Editorial: Tanzanias nationalism threat to integration
August 14, 2008: Uneasy neighbours, suspicious trade partners. That captures the relationship between Tanzania on the one hand and Kenya and Uganda on the other.
The heads of the three states annually hold what is called The Summit, a photo session preceded by meetings between ministers and technocrats with a now familiar theme of expediting and deepening economic and political links.
Beyond the shared common umbilical chord in Lake Victoria and the imperial yolk of colonialism, however, the body language in many of these sessions has betrayed reluctance to walk the talk.
At the heart of the mistrust is a perception by Tanzania that swallowing wholesale the East African Community policies, without taking the trouble to digest, would lead to constipation in the form of death of infant industries, worsened terms of trade and other destabilising economic impacts. While that is not unique to the EAC trade blocs face the challenge of disparities in economic status the way it is being exploited by Tanzania to hold back the integration ideals is a cause for concern.
In May, the country denied its citizens an opportunity to invest in Safaricom during the regions biggest initial public offering of shares. Reason? It would wreak havoc on the countrys exchange rates and capital accounts.
Over time, it has required lots of persuasion to have companies listed in Kenya or Uganda crosslist on the Dar-es-Salaam Stock Exchange to an extent that some have outrightly shied away from the idea.
That Tanzania is a tough business proposition is not restricted to the capital markets where just this week it barred Kenyans and Ugandans from buying shares in the National Microfinance Bank, citing reasons similar to those floated during the Safaricom IPO.
There is no need to emphasize that this stance is against the EAC protocol on free movement of capital.
In labour matters, Tanzania has not batted an eyelid in expelling Kenyans from its territory by withdrawing work permits, despite the existence of a regional passport and policies supporting free labour movement.
In aviation, the country even chose a no win arrangement with South African Airways that has since been revoked rather than sell Air Tanzanias stake to Kenya Airways.
The finer details in these instances may have justified the countrys position, but read broadly they point to a trade partner who is not ready to cede any ground in the marriage called the EAC.
Even when rolling out the customs union nearly three years ago, Tanzania got a key concession where most goods from Kenya and Uganda would start entering its market after five years despite its products enjoying the common external tariff immediately.
As matters stand, Tanzania is yet to see the need to join its partners in the Common Market for Eastern and Southern Africa by renouncing its membership to SADC a rival trading bloc which translates into a free trade area this weekend. That transition should force Tanzanias hand since under the World Trade Organisation rules, one cannot belong to two preferential trading regimes.
These isolationist tendencies by Tanzania, thinly couched as protectionism, have salient lessons for economic integration in Africa.
Given that trade blocs in the continent have emerged more out of history and geographic proximity, a common shared vision is essential to drive the integration forward.
Unequal levels of development have slowly emerged as stumbling blocks to integration efforts, rather than the motivation for enlarging markets and harmonising tax and legal policies.
Since this imbalance cannot be wished away, a rigorous and clear joining criteria needs to be put in place so that only countries committed to set reforms accede to membership. It is the case with other free trade areas in America, Asia and Europe.
These procedures will gain in importance as political interests tend towards one continental trading bloc which cannot thrive if some members choose to adhere to certain policies and disregard others at will with no attendant penalties.
Link to article
August 14, 2008: Uneasy neighbours, suspicious trade partners. That captures the relationship between Tanzania on the one hand and Kenya and Uganda on the other.
The heads of the three states annually hold what is called The Summit, a photo session preceded by meetings between ministers and technocrats with a now familiar theme of expediting and deepening economic and political links.
Beyond the shared common umbilical chord in Lake Victoria and the imperial yolk of colonialism, however, the body language in many of these sessions has betrayed reluctance to walk the talk.
At the heart of the mistrust is a perception by Tanzania that swallowing wholesale the East African Community policies, without taking the trouble to digest, would lead to constipation in the form of death of infant industries, worsened terms of trade and other destabilising economic impacts. While that is not unique to the EAC trade blocs face the challenge of disparities in economic status the way it is being exploited by Tanzania to hold back the integration ideals is a cause for concern.
In May, the country denied its citizens an opportunity to invest in Safaricom during the regions biggest initial public offering of shares. Reason? It would wreak havoc on the countrys exchange rates and capital accounts.
Over time, it has required lots of persuasion to have companies listed in Kenya or Uganda crosslist on the Dar-es-Salaam Stock Exchange to an extent that some have outrightly shied away from the idea.
That Tanzania is a tough business proposition is not restricted to the capital markets where just this week it barred Kenyans and Ugandans from buying shares in the National Microfinance Bank, citing reasons similar to those floated during the Safaricom IPO.
There is no need to emphasize that this stance is against the EAC protocol on free movement of capital.
In labour matters, Tanzania has not batted an eyelid in expelling Kenyans from its territory by withdrawing work permits, despite the existence of a regional passport and policies supporting free labour movement.
In aviation, the country even chose a no win arrangement with South African Airways that has since been revoked rather than sell Air Tanzanias stake to Kenya Airways.
The finer details in these instances may have justified the countrys position, but read broadly they point to a trade partner who is not ready to cede any ground in the marriage called the EAC.
Even when rolling out the customs union nearly three years ago, Tanzania got a key concession where most goods from Kenya and Uganda would start entering its market after five years despite its products enjoying the common external tariff immediately.
As matters stand, Tanzania is yet to see the need to join its partners in the Common Market for Eastern and Southern Africa by renouncing its membership to SADC a rival trading bloc which translates into a free trade area this weekend. That transition should force Tanzanias hand since under the World Trade Organisation rules, one cannot belong to two preferential trading regimes.
These isolationist tendencies by Tanzania, thinly couched as protectionism, have salient lessons for economic integration in Africa.
Given that trade blocs in the continent have emerged more out of history and geographic proximity, a common shared vision is essential to drive the integration forward.
Unequal levels of development have slowly emerged as stumbling blocks to integration efforts, rather than the motivation for enlarging markets and harmonising tax and legal policies.
Since this imbalance cannot be wished away, a rigorous and clear joining criteria needs to be put in place so that only countries committed to set reforms accede to membership. It is the case with other free trade areas in America, Asia and Europe.
These procedures will gain in importance as political interests tend towards one continental trading bloc which cannot thrive if some members choose to adhere to certain policies and disregard others at will with no attendant penalties.
Link to article
