Trade remains at the heart of East Africa’s integration

by Jason Braganza


Trade remains the heart of East Africa’s integration

The East African Community (EAC) has allocated almost half (46%) of its US$124 million regional budget to trade-related sectors.* Some 42% goes to administration, 5% to peace & security, 5% to environment, livelihoods & agriculture and 3% to other sectors. This is amid a growing poverty crisis in the region.

Despite improving trade opportunities and regional trade growing year on year within the EAC, the most recent data suggest that poverty in the East Africa region remains at very high levels. According to national poverty lines, poverty levels range from 46% in Kenya and 45% in Rwanda to 28% in Tanzania and 25% in Uganda. ** These people’s situations are exacerbated by being excluded and marginalised from mainstream socio-economic opportunities and more vulnerable to shocks.

This East Africa poverty problem threatens the economic gains of the past 15 years of regional integration – at both national and regional levels.

The sectors most likely to have a more direct and short- to medium-term impact on poverty levels are receiving fewer resources than trade-related sectors, which may well lead to reduced poverty, but over a longer time horizon.

As we will explore in our forthcoming analysis of chronic poverty in East Africa, the EAC needs to consider how regional policy and resource allocation can strike the best balance between trade, development and poverty reduction. Our East Africa Chronic Poverty Report will call for more resources to be allocated to agriculture, livelihoods and social protection. Combined with a strong trade agenda this will ensure the most beneficial and sustainable regional integration process.

Data

You can download the data in Excel or CSV format.

Source

Development Initiatives analysis, based on the EAC’s 2014–15 Budget Statement to the East African Legislative Assembly, 4 June 2014

Notes

* The East African Community (www.eac.int) was formed in the early 1900s. It collapsed in the 1970s, but was re-established in 2000 and operates as a customs union. It has five partner states – Burundi, Kenya, Rwanda, Tanzania, and Uganda. The EAC regional budget covers the implementation of programmes and projects that cover the entire region. Each partner state develops its own national budget. While there tends to be a strong emphasis on trade and economic integration in the regional integration literature, it is important to note that as integration of countries proceeds, there is a high risk of a certain proportion of the population being left behind. This could be true in Africa and other developing regions.

** Ssewanyana and Kasirye (2013); National Institute of Statistics of Rwanda (2012); National Bureau of Statistics (2013) and Kenya National Bureau of Statistics, 2007. These figures differ from the PPP$1.25 poverty line used internationally.