It takes a region
Developing a regional trade market in East Africa is vital to U.S. political and economic security.
You have to either admire or look askance at the Obama administration’s commitment to Africa. On the one hand, the dollar commitment made to Africa by the administration is but a third of that made by Japan or China, However, the longer I study the Obama plan, the more I am impressed by the daring, optimism and the simple genius behind it, especially if it actually succeeds.
The U.S. commitment is only $7-$9 billion in loan guarantees for American companies wishing to invest in the power industry. There is not a direct commitment to the African nations themselves, although six countries have been given priority. One can and should, however, argue that the PowerAfrica commitment is a major one to Africa’s development, as well as to our own economy. PowerAfrica is one of four pillars of the Obama plan for Africa announced last year. As noted in my last post, it addresses perhaps the most critical need for African development.
The second pillar of of the administration’s plan for African development is referred to as TradeAfrica, and like PowerAfrica it has its proponents and skeptics. It addresses another major need for African development, both economically and politically: the need for regional cooperation among nations. It is also a plan that assists U.S. companies that want to invest in Africa, but have not done so because of the lack of market size.
TradeAfrica focuses almost entirely on building a viable regional economic community, as an example for all other regions in Africa to follow. A regional market can only be built through unprecedented cooperation among African nations, in this case among those of the East African Community: Kenya, Tanzania, Rwanda, Uganda and Burundi.
A regional market becomes much more attractive to investors as the market size grows significantly and the access to all countries in the regional market becomes equal. To develop a regional market, however, requires a harmonization of customs duties, roads, rail systems and an increasingly common set of laws, much like those in the European Union. However, because the stage of development varies so greatly throughout Africa, the administration has chosen to focus on the regional market area deemed most likely to evolve into an effective working regional community, the East Africa Community.
It will not be easy for the East Africa Community to effectively develop into a regional market, even though historically Uganda, Tanzania and Kenya once were linked as a regional market shortly after their respective independence. Kenya is the economic giant and linchpin to the region, a fact that Tanzania has been reluctant to accept. Burundi lags far behind the other four, and is the only purely Francophone country since President Paul Kagame made English the official language of Rwanda. Kenya, Uganda and Rwanda have pledged to move forward together, regardless of any differences with Tanzania, but Uganda’s anti-gay laws have complicated possible cooperation with the United States. Kenya-U.S. relations, meanwhile, have been prickly, with President Uhuru Kenyatta under indictment from the International Court of Justice. It seems likely, however, that those charges will be dropped soon. But, aside from South Africa, the East Africa community is the most advanced region economically and politically. There is not a better region for U.S.-Africa cooperation to develop.
It will not be easy, for not only will agreements of trade facilitation have to be built between the United States and the East Africa Community, but the five nations of the community must also develop a more effective means of working together. Customs duties will need to be harmonized and shared. Trust must be built and the egos of leaders must be sublimated for the common good. It will not be easy, but it is essential for the economic and political security of the region and of Africa.
Stephen Hayes is president and CEO of the Corporate Council on Africa.