practice and I managed to get an internship position with the German development cooperation (GIZ) at their support program for the East African Community (EAC) which is based in Arusha, Tanzania. The EAC is commonly described to be the most progressive and ambitious REC on the continent and has reached quite some milestones so far. Its five Partner States Burundi, Kenya, Rwanda, Tanzania and Uganda have rolled out a Customs Union, continuously expand the scope of their own Common Market and have even agreed to enter a Monetary Union with the planned introduction of a common East African Shilling in 2024.

Studies tell you that the EAC is a role model for similar organizations. When I attend regional meetings I have the feeling that true progress is being made. Representatives from all partner states work together well and have an East African approach to many issues the region faces.

It’s the image I also get in my private life. Recently I went to “Sauti za Buzara” in Zanzibar, the most prominent music festival in East Africa. I saw great acts from Rwanda, Kenya and Tanzania and danced with Ugandans and Burundians alike. Other weekends I take the bus across the border to enjoy big city life in Nairobi or some Kenyan friends come over to pay us a visit. All I want to say is that – to me – East African regionalism is real and both my private as well as my professional life shows me how it can work – It looks like my optimistic expectations have actually been met.

 Alas, I am living in a bubble and it burst about two weeks ago. It is not the first time I got a reality check since I work at the EAC, but this time it was more brutal than before. Tanzania – our beloved host country – just gave regional integration efforts the bird. Again, it did not come as a total surprise. Tanzania has always been a bit reluctant about opening up towards its East African partners.

The so-called “Coalition of the willing” made up of Kenya, Uganda and Rwanda had already realized that and created what we termed in the EU as a “two-speed union”. While the Coalition has arranged for citizens to travel quite freely across these three countries, scrapped work permit fees and made progress on common infrastructure development, Tanzania took things a bit more slowly and only hesitantly implements previous EAC policies.

Yet, two weeks ago the Tanzanian government came up with two decisions that were not only not helping to further integration, but actually represented a fundamental step backwards: Firstly, the Civil Aviation Authority ordered the region’s biggest airline, Kenya Airways, to decrease its flights to Tanzania from 42 to 14 per week. Secondly, the Tanzanian parliament voted for a highly restrictive new immigration law that makes it even harder to get a work permit as a foreigner than it is already. The first decision has been taken back for now and the second still needs to be confirmed by President Kikwete, but they both sent a strong signal: integration is definitely not top priority.

It is especially frustrating for us at the GIZ because two of our focus areas of cooperation are Trade in Services and Free Movement of Workers. On top of that, Tanzania is the second biggest economy and the largest country in terms of population in the EAC – an actor you want to have fully on board.

But why does such a major player dither like that?

You might think that it would make economic sense to go for a bit more protectionism. After all there is some inequality between EAC countries and some Tanzanian companies are likely to lose out by having to compete with their more efficient Kenyan neighbors. Moreover, especially Chinese actors here are often criticized for bringing in workers for tasks that many Tanzanians would be able to do and with 65% youth unemployment jobs are very much needed.

Yet, on a second look, the economic argument is hardly valid. Overall, Tanzania has grown strongly since economic integration began in 1999: its GDP per capita more than doubled over the years and regional trade has taken a similar route.

Looking specifically at the two recent decisions, Tanzania would suffer dearly. The country’s important tourism industry complained strongly to President Kikwete when the ban was announced, as many of their customers are flown in by Kenya Airways and Dar businessmen rely on air transport to the business hub Nairobi. Tanzania’s own national carrier went bankrupt some time ago, local Precision Air does not have sufficient capacity to step in and the budget carrier FastJet is not allowed to operate in Kenya yet (some say that retaliation for this was the reason for the Kenya Airways ban in the first place). Concerning the other bill, Tanzanian businesses rely on bringing in foreign experts to close a great skills gap caused by a broken and underfunded education system. For many technical and higher managerial jobs that the country lacks enough skilled candidates to fill all positions. Simply restricting companies from recruiting outside of the country will not magically create a highly-capable workforce.

It seems like there is little ground to draw back from regionalism for economic reasons. Could we be facing the return of the spectre that haunted and finally helped to destroy the last attempt at an East African Community in 1977?

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Continue reading Part 2 here

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