ARE OUR POLITICS RIGHT FOR GROWTH OF REGION'S INDUSTRIES?
2 December 2017 (EANA) – The document has hardly received mention in the media, but the first East African Community Competitiveness Report 2017 released in November makes some interesting observations.
As would be expected of a report from the EAC or indeed any other “friendly” institution, it simply presents the basic information. The impact of local and regional politics on industrialization was not likely a part of the brief for the researchers, but is something that the region obviously needs to address.
The report attempts to assess the current performance of the industrial sector in the EAC region, particularly its competitiveness in the domestic and global markets. This is important, especially considering that all EAC partner states have resolved to transform their respective economies into middle income status in the coming decades. Such a transformation calls for speeding up the rate of industrialization, which is what has enabled richer countries to get to where they are today.
It has been envisaged that industrialization will be achieved through a variety of plans, strategies, and blueprints – both local and international. They include the Sustainable Development Goals, the African Union Agenda 2063, Kenya’s Vision 2030, Tanzania’s Development Vision 2025, and the various limited-timeframe development plans of each partner state.
Given this scenario, it would have been expected that partner states would target their efforts and energies towards attaining – individually and collectively – the goal of industrialization to provide employment and uplift the standards of living of their peoples. But, alas, this has not been the case.
In fact, the region performed below similar regional economic communities in Sub-Saharan Africa such as the Economic Community of West African States (ECOWAS). The report says that even more strikingly, it registered some signs of slowdown in recent years. Manufacturing value added growth slowed down from 5.3 per cent between 2005 and 2010 to 4.6 per cent between 2010 and 2015, thus falling short of the 10-15 per cent annual growth rate targeted in the EAC Industrialisation Policy and Strategy. These figures were also below the Sub-Saharan Africa average.
An analysis of the cotton and leather sectors, the report says, also showed missed opportunities at the level of high-value added products in the value chain, such as for cotton apparel and leather footwear. This, naturally, will have an impact on the region’s desired aim of banning imports of secondhand clothes, since it had been hoped that local industries will step in to satisfy demand.
And even though manufacturing firms increased their intra-regional exports in some sectors, the report says that this did not happen at the pace and extent needed to match the growth in demand within the region. As a result, the EAC lost market share in 22 out of 25 most demanded manufactured goods. It was a weakness that benefited emerging economies such as India (pharmaceuticals, heavy petroleum), China (iron and steel products and fertilisers), and Malaysia (fixed vegetable oils).
Regional integration was expected to provide larger markets for industries and thus spur growth of the manufacturing sector. But this remains a pipedream, going by the current trend. Of course, there have been numerous hurdles along the way, including non-tariff barriers and lack of harmonization for various standards and procedures. While some of these issues are being addressed, it is discouraging to note that new non-tariff barriers are often established soon after previous ones have been eliminated.
This points to a problem of political will. But it’s not just about the political will to fully implement the Common Market Protocol, but an improvement in the overall governance structures and constitutionalism in the region. Indeed, it is becoming increasingly clear that until the region gets its politics right, ambitious programmes aimed at industrialization and alleviation of poverty will remain in limbo.
Kenya, for instance, has been embroiled in political controversy for the better part of this year. It is certain that the swearing-in of President Uhuru Kenyatta will not spell closure, as the opposition and numerous county governments have refused to recognize his presidency due to electoral fraud.
Other countries in the region have also had their fair share of political shenanigans. This is not the kind of environment that breeds confidence, attracts investors and leads to rapid economic growth. No, it is the perfect environment for a stillbirth of all economic initiatives.