Politics of regional integration: Why South Sudan joining EAC bloc is political & economic chicanery?

By IAfrica
In South Sudan
Mar 20th, 2014

BY: Jacob D. Chol, Lecturer, U of Juba, MAR/20/2014, SSN;

The ferocious debates of South Sudan joining East African Community (EAC) bloc has tore the academics, policy practitioners & politicians and a more importantly and recently the citizens of South Sudan. These debates have been heightened with the recent appointment of the high level committee to negotiate South Sudan accession to the East African Treaty.

For those who do not know about the bloc, East African Community comprises of membership of Kenya, Uganda, Tanzania, Rwanda and Burundi. The bloc has signed three important protocols: Customs Union, Common Market and Monetary Union.

South Sudan application was submitted on November 2012, given observer status and promised admission in April 2014.

But a question begs, is South Sudan ready to join EAC bloc now?

The country national interest prompted by realist theory or zero-sum game determines political and economic integration.

Once the country has measured and calculated the cost and benefits through critical research and analysis and finds benefits to outweigh the cost then it can start the process of educating its citizens about the potential integration and its national interest.

This is known as real politik. Thus South Sudan joining EAC should be analyzed on the pre-conditions of EAC constitutive treaty.

To phrase the treaty, article 3, section 3 lays out the following prerequisites for acceding to the bloc:
a) The interest member state must be committed to accept the community the way it was founded.
b) The interest member state must adhere to the universal principles of respect of human rights, fundamental freedoms, political & economic rights and rule of law.
c) A member state must be within geographical proximity
d) A member state must have modern and market driven economy
e) An interested member state must adhere to democracy and democratization.

If you look at the above pre-conditions, we can say with confidence that South Sudan meets number C but still building its institutions to achieve the other four pre-conditions.

However, given that the admission to regional integrations are determined by political game matrixes and interests of other members states, it is not surprising that other members of the bloc would with open arms admit the Republic of South Sudan.

But what would be the core benefits of South Sudan joining the bloc?

Well, as alluded to earlier, the interaction of members’ states in the EAC bloc is dictated by three essential protocols of Customs Union, Common Market and Monetary Union.

So, should South Sudan join then it has to ratify these three protocols to participate in the community activities, unless special exemptions are made which should also depend on the quality of negotiations.

A modest analysis of these protocols puts South Sudan at political and economic risks.

For instance, the protocol of Customs Union means that members of EAC have centralized payment of customs’ duties at one entry point.

For example, South Sudan goods can be cleared at coastal port of Mombasa; duties paid there and transport through Uganda freely till South Sudan.

This looks like an advantage given that the country is landlocked and has to rely on either Port Sudan or Mombasa’s shipment of its goods.

However, give it a critical look, this does benefit South Sudan economically. This is because the centralization of customs duties payment would require well trained and disciplined Customs officers to look at the interest of South Sudan at the pool of the customs duties paid at one point.

South Sudan does not have well trained, disciplined and non-corrupted Customs Officers who will take care of South Sudan revenues once paid.

Moreover, since the Custom Officers are neither trained nor exposed, they will be manipulated by the well trained and professional Custom Officers of other member states, particularly Kenya.

This will make South Sudan to score look in securing its customs revenues in the bloc.

Secondly, on the Common Market, the country will battle it out with the survival of its domestic industry.

To be sure, Common Market means reduction or elimination of tariffs duties in trade and investment opportunities amongst the EAC members’ states.

It means that there will be free flow of goods, services and persons to trade and undertake economic development in members’ states.

This means citizens of these regional integrated countries will move freely and do economic activities.

South Sudan in this Common market will be seriously disadvantaged, look now even before joining the EAC bloc, the domestic market of South Sudan is 70% foreign owned.

The population of members of EAC in South Sudan is closed to a million and it has already dominated ICT, financial, manufacturing, construction, hospitality and service industry and even will still dominate the virgin agriculture sector once the infrastructure and security situations turn better.

This further means that competitive giant multinational investors would push out South Sudan entrepreneurs, making them redundant and in lieu repatriate profits back to their mother countries as currently done by Kenyan banks.

Besides, the local labor, jobs done by the semi-literate and illiterate persons would entirely be taken over by the aggressive East African citizens as they have already done it in Konyo Konyo, Jebel and customs markets.

What is more, the literate population of South Sudan is 27% while that of Kenya, Uganda, Tanzania, Rwanda and Burundi stand at average of 71%.

Thus joining such highly complex and modern market will make South Sudanese be at serious demerit since they will lack skills in competing with highly innovative and intellectuals’ EAC citizens.

South Sudan is a consuming nation with single export that is oil commodity piped through Sudan.

With devastated domestic market that lack subsidies, the country will continue to imports basic commodities from the EAC members’ states spending all millions of dollars in abroad economies without domestic production.

This shall affect the real exchange rate, a condition known, as Dutch Disease given that one commodity export will lead to appreciation of dollar making the economy more pathetic.

Thirdly, on the Monetary Union, the country will be competing with the highly developed EAC economic institutions.

It also means that there will be harmonization of macro and fiscal policies for all the members’ states.

This shall be done through the East African Development Bank (EADB).

Looking critical at South Sudan economic institutions such as Central Bank and Ministry of Finance, there are no strong fiscal policies to regulate inflations & deflations such as public auction of security bonds, unified exchange rate and injecting of subsidies to markets.

Coupled with this, are lack of the stock exchange markets to encourage comfortable floating of shares and strong insurances companies to cover investments.

Since there shall be single currency and perhaps Shilling shall be legal tender for members in EAC bloc, South Sudan shall be in economic tsunamis due to reliance heavily on imports and inadequate reserves.

Monetary Union shall also affect national development strategy since unification of economic policies shall be effected.

For instance, Uganda in revival of EAC in 2000 was requested to change its Growth and Development Strategy model to suit what the others East African members have done.

Rwanda was compelled to adjust its National Economic and Development Strategy to suit others.

Since these countries of EAC have commonality of being agriculture producing states, it was with more ease adjusting their economic development paradigms.

However, South Sudan is a post conflict case with enormous petroleum, a rare resource in EAC and thus forcing to adjust its own National Development Plan would adversely affect its unique path of development and prosperity.

Finally, joining EAC bloc is a great idea but on a wrong timing given that South Sudan would not enormously benefits from its membership.

When I asked my students in a regional & political integration class in University of Juba whether South Sudan is ripped to join EAC bloc or not, 92% objected, not convinced of concrete benefits the bloc would add in social, economic and political progress of South Sudan.

However, it would be important for the recently appointed high-level committee on EAC to negotiate the position of South Sudan very well.

Given that 99% of members appointed are politicians, it is advisable that they constantly consult South Sudanese experts on regional integration so that they will not be handed over already prepared papers by experts in Arusha to only sign them off.

Moreover, accession to regional bloc is an important national matter that should not be rushed, at least South Sudan can prepare itself in the next five years so that it will have to benefit as a country and its citizens as well.

Before Rwanda acceded to the treaty in 2007, it created a Ministry of East African Affairs in 2004 to educate the Rwandese citizens about the benefits they were going to receive.

The Ministry with the experts carried out a nationwide survey and extensive research to critically evaluate the benefits in the community.

Even when Rwanda joined in 2009, it had negotiated very well two years’ exemptions in implementation of the Customs Union and Common Market.

South Sudan can borrow the Rwandese model so that it can socially, economically and political calculate the benefits of membership.

After the Customs Union, Common Market, Monetary Union, the last leg of EAC integration would be political federation.

Is South Sudan prepared for this? I do not think so!

Thus if South Sudan leaders do not critically analyze the pros and cons of acceding to the EAC bloc, widely consult experts and citizens on this national decision, then they shall be committing political and economic chicanery.

Mr. Chol is a Senior Lecturer of Regional & Political Integration at the University of Juba, founder and Executive Director of the Centre for Democracy and International Analysis (CDIA). A research and an academic think-tank based in Juba. He can be reached at dutsenior@yahoo.com

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