The East African Community has much going for it, with its level of integration touted among its major achievements compared to other regional economic blocs on the continent.
This therefore is one of EAC’s biggest selling points, especially for the prospect it offers to implement seamless cross-border projects. And boasting a population of 300 million, it presents an investment and developmental proposition difficult to ignore.
The memorandum of understanding (MoU) between the EAC and Equity Bank signed during the recent Heads of State Summit in Arusha to begin implementation of the bank’s ambitious Africa Resilience and Recovery Plan emphasises the point about integration.
The signing follows launch of the Recovery Plan in Kigali last month. And, looking at a hefty $13 billion fund, it makes for quite a statement that it has already enjoined the support of some of the biggest financial partners.
The names of international partners read like who-is-who in the donor sector and include the Bill and Melinda Gates Foundation and the Warren Buffet Foundation, World Bank’s International Finance Corporation and the Africa Development Bank. The partners number 16 in total.
Aside from the confidence the broad international support shows, it says something of the region having come of age to lift itself with its bootstraps with the corporate leadership such as Equity demonstrates.
This not only emphasises EAC’s market strength to give rise to profitable ventures such as the Equity’s, but also its ability to hatch and deliver on such a broad programme riding on the success of its corporate sector.
The MoU is targeted at the micro, small and medium enterprises (MSME) component of the wide-ranging programme, whose other pillars include social and environmental transformation, agriculture, manufacturing, trade and technology.
A facility of $2 billion is already available specifically for borrowing by the small businesses.
Among its ambitious projections, such as bringing onboard 100 million online customers, the initiative envisions employment of 50 million. It projects 25 million direct jobs being created as businesses grow, with a further 25 million indirect jobs created as value chains expand and deepen.
There is every reason to believe the goals set will be attained.
But, not to paint too rosy a picture, the EAC still has much to do if the MSMEs are to achieve their potential.
Much will ride on cross-border trade, both for the MSMEs and the larger business sector they must thrive in.
Currently, trade between the EAC countries is at a dismal 20 per cent.
The low cross-border trade has been blamed on persistent non-tariff barriers and unharmonised rules and regulations. These have remained an impediment since the inauguration of the Common Market Protocol eleven years ago.
Bureaucracy and reluctance by partner states to cede sovereignty over the free movement of goods and services have also been cited as some of the huddles.
These impediments were aired at the Arusha summit, as they have been in previous Heads of State meetings. But it is to the summit’s credit it affirmed that something is being done about it.
The fundamental issue however is whether an adequate will has been mustered this time around to address the bottlenecks stifling the cross-trade.
The signing of the MoU is probably one of the clearest indications of the will to do better. Operationalising it is expected to help address at least some of the underlying concerns.
By supporting the MSME sector, including boosting its capacity for value addition to spur the partner states’ mainly agriculture-based economies, the region will empower itself from within.
It will help the EAC wean itself from being a net importer of products and services.
As was inevitably also touched upon at the summit, ensuring market-friendly policies locally will better position the EAC in the African Continental Free Trade Area (AfCFTA).
Indeed, the Equity Bank initiative has already inked a deal with the AfCFTA Secretariat to deepen the economic integration, linking the Recovery Plan with the continental trade area’s Private Sector Strategy.
Reaping from continental business is however not guaranteed. As the East African Business Council’s chief executive emphatically pleaded, "The African Continental Free Trade Area is an opportunity and prospect for East Africa’s and Africa’s economic growth. But we are likely to miss out on it if we continue to allow fresh NTBs (non-tariff barriers).”