Case of history repeating itself as EAC member states pull in different directions

Last weekend at Moi International Airport in Mombasa I was holding a boarding pass with a message “Celebrating 36 Years” by Kenya Airways, which means the airline came into being in 1977.

On a particular day in 1977 at the same airport I sat with a group of oil industry supply managers after a meeting in Mombasa, waiting for an East African Airways (EAA) flight to Nairobi. It was to be a DC 9 aircraft flying from Dar es Salaam via Mombasa to Nairobi. The flight was never to be as the DC 9 never left Dar. We hired taxis to Nairobi.

The following day we learned that the East African Community (EAC) had irreversibly collapsed and that the DC 9 aircraft had been detained at Dar by the Government of Tanzania. The Kenya Airways must have been formed immediately after this incident with whatever EAA aircraft that were within Kenya. I guess the detained DC 9 aircraft in Dar may have become part of the new Air Tanzania.

In 1977, as the EAC collapsed, Tanzania immediately closed its borders with Kenya. The following year, I remember going to Dar for a meeting and since the border between Kenya and Tanzania was closed I had to fly Ethiopian Airlines via Addis Ababa to access Dar. The border remained closed for nearly seven years during which time there was virtually no trade between Kenya and Tanzania, except for smuggled goods.

I still remember when the border was re-opened and Kenya Airways made their inaugural flight to Dar. I was on this inaugural flight which carried many Kenyan entrepreneurs. The purpose of my trip to Dar was to meet the bosses of Tanzanian Petroleum Development Corporation (TPDC) to discuss resumption of supplies by Esso Kenya of Industrial Diesel Oil (IDO) from Kisumu to a power plant in Musoma. Supplies from Kisumu using the boat MV Nyangumi had stopped in 1977 when the border was closed.

Apparently Musoma was President Mwalimu Nyerere’s hometown and power outages were embarrassing the petroleum technocrats. The petroleum infrastructure and systems in Tanzania had virtually collapsed after the demise of EAC . Foreign exchange was also in short supply.

After talks with TPDC, I confirmed it was possible to resuscitate the marine export systems at Kisumu and deliver fuel to Musoma within a month. It was such a relief to the TPDC chiefs that they telephoned President Nyerere to inform him about the good news. A few TPDC officials and myself were invited to the State House to deliver that assurance.

I remember Mwalimu Nyerere calling me “director kijana”. In mid-thirties, I was in deed young and a director at Esso Kenya. He explained that Musoma was his hometown, and power outages were not a good reflection. I reassured him that when an irrevocable and confirmed letter of credit (LC) was opened we would make firm plans to deliver.

Mwalimu picked the phone and called the governor of the Central Bank. Within two days we had the LC for 600 cubic metres of assorted products including IDO. Within the promised time MV Nyangumi docked at Kisumu and we delivered our side of the bargain.

I am telling this story because we have an ongoing major experiment to re-establish and sustain a new EAC. However, of late we are seeing a manifestation of the same signs that made the previous EAC to collapse. The full summit is no longer meeting.

The old EAC could not survive because the three countries (Kenya, Uganda, and Tanzania) had very different political and economic governance systems.

Kenya was an open and free market economy that welcomed and encouraged enterprise. Tanzanian economy was centrally controlled with emphasis on social equality programmes. Uganda, on the other hand had, the entire economic and political systems brought down by late dictator Idi Amin. With so much divergence it was not possible for the heads of state to meet and find common ground. The collapse was inevitable.

Have the current EAC member states found sustainable convergence to sustain an economic and political union? I very much doubt they have. The one common bond that should be binding the EAC is intra-state trade. Why has it taken this long to establish free movement of goods and people with minimum barriers?

Honest answers to this question will tell us how we can establish and sustain a value adding EAC.

Recently we have seen creation of a parallel new corridor alliance among nations that aim to add value to one another through efficient transit infrastructure. Value addition by EAC is a key deliverable which has taken a bit too long to show.

Today, each member country has its individual medium and long-term economic development programme. The sum total of these programmes may not necessarily add up to the central objectives of EAC because each country has different emphasis.

Each state is emphasises local industrialisation and maximising of local jobs. Therefore, some level of trade and migration protectionism will definitely manifest itself.

Also, the recent discoveries of fossil resources among member states appear to have led to re-prioritisation of individual country’s development agenda which may take priority over EAC common objectives.

Whichever way each country chooses to develop, trade among states will always be a cross-cutting essential. For this reason, there is a need to establish efficient inter-state transit infrastructure with minimum trade flow barriers.

If we correctly and sufficiently achieve trade facilitation, then there may be no immediate need to pursue monetary or political union.

Mr Wachira is the director Petroleum Focus Consultants. Email: [email protected]