AMBASSADORS BELIEVE EAST AFRICAN FEDERATION WILL WORK THIS TIME

[USIA]

USIS Washington File

21 January 1998

AMBASSADORS BELIEVE EAST AFRICAN FEDERATION WILL WORK THIS TIME

(Update CSIS on East African Cooperation (EAC) effort) (1040)
By Jim Fisher-Thompson
USIA Staff Writer

WASHINGTON -- The ambitious attempt by three East African nations to
establish a political and economic federation is steadily moving
forward, largely because of their emphasis on the private sector as
the engine of economic growth for the region, says Ugandan Ambassador
Edith Ssempala.

Ambassador Ssempala January 16 gave an update on the East African
Cooperation (EAC) forum, which was launched in 1996 by Kenya, Uganda,
and Tanzania. She was joined in her presentation by Ambassador Mustafa
Nyang'anyi of Tanzania and Ambassador Samson Chemai of Kenya.

Ssempala, an engineer turned diplomat, told a breakfast sponsored by
the Center for Strategic and International Studies (CSIS) that EAC is
making progress toward its goal of "regional economic integration...so
that our economies can provide competitive employment and better
living standards for all our peoples."

"The regional integration efforts have already had an impact in
accelerating liberalization of trade and investment in East Africa,"
she said. For example, "the convertibility of the national currencies
of Tanzania, Kenya, and Uganda, which was given impetus by the
establishment of the East African Secretariat, has gone a long way in
facilitating trade among those states."

The leaders of the three East African nations expanded the federation
when they signed an agreement adopting a common passport and flag in
Arusha last September. At the same time they released a plan of action
for further economic integration called "The East African Cooperation
Development Strategy for 1997-2000."

Ssempala explained that the federation came about as the result of a
recognition by the three nations that because of their small size and
population, "individually we simply do not have the critical mass
large enough to attract investment [and] tourists, generate trade, and
be competitive in today's globalized economy."

The EAC, she explained, "creates a market of approximately 77 million
people. It creates efficiency as a result of tariff and tax
rationalization and the sharing of some common services, thereby
eliminating the deficient and wastage."

Mentioning a similar attempt at federation by the three nations that
collapsed in 1977, Ssempala said she believes the current plan will
succeed because it is established on a firmer foundation. "Unlike the
cooperation arrangement with the defunct East African Community, which
was mainly based on joint ownership of common services," the EAC "is
based on the creation of an enabling environment for the establishment
of a single market and investment area with the private sector as the
engine of economic growth," she added.

With that in mind, the Ugandan said that the EAC nations "are
currently undergoing economic liberalization [and] privatization, and
are committed to market economies. The role of government, therefore,
will only be:

-- maintenance of law and order;

-- provision of basic infrastructure; and

-- formulation of policies for the development and expansion of market
mechanisms and the private sector."

"Since the private sector will be the engine for economic growth,"
Ssempala added, "its role in the development of the single market and
investment area is critical. The EAC will therefore encourage the
development of private sector institutions to encourage cross-border
investments, joint ventures, and increased trade in goods and
services."

Other areas the EAC will focus on in the coming months include:

-- harmonization of fiscal and monetary policies aimed at creating "a
uniform incentive framework," making it easier to promote the EAC as a
single investment target;

-- upgrading the transport and communications systems of the region;

-- smoothing immigration practices, aimed at easing border crossings;

-- rationalizing energy use throughout the EAC;

-- dismantling trade barriers between the three member nations, "with
the eventual removal of interstate trade formalities and tariffs";

-- promotion of joint industrial projects;

-- support for small- and medium-sized enterprises;

-- tourism and wildlife conservation and "joint marketing of East
Africa as a single tourist destination";

-- legal and judicial cooperation, with creation of regional courts
and "setting up of a regional mechanism for settlement of business
disputes";

-- discussion of a common employment policy "aimed at creating a
conducive environment for investment and the development of the
private sector";

-- development of information systems making it easier to link into
the global information highway;

-- standardizing and integrating regional health and education
systems; and

-- political cooperation, including summit meetings of heads of state,
other ministers' meetings, and "joint committee meetings of national
assemblies and meetings of administrative authorities."

Tanzanian Ambassador Nyang'anyi, who has a master's degree in public
administration and management from Harvard University, gave a historic
overview of the former East African community, noting that it failed
primarily over money.

Under the old system, he said, "the headquarters of the various common
services were apportioned out to the three nations. Tanzania had the
headquarters of the community and headquarters of ports and harbors.
Uganda had the East African Development Bank and posts and
communications. Kenya had East African Railways and East African
Airways."

The problem was that those headquarters were supposed to remit
revenue, after deducting operational costs, to EAC headquarters --
which was not always done. "When you put that kind of provision in a
treaty which is trying to build cooperation in poor developing
countries, you run the risk of misunderstanding," he explained.

This is unlikely to happen with the EAC, he said, because of its focus
on private sector growth and diminished government interference in the
market. For example, in Tanzania, Nyang'anyi said, government is
shedding its ownership and control of more than 400 companies that are
currently being privatized.

Of special interest to Kenyan Ambassador Chemai is the EAC's emphasis
on human capacity building, or training, in law. Chemai, former
director of Kenya Posts and Telecommunications Corporation's central
training school, at the Kenya College of Communications and
Technology, said, "We have been enhancing regional training
activities" with legal and judicial cooperation in mind.

Rule of law is essential to the proper functioning of the EAC, the
Kenyan said, and therefore, "we are requiring the exchange of
information between our various courts in order to harmonize the legal
system." In this regard, he said, "there is a need to revive the Court
of Appeal of East Africa immediately in order to strengthen the
judicial process within the EAC."