EAC partners adopt seamless pay system

Presidents Pierre Nkurunziza (Burundi), Jakaya Kikwete (Tanzania), Uhuru Kenyatta (Kenya), Yoweri Museveni (Uganda) and Paul Kagame (Rwanda) at Speke Resort, Kampala. Kenya, Tanzania and Uganda central banks have interconnected their payment systems offering traders and bank customers an alternative method of sending and receiving money. Rwanda and Burundi will join the system at a later date. Photo/PSCU.  NATION MEDIA GROUP

By  George Owuor

The crisis in Egypt has garnered world attention and rightly so. Despite the words of encouragement, African states generally do not believe that the Egyptian crisis directly affects them as Egypt has always uncomfortably sat on the fence between being part of Africa and the Middle East.

It is imperative that Common Market for Eastern and Southern Africa (Comesa) member states begin actively engaging in making Egypt the stable big brother it once was.

Such engagement is necessary for two reasons; the structure and operation of the Comesa community and the economic impact on Comesa members if the instability continues.

Egypt’s initial commitment to Comesa can be described as tepid at best. It was not part of the founding 16 members that signed the Treaty in 1993. To be fair, neither were other key countries such as Libya. Egypt’s accession to the treaty was a coup for the regional economic community.

The South African Development Community (SADC) had the economic muscle of South Africa that ensured its communal voice was heard on the global stage.

Comesa on the other hand, did not have that economic giant that would effectively make the world take note of them. Egypt provided Comesa with the aforementioned credibility when it joined the Community in 1999.

Egypt’s position as one of Africa’s top economies still stands today, despite the conflict. The effect on Comesa and its member states if Egypt’s economy were to fail would be notable.

Export revenues from Uganda to Egypt dropped to $1.8 million in 2012 from $5.7 million in 2011. A shrinking Egyptian economy would lead to further decreasing export numbers.

It is said that on average, one year of conflict reduces a country’s growth rate by over 2.2 per cent .Neighbouring countries in conflict stricken regions have been known to contract by over 0.9 per cent.

However, the former is only true in regions with high intra trade volumes. On average, intra- Africa trade only accounts for 7.5 per cent of Africa’s total trade.

Despite Comesa being slightly more integrated than the rest of Africa, intra-trade volumes remain relatively low. This means, that it is possible that Egypt’s woes may not affect Comesa member states as much as expected.

Comesa member State and founding member Kenya, is already feeling the heat. The country’s exports to Egypt fell by over $23 million in the first eight months of 2013. The worst hit sector has been tobacco and tobacco related exports. However, Kenya’s no.1 export to Egypt, tea, has remained resilient.

For Comesa to further its regional integration agenda it is clear that a more active approach to Egypt’s woes is vital. First and foremost, the Comesa Treaty calls for members ‘to co-operate in the promotion of peace, security and stability among the Member states in order to enhance economic development in the region.’ The longer Egypt continues to grapple with internal strife, the slower the pace of integration.

Conflicts alter the priorities of Member States. Comesa, already grappling with a lack of strong institutions, cannot afford for Egypt to lose sight of the ultimate goal of a fully functioning common market.

However, it may be Comesa’s inherent structure that renders it less inclined to take a more proactive role. It is true that democratic and stable countries in regional communities often may help anchor democratic reforms in neighbouring countries in conflict.