East African Community Member Research Articles

Does the Inflows of Foreign Aid Dampen or Stimulate FDI to EAC Members? Evidence From East African Community (EAC) Members

Recently, the World Bank and IMF have been more interested in understanding whether foreign aid inflows from multilateral or bilateral donors have catalyzing effect on the crowd out effect to FDI. From this fact, the paper investigates the causal relationship between foreign aid, both bilateral and multilateral aid with FDI inflows to EAC members. Using time analysis techniques of VECM and Granger causality, the results are mixed. On one hand, foreign aid (bilateral and multilateral) causes FDI in two countries. On the other hand, we found no relationship between foreign aid and FDI in other two countries. The results calls for appropriate policy implementations.

The East African Community Integration Process and Economic Growth of Member Countries

This study investigated the effects of East African Community integration process on economic growth of member countries. A panel data was used and generalized least square technique employed. The results show that trade within the East African Community has no significant impact on the economic growth of the member countries. However, the Community trade with the rest of the World and foreign direct investment has a significant effect on growth. The finding, therefore, suggests that for the East African Community member countries to benefit fully from the integration process, they need to streamline their custom clearance procedures and standards and establish a single custom territory.

Tourism in the East African Community (EAC): Challenges, opportunities, and ways forward

The Economic Road Map and Visions of the East African Community member states (Kenya, Tanzania, Uganda, Rwanda, and Burundi) view tourism development not only as a key pillar for national development, but most importantly as a mechanism to alleviate poverty, generate foreign revenue for the government, and contribute to wildlife conservation. With exception of Kenya and Tanzania, which also have a well-developed coastal tourism segment, the remaining East African Community countries are landlocked, with nature and wildlife remaining as the only core tourism assets. Yet, their Economic Road Map and Visions foresee tourism as a key contributor to transforming their economies in the years to come . While this sounds like a honorable aspiration, most tourism revenues have been generated through narrow tourism products, such as wildlife and national parks, based on a few species (i.e. the big five and the mountain gorillas). Other challenges affecting the potential for tourism to flourish include political stability and governance, infrastructure development, service standards, and human capacity just to name a few. In this paper, drawing upon literature and previous research experiences of the authors, an overview on the state of tourism in the East African Community is presented with the aim to assess the main challenges, opportunities, and offer some reflections on possible ways forward for tourism development in the region.

Mobile Banking Services in the East African Community (EAC): Challenges to the Existing Legislative and Regulatory Frameworks

Abstract Should regulators require interconnection and interoperability between mobile money networks? Yes, asserts the author, using the five-nation East African Community (EAC) as a case study. Challenges to policy harmonization are posed by different legal and regulatory systems in the EAC Member States; as well as different business models, technologies, functionalities, and forms of mobile money. With few models on which to draw, the EAC must find a way to address the convergence of the telecommunications and financial sectors to enable maximum benefits from mobile banking, especially for the poor.

Mobile Banking Services in the East African Community (EAC): Challenges to the Existing Legislative and Regulatory Frameworks

Abstract Should regulators require interconnection and interoperability between mobile money networks? Yes, asserts the author, using the five-nation East African Community (EAC) as a case study. Challenges to policy harmonization are posed by different legal and regulatory systems in the EAC Member States; as well as different business models, technologies, functionalities, and forms of mobile money. With few models on which to draw, the EAC must find a way to address the convergence of the telecommunications and financial sectors to enable maximum benefits from mobile banking, especially for the poor.

Macroeconomic Shock Synchronization in the East African Community

The East African Community (EAC) economic integration has gained momentum recently, with the EAC countries officially aiming to adopt a single currency in the summer of 2012. This paper assesses empirically the readiness of the EAC countries for monetary union. First, structural similarity of the EAC countries is measured in terms of intra-industry trade and similarity of production. Second, the symmetry of shocks among the EAC members is examined with structural VAR. Both methods show that the shock synchronization in the EAC is low, albeit increasing, suggesting that the move to EAMU should not be rushed. The paper concludes with policies that would facilitate the EAC regional economic integration, including the eventual establishment of monetary union.

Analysis of the Republic of South Sudan's Assession to the East African Community: Benefits, Detriments and Recommendations

Accession to the East African Community (EAC) offers many potential benefits for the Republic of South Sudan. For instance, access to ports in Kenya and regional transportation corridors could increase the competitiveness of South Sudanese products. EAC membership could also open up new regional and international markets for South Sudanese products and strengthen South Sudan's negotiating position vis-a-vis non-EAC countries. Moreover, EAC membership may result in knowledge transfer between EAC partner states and increased regional investment. This in turn could promote the development of better domestic infrastructure and generate significant welfare gains. South Sudanese participation in non-economic EAC cooperation programs could also enhance regional security, food security, and natural resource management.But EAC membership could also have detrimental effects. EAC members are expected to implement a variety of economic and non-economic programs, not all of which may be in South Sudan's interest. For instance, EAC policies like common external tariffs (CETs) and common investment rules could constrain South Sudan's ability to implement trade and investment promotion policies. In addition, EAC membership may hurt South Sudanese consumers and entrepreneurs through elevated CETs on consumer goods and exposure to regional competition. Additionally, continued use of non-tariff barriers and political resistance in EAC partner states may prevent full realization of the potential positive benefits of EAC membership. Lastly, as seen in the case of the EAC-EU Economic Partnership Agreement, EAC membership could require South Sudan to make trade concessions to non-EAC countries.As South Sudan appears committed to pursuing EAC membership, it is now necessary to develop a considered negotiation strategy to maximize the potential benefits of integration and mitigate its negative effects. As demonstrated by the Rwanda case study in Part III, this strategy can be implemented through a multi-step process that focuses on determining the positive and negative impact of EAC membership on South Sudan's development and economy, educating local stakeholders, strengthening vulnerable sectors, and mitigating the negative effects of integration.

Comparative Advantage and Economic Performance of East African Community (EAC) Member States

The researchers have investigated comparative advantage in the East African Community member states. They have also investigated economic performance of the member states. Balassa’s Revealed Comparative Advantage (RCA) index was used to establish member states’ comparative advantage. An analysis of real GDP, employment levels and stability of exchange rates was used to measure their economic performance. The results show Kenya has comparative advantage in 471 product codes, Tanzania in 471 products, Uganda in 437 product codes, Rwanda in 275 products codes and Burundi in 152 product codes. There is therefore evidence that the member states have revealed comparative advantage although in limited products and that economic indicators show they have performed well. However, there is a need that GDP growth rates should exceed population growth rates in order to have sustainable economic growth.

Capital Market Integration: Progress Ahead of the East African Community Monetary Union

Capital markets in the East African Community (EAC) face common challenges of low capitalization and liquidity, but to different degrees. EAC member countries have made noticeable progress in developing domestic capital markets through a regional approach, removing constraints on capital transactions and harmonizing market infrastructure. Nevertheless, empirical analysis suggests capital market integration has not deepened during the past few years in the EAC, although convergence of investment returns is taking place to some extent. Learning from the experience of the West African Economic and Monetary Union and the Association of Southeast Asian Nations, EAC countries would benefit from four actions to accelerate financial market integration: (i) further harmonize market infrastructure; (ii) strengthen regional surveillance mechanisms; (iii) encourage local currency bond issuance by multilateral financial institutions; and (iv) build the capacity of the existing regional institutions.

Capital Market Integration: Progress Ahead of the East African Community Monetary Union

Capital markets in the East African Community (EAC) face common challenges of low capitalization and liquidity, but to different degrees. EAC member countries have made noticeable progress in developing domestic capital markets through a regional approach, removing constraints on capital transactions and harmonizing market infrastructure. Nevertheless, empirical analysis suggests capital market integration has not deepened during the past few years in the EAC, although convergence of investment returns is taking place to some extent. Learning from the experience of the West African Economic and Monetary Union and the Association of Southeast Asian Nations, EAC countries would benefit from four actions to accelerate financial market integration: (i) further harmonize market infrastructure; (ii) strengthen regional surveillance mechanisms; (iii) encourage local currency bond issuance by multilateral financial institutions; and (iv) build the capacity of the existing regional institutions.

English

This paper empirically examines the suitability of monetary union in East African community members namely, Burundi, Kenya, Rwanda, Tanzania and Uganda, on the basis of business cycle synchronization. This research considers annual GDP (gross domestic product) data from IMF (international monetary fund) for the period of 1980 to 2010. In order to extract the business cycles and trends, the study uses HP (Hodrick-Prescott) and the BP (band pass) filters. After identifying the cycles and trends of the business cycle, the study considers cross country correlation analysis and analysis of variance technique to examine whether EAC (East African community) countries are characterized by synchronized business cycles or not. The results show that four EAC countries (Burundi, Kenya, Tanzania and Uganda) among five countries are having similar pattern of business cycle and trend from the last ten years of the formation of the EAC. The research concludes that these countries, except Rwanda, do not differ significantly in transitory or cycle components but do differ in permanent components especially in growth trend.   Key words: Business cycle synchronization, optimum currency area, East African community, monetary union, development.

The impact of khat use on East African communities in Melbourne: A preliminary investigation

Catha Edulis Forsk (khat) is a plant-reported to have a stimulant effect similar to that of amphetamines-grown and used by eastern African communities worldwide. Khat can be legally consumed in many parts of the world, including Victoria, Australia. Recent concerns have been raised about the social and economic impacts of khat consumption among Victoria's East African community members. This study explores khat use and the social impact it has on East African families and communities in Melbourne, Australia. Focus groups and individual interviews were conducted in 2009 with 29 members of Melbourne's East African community recruited via community leaders and snowball sampling. Fifty-five per cent of the sample reported khat use and the remainder reported only having experience of other people's use of the drug. Participants who did not report chewing khat were mainly concerned with the negative social impacts of its use, such as the extended time men spent away from their families while consuming the drug. These participants (mainly women) expressed their hope that khat would be prohibited in Victoria. Participants who reported the use of khat (mainly men) reported that any social problems existed independently of khat consumption. This study found only limited evidence that khat use has been impacting directly on people's health and well-being. Any moves to prohibit khat use may further marginalise already vulnerable groups of people.

Non-Tariff Barriers in the EAC Customs Union: Implications for Trade in Uganda with Other EAC Countries

A key objective for the adoption of East African Community (EAC) Customs Union was to enhance economic gains through elimination of tariffs and non‐tariff barriers (NTBs) within the member states. This study has established that several NTBs continue to exist, and some have persisted. The NTBs that have persisted for more than three years include a long list of customs documentation requirements, cumbersome formalities, and limited testing and certification arrangements. Other NTBs that still exist include: un‐standardized weighbridges; several road blocks; lack of recognition of individual country’s standards; and the existence of several un‐harmonised standards. The simulation results of spatial equilibrium model of maize trade with and without NTBs show that at the EAC level there are positive production, trade and welfare implications attributable to elimination of NTBs in intra‐regional maize trade. The gains are greatest in trade and production in Uganda compared to Kenya and Tanzania. To eliminate the existing NTBs and to reduce the possibility of new ones being created, first and foremost, the EAC countries need to design effective mechanisms for identifying and verifying information about NTBs and ensuring their elimination. This will require giving the EAC Secretariat the mandate to compel individual countries to eliminate any identified NTB and to ensure that no new ones are created. Second, policy and legislative decisions made by, for example, Council of Ministers should be communicated in time for effective implementation. Broadly, the Government of Uganda (GoU) needs to examine the trade barriers identified in this study and remove those that are internally instituted while working with the rest of the member states to remove those externally imposed. In the specific and medium term, standards should be harmonized and enforcement of compliance be transferred to one regional body, such as EAC Bureau of Standards. In the short run, the EAC countries should develop a mutual recognition of standards across member countries. Furthermore, EAC member states and other key stakeholders such as private sector associations need to launch public awareness campaigns to disseminate information about customs union and its economic opportunities. There is also a need for full commitment to the implementation of customs union protocol by all the member states

Language management and the East African Community

Within the emerging discourse of language management, there is an increasing realisation of the strategic role that language plays in multinational and supranational contexts. The article discusses the strategic role that language can and should play within the East African Community (EAC). The discussion is presented in four parts: the first presents an exploratory discussion on the theory and practice of language management. The second provides key statistics on the EAC, including the language profiles and language policies of EAC member states and the language policy of EAC organs. Part three discusses some language management issues within the EAC. The final part of the article argues for the centrality of language management within the EAC.

Opening Up African Skies: The Case of Airline Industry Liberalization in East Africa

The three member states of the East African Community (EAC) have made great efforts in modernizing their air transport industry in order to meet the increased demand for international tourism and horticultural export trade. The policy adopted by the sub-region, at independence, to regulate the airline industry was the bilateralism approach with emphasis on reciprocity. Such a policy became a bottleneck in the development of the air transport industry in the sub-region. It became apparent that the EAC member states needed efficient air services and not airlines that served mainly as status symbols. However, the last decade witnessed the liberalization of the aviation sector in the sub-region. This liberalization process is part of a proactive policy to encourage global investment in the sub-region. This has led to the adoption of the Yamoussoukro Decision, which calls for the opening of the African skies. This paper, therefore, critically discusses the process of the airline industry liberalization and its prospects for success in the sub-region.

Media Performance, Agenda Building, and Democratization in East Africa

This chapter discusses media performance during the democratization process in the Eastern African countries of Burundi, Kenya, Tanzania, Uganda, and Rwanda, which form a regional union called the East African Community (EAC). The analysis is inspired by over 200 seminal academic studies and expert texts from various disciplines, mostly on East Africa, to assess how these governments influence media performance during their wave of democratization. The chapter examines a range of issues that demonstrate the autocratic means of building a government agenda, such as restrictive press laws, sectarianism, election malpractice, political and ethnic violence, and influence peddling. It shows how this agenda-building approach exercised by the EAC member states undercuts the contributions of the media to the democratization process. The authors demonstrate how the emergence of independent media and religious institutions in some of the EAC member states constitute the most vigilant and influential part of civil society. Further, the argument is that media performance is most successful when its agenda mobilizes citizens to challenge the structures of authoritarian rule by promoting human rights, economic empowerment, and the rule of law.