ARM IN ARM

Tanzania 2015 | DIPLOMACY | FOCUS: THE EAST AFRICAN COMMUNITY (EAC)

As a founding member of the East African Community (EAC), Tanzania has been at the forefront of championing and advocating the intergovernmental organization's regional integration efforts.

The EAC is currently comprised of the original three members—Tanzania, Kenya and Uganda—as well as Burundi and Rwanda. The first incarnation of the EAC was established in 1967 before collapsing a decade later in 1977, but was later revived on June 7, 2000. The total area of all five of its member countries is over 1.8 million square kilometers, with a population of roughly 150 million people.

Despite some initial concerns and criticisms, early returns on the EAC's ongoing integration process have proven to be beneficial for Tanzania. In 2010, the EAC introduced the common market. From 2012 to 2013, total trade amongst EAC members increased by 36.36% to $5.5 billion. Tanzania has in particular taken advantage of the common market, raising its level of trade with other EAC countries by 82%, more than double the average of the entire organization. Access to the much larger 150 million person market via Tanzania has greatly improved the country's draw as an investment destination, especially when combined with the country's geographic position as a natural gateway to the other landlocked countries in the EAC such as Uganda, Burundi, and Rwanda.

The common market and ongoing regulation reforms are having dramatic effects on the logistics and transportation of goods moving to and from EAC member countries. With the implementation of the single customs territory, the required documentation for the movement of cargo has been reduced by 90%. Shipments from Mombasa to Kampala, which had historically taken 18 days to complete, could now be delivered in as little as four days.

However, even with these early successes, the EAC's ambitions run much higher. The customs union and common market were just the first two stages of an eventual four stage plan, with the third and fourth stage being a monetary union and eventually a federation of states. While the EAC is still finalizing the common market stage, the groundwork has already been laid to successfully transition into a monetary union. In November 2013, the EAC's heads of state signed the protocol on the monetary union during a meeting in Kampala. According to the protocol, each country has 10 years to satisfy various macroeconomic criteria, such as debt to GDP ratio, budget deficit to GDP and reserves for imports, and the union can begin as soon as three countries fully qualify. Tanzania is well positioned to be among one of the first qualifiers, as it already satisfies certain conditions, but the country is currently lacking in the area of budget deficit.

Beyond the monetary union, the EAC is also hard at work to increase the physical infrastructure connecting the member countries, with multiple ambitious rail, road, sea and air projects currently in various stages of completion. For Tanzania's part, the government's Big Results Now (BRN) model is being adapted to revitalize the country's rail network. The EAC Railway Master Plan includes upgrades to the Tanga-Arusha line, as well as the creation of a new line from Arusha to Musoma. Additionally, a major third terminal is currently under construction at Julius Nyerere International Airport in Dar es Salaam that would take the airport's annual capacity from 2 million to over 7 million people.

According to EAC Minister Samuel Sitta of Tanzania, the ongoing integration of the region will only lead to greater stability, peace and the alleviation of poverty. Although there are still many obstacles and challenges before a full monetary union or an eventual federation can be established, the early signs of EAC integration have instilled a deserved sense of optimism.