Following the show of interest by the Democratic Republic of Congo to join the EAC, there is a need to critically analyze the impact of the integration on the parties involved. According to President Tshisekedi’s letter dated 8th June 2019, DRC’s interest was inspired by her need to increase trade flows with the EAC while creating opportunities for people through market and labour access. This assertion is consistent with that of many scholars and policymakers who believe, that regional integration provides African Economies with a platform to achieve sustained development and increase their participation in the global economy.
EAC was established in 1999 to enhance the region’s competitiveness through deeper integration, starting with a Customs Union, followed by a Common Market, a Monetary Union and ultimately a political federation of East Africa. The United Nations Economic Commission for Africa 2018 report states that even though there is room for improvement, the EAC has made more progress in intra-regional trade than other trading blocs in Africa. In the same vein, the African Development Bank indicated that EAC has made the greatest linear progress towards economic integration, and it is regarded as the most ambitious African integration bloc. The IMF indicates that the bloc had the highest Intra trade flows (19.7%) as compared with SADC (17.3%), ECOWAS (7.6%), IGAD (14.4%) and COMESA (0.8%). Additionally, the EAC investment report indicated that the EAC global exports decreased by 9.3 percent to USD 14.7 billion in 2017 from $16.2 billion in 2016 whereas the EAC intra-regional exports in the same period of comparison increased from $2.7 billion to $ 2.9 billion
This intra-trade has trickled down to members for instance Uganda’s exports to the EAC region grew by 51.8 percent from US$ 89.40 million in May 2016 to US$ 135.74 million in May 2017. Exports to Tanzania and Kenya registered the largest increases of 114.5% and 111.2% respectively. This success story has been attributed to; customs unions with the removal of tariffs and Non-Tariff Barriers leading to increased trade flows, Foreign Direct Investments, enhanced access to various goods and services given the big market size of 150 Million people.
Regean Mugume
DRC’s intention to join presents a big boast to the EAC whose desire is to not only to grow the global economy anchored on strong trade relations but to gain a greater international political credibility and legitimacy as strong blocs like the European Union, Association of Southeast Asian Nations (ASEAN) and others. As a neighbor sharing borders with five of the six-member states, the country is best positioned in relation to the geographical proximity clause of the EAC treaty. Its location would be a greater enabler of free movement of people in search of employment opportunities and easing the infrastructural developments in the region.
Moreover, the country’s trade potential is facilitated by a common language, Kiswahili which is spoken by 50% of the Congolese and at the same time doubles as East Africa’s official language. Past research has emphasized the role of common language as an accelerator of trade particularly with its ability to ease trade transactions.
Furthermore, the country’s vast population of 81 million possesses a huge market for the EAC commodities as well as an immense labour source if it can be harnessed through human capital development. The country is a renowned natural resource hub for rich minerals mainly cobalt, copper. DRC’s estimated export value of 7.23 billion USD is mainly accounted for mineral exports like cobalt, copper, diamond, tantalum, tin, and gold. The African Business magazine (2009) indicated that the total mineral wealth of DRC was estimated at $24 trillion equivalent to the GDP of Europe and the United States.
In terms of infrastructure, the country has the 5 ports (Banana, Motanda, Boma and Ango-Ango) as opposed to the two available for EAC (Mombasa and Da-er-salaam). Relatedly, a recent report by PWC (2018) shows that ports are the gateway for 80% of the volume of the worldwide merchandise trade and 70% of its value because they facilitate a faster and cheaper way of handling cargo both coming and en-route the region. Hence with EAC support, these would be developed to boost the region’s trade with the rest of the world while attracting FDI in the region.
President Yoweri Museveni (R) and DRC’s Felix (L) Tshisekedi launch a joint road project recently
Worth noting is that 50% of the trade between DRC and EAC is informal. For the case of Uganda, an estimated 90% of Uganda’s trade with DRC is informal, accounting to USD 270 million in 2017 according to UBOS. This literally indicates that a lot of potential trade has been hindered for fear of heavy tariff and Non-Tariif barriers. It also indicates significant evasion of revenue collection as traders conduct informal trade given the high administration costs at the borders.
However, experts have warned that DRC’s history of political unrest is a key aspect the EAC should address to yield significant mutual benefits. For the past two decades, the country has been plagued by war manifesting human right violation, organized crime, and corruption. It is apparent that over one hundred armed groups operate in DRC and continue to terrorize some communities and control weakly governed areas. The United Nations estimates for IDPs and refugees stand at 4.5 million and 800,000 respectively.
Additionally, the World Bank report (2017) indicates the country is faced with infrastructural deficits that have resulted into the highest rates of import and export transactional costs in Africa. The infrastructure sector is characterized by poor railways, ports, and energy supplies despite the country’s endowment. Furthermore, the economy is faced with a poor business climate with a ranking of 184 out of 190 (World Bank, 2017). According to the 2014 Enterprise Survey of DRC firms, the low ranking was attributed too high power costs, high levels of corruption, and limited access to credit. These factors among others have impended the trade potential of a country potential. It’s therefore imperative for the EAC to craft mitigation measures to maximize mutual benefits for DRC and the bloc. This entails regional efforts towards promoting trade facilitation at the border points, infrastructural investment, and advocating for peace talks to ease political tension.