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Master Thesis

The East African Union:

Regional Integration in the

East African Community

Julius Hemingway

s2158140

Leiden University

10-01-2018

Word Count: 9581 words

First Reader: Professor Nicolas Blarel Second Reader: Professor Michael Sampson

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Acknowledgements I would like to use this opportunity to thank my supervisor, Dr. Nicolas Blarel, for his advice and helping words during these months. His guidance was always much appreciated, and helped me correct my course. I would further like to thank my former colleagues at the IOM office in Tanzania, who have been working tirelessly to assist the EAC in implementing the common market protocol. It is their passion that awoke my interest in this field, and their experiences contributed greatly to my understanding.

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Table of Contents Abstract 4 Introduction 5 Literature Review 7 Theoretical Framework 11 Research Design 15 Analysis of Regional Integration in the EAC 20 Hypothesis 1: The Common Market Protocol 22 Hypothesis 2: The East African Monetary Union 27 Conclusion 31 List of References 34

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Abstract

The East African Community is a regional integration project with the ultimate aim of entering a political federation. Despite these unique ambitions, integration levels in the EAC have fluctuated and appear to be stalling short of their supranational aspirations. This thesis further makes use of intergovernmentalism to provide a theoretical justification for these causes. In doing so, this paper finds evidence that supports the notions of state-controlled integration processes that are born as a result of interstate bargaining. This paper concludes that with continued commitment and the convergence of national preferences, regional integration in the EAC will progress, albeit in a controlled and possibly pragmatic manner.

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Introduction

The East African Community (EAC) is a regional project that started as early as 1967, and has since varied in its levels of integration (Maxon, 2009). After enjoying strong economic growth, the EAC collapsed in 1977 over misunderstandings regarding resource sharing (Mugomba, 1978; Roberts, 2014). However, after the re-establishment of the EAC on July 7th, 2000, the

organisation enjoyed more attention in academic literature on integration, as three new members joined in 2007 and 2016, despite integration progressing slower than anticipated (Buigut, 2016; Mérino, 2011; Ligami, 2013). The six EAC members (Kenya, Tanzania, Uganda, Rwanda, Burundi and South Sudan) share many of the same internal development issues, despite differing greatly in economic prowess and size. Nevertheless, the countries have continuously sought greater regional integration (UNCTAD, 2018). Steps towards a political union, which originated as early as the 1960s when Kenya, Tanzania and Uganda achieved independence from the United Kingdom, have gradually progressed to the point where a constitution for the political federation was drafted by the member states in 2013 (Kyle, 1997; Sudan Tribune, 2013).

Some commentators, including Rothchild (1964), East African Federation (1960), Mshomba (2017) and Nnyanzi, Babyenda & Bbale (2016), have argued that there are signs indicating further integration as the EAC members have moved towards the creation of a Monetary and Customs Union, and that trade has more than doubled in the bloc between 2005 and 2011 as a result. However, the integration process remains slow and some promises, including removing all

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barriers to trade or instituting a common passport, have not yet been realised (Havyarimana, 2018; McLymont, n.d.; The Citizen, 2016; Ligami, 2013).

As such, there appears to be a discrepancy between the commitment shared by member states for integration into a political and federal union and the reality on the ground (Nzioki Kibua & Tostensen, 2005). This is a gap that this paper aims to address by answering the following research question: What

are the factors that have caused regional integration in the East African Community to slow despite continued commitment by member states? This puzzle

not only fits within the context of the gradual regional integration process, but also provides answers to questions about whether integration has stalled short of its supranational ambitions (Reith & Boltz, 2011). Furthermore, I seek to find whether intergovernmentalist theory, as opposed to theories of functionalism or supranationalism, best explains the integration process in East Africa. Intergovernmentalism would provide a theoretical explanation why integration has not moved beyond a stage of economic cooperation and why barely any sovereignty has been ceded to the EAC institutions (Hamad, 2016).

Before this paper delves into the theory of intergovernmentalism and determines to what extent it applies to the case of integration of the EAC, I will provide an overview of the existing literature in order to highlight the research gap this thesis will address. I will then elaborate upon the theoretical foundations of my argument and my resulting causal hypotheses, followed by the operationalisation section and finally an empirical section and conclusion. In doing so, I hope to analyse the extent of regional integration in the EAC, and find why the process may have slowed despite the aim of an eventual political federation.

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Literature Review

In this section, I review the literature that has dealt with regional integration in East Africa. I use this opportunity to highlight both how the existing literature has attempted to explain integration processes in the EAC and what gaps in the literature still need to be addressed.

First and foremost, it is important to define the core concept of regional integration. Laursen (2003) highlights both Haas’ and Lindberg’s definitions, with the former describing integration as “the process whereby political actors in several distinct national settings are persuaded to shift their loyalties, expectations and political activities to a new centre whose institutions possess or demand jurisdiction over the pre-existing national states” (Laursen, 2003). Lindberg on the other hand defined regional integration as “(1) the process whereby nations forgo the desire and ability to conduct foreign and key domestic policies independently of each other, seeking instead to make joint decisions or to delegate the decision-making process to new central organs; and (2) the process whereby political actors in several distinct settings are persuaded to shift their expectations and political activities to a new centre” (Laursen, 2003).

For the purpose of this thesis, I will be focusing on the latter definition, viewing integration as a process of ceding sovereignty all the while seeking greater cooperation with the fellow member states of the organisation. This is because integration makes itself noticeable through the institutionalisation of cooperation, including elements such as the common market or the monetary union. The second section of Lindberg’s definition further points towards the state control over the speed and depth of integration, with the former referring

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to how quickly member states cede sovereignty and the latter focusing on how much sovereignty is ceded.

Before this paper delves into the existing explanations for the depth of integration in the EAC, it is important to conceptualise the recurring theme of the spillover effect. This is where “cooperation in one field necessitates cooperation in another” (Hamad, 2016). As such, increased cooperation in one area causes further integration in other policy areas, thereby creating a knock-on effect. This stands in direct contrast to theories that posit that both the speed and depth of regional integration is always state controlled.

A large amount of literature has focused heavily on economic regional integration, emphasising mainly trade relations and how governments have cooperated in the removal of barriers to trade. As such, Kamau (2010), Ndung’u & Goldstein (2001) and Booth, Cammack, Kibua, Kweka & Rudaheranwa (2007) highlight factors such as the economic power discrepancy as the main obstacle for supranational integration. This is noteworthy because the articles are based on the previously defined assumption that integration is being driven by an economic spillover effect as the ratification of the Customs Union and Monetary Union leading to Free Movement resolutions in the EAC. However, these theories fail to address why states have not moved to remove all barriers of trade and why they remain hesitant to cede further control to the EAC (Calabrese & Mendez-Parra, 2016).

Existing studies further fail to take into account how the enlargement of new member states has affected economic stability in the region (Newfarmer & Söderbom, 2012). This paper finds the assumption that the ratification of proposals towards a monetary union as evidence of economic convergence is

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flawed. Although the member states have ratified the resolutions, concrete policy action and the domestic reforms required for a successful monetary community remain slow (Slavica & Andreja, 2014; Mathieson, 2016). As such, the ratification of protocols, such as the Customs Union protocol, Common Market protocol or Monetary Union protocol, is not sufficient evidence to expect further integration.

Contrary to this, some articles have focused on the speed and depth of political integration (e.g. Mugomba, 1978; Hazlewood, 1979, Kasaija, 2004; Maxon, 2009; Magu, 2014). However, although the process of economic integration has remained incomplete, these studies find that it has progressed further than political integration in the region by emphasising the focus on economic policy convergence and trade cooperation (Hamad, 2016; Drummond, Aisen, Alper, Fuli & Walker, 2015).

East African integration literature contains a number of articles that deserve to be highlighted as they indirectly provide support to the idea of using intergovernmentalist theory to account for the pace of regional integration in East Africa. Kasaija (2004) ascribes much significance to Uganda’s President, Yoweri Museveni, and his political will to federalise the EAC. However, the article provides no theoretical explanation for the inclusion of Museveni’s commitment, thereby making the analysis arbitrary and redundant. This is a further gap that this thesis wishes to bridge as I aim to provide a more sound theoretical foundation to the analysis of political support for integration, which is specifically included in intergovernmentalist theory (Puchala, 1999).

Magu (2014), on the other hand, uses game theory to analyse the advantages and disadvantages that member states can expect from further political and economic integration. They posit that states prefer to cooperate in a

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limited fashion rather than ceding sovereignty, as it allows the possibility of defection when economic integration is no longer beneficial for the member state. By highlighting the extent to which countries control the speed of economic integration, Magu (2014) provides support for the application of intergovernmentalist theory.

Finally, Hamad (2016) analyses why neofunctional theory does not fully explain the processes at play in East Africa, as little action has followed the supposed political will of EAC member states’ leaders. The result is the stalling of regional integration. Evidence of this is the weakness of the EAC secretariat and the failure by member states to enact collectively decided legislation. As a possibility for future research, Hamad (2016) excludes the intergovernmentalist approach as an explanation, as he argues that integration in East Africa is primarily market-driven. However, as I shall elaborate over the following section, intergovernmentalism does not exclude cooperation on economic issues, and hence cannot be automatically disregarded as a possible explanation. As such, this paper aims to contribute to the existing literature by making use of intergovernmentalist theory to explain the extent to which members of the EAC have been moving towards political integration with the possible end goal of an East African Federation (EAF) and offer an alternative explanation to existing arguments.

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Theoretical Framework

As elaborated upon in the previous section, much of the literature has either failed to directly explain the slow pace of regional integration in the East African region or only done so partially. One can thus not talk of the spillover effect that is essential to the theory of neofunctionalism (Hamad, 2016). Furthermore, EAC members have yet to overcome a number of structural hurdles before integration can be achieved. Examples of said hurdles include the poor level of infrastructure in the region or the barriers to free movement of goods, services and capital, which require member state commitment and actions to be resolved (Nnyanzi, Babyenda & Bbale, 2016). Thus, the paper concludes that theories of functionalism or supranationalism have not been able to explain the current processes of regional economic and political integration.

However, contrary to Hamad (2016), this paper does not exclude intergovernmentalism as an explanation on the grounds that the EAC is a market-driven organisation that focuses heavily on economic integration. As a matter of fact, this supports intergovernmentalism on the basis of the concepts of low politics and high politics. These two concepts are core elements to intergovernmentalist theory. Low politics refer to policies regarding economic cooperation and welfare, while high politics are the more existential debates on issues such as national security or the transfer of national authority to supranational bodies (Moga, 2009). Not only do scholars, such as Kamau (2010) or Magu (2014), highlight that economic integration has been the main focus of member states in the EAC, but in an article on Tanzanian scepticism of a militarised East African Federation, Knowles & Garry (2016) also emphasise how

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a member state such as Tanzania has been opposed to cede security sovereignty to the EAC. Lastly, Hamad (2016) points towards the weakness of the EAC secretariat, which both highlights a flaw in the neofunctionalist theory and supports intergovernmentalist theory as it further underlines the unwillingness of member states to grant autonomous powers to the governing body of this regional organization.

Though initially a European integration theory, I posit that intergovernmentalism can be applied to the case of the EAC. As a state-centric theory that assumes the processes of integration to be the result of the actions of rationalist and security-seeking states, it provides a theoretical foundation for analysis (Cini & Pérez-Solórzano Borragán, 2016). Furthermore, intergovernmentalist theory is used to explain periods of radical integration, which occur when member states’ preferences converge, as well as periods of slow integration when preferences diverge (Sonny, 2015). This is something that is visible in the EAC, as integration has progressed at different speeds. Finally, the EAC has set itself on an almost identical path to the European Union (Njura, 2016). By entering not only an economic community, but maintaining the aim of a political union, the EAC follows the model of the EU. Both the EU and the EAC have established customs unions and common markets. Furthermore, the EAC is in the process of implementing a monetary union, which the EU has established. Hence, there are many comparisons to be made between the EU and the EAC that warrant the use of intergovernmentalist theory.

This paper hypothesises that integration attempts by the EAC members have slowed merely due to intergovernmental processes of interstate bargaining and the prioritisation of national preferences. Börzel (2016) and Puchala (1999)

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have highlighted how intergovernmentalist theory posits that regional integration processes are reduced to interstate bargaining, which means that member states have certain preferences and that political and economic convergence only occurs when these interests overlap. One area in which I aim to prove this is in the creation of the Common Market in 2010. As an integral step to developing regional economic integration, the first hypothesis posits that contrary to the expectations of the spillover effect, the processes behind reaching the Common Market are both the result of interstate bargaining and proof that integration is controlled by member states. I therefore derive the following hypothesis:

H1: The establishment of the Common Market in East Africa was the result of interstate bargaining.

The establishment of the Common Market has not only been an important step in that it furthered integration, but it also highlighted economic convergence between the members. If one is to follow intergovernmentalist theory, then the integration of countries only progresses when diverging positions are bridged and states concede on differences to find common ground.

Intergovernmentalism further posits that member states aim to retain state-control over the integration process to ensure the adherence to their national preferences. As promoters and initiators of the process, member states have to commit to further institutionalising their cooperation and ceding control to the regional organisations (Puchala, 1999). Hence, this hypothesis will be testing if the stalling of economic integration (such as in the case of the Monetary Union in East Africa), should be partially ascribed to member states safeguarding

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their sovereignty and maintaining control over fiscal and monetary policies (Cini & Pérez-Solórzano Borragán, 2016). The following hypothesis is derived:

H2: The difficulties of successfully establishing the Monetary Union are due to member states’ prioritisation of state-controlled integration.

The establishment of the Monetary Union would be a significant step in the direction of deepening integration, as it would imply the creation of an East African currency and the relevant institutions. However, due to the project falling behind schedule, and an apparent hesitation to cede the aforementioned control over policies, it remains an important puzzle to resolve.

Although the hypotheses look at different dependent variables, they nevertheless focus on vital steps in the integration path of the member states in the EAC. Both the institutionalisation of the common market and the monetary union are considered to be important stages in the regional integration of the bloc (East African Community, 1999). In addition, the two hypotheses are also connected in that they are grounded in some of the core assumptions of intergovernmentalism, which provides theoretical support to the analysis.

Having discussed the theoretical framework of this thesis, this paper will now present the research design and operationalisation of the hypotheses. In doing so, I hope to not only explain how I shall analyse the progression of regional integration in East Africa, but also highlight the role that intergovernmentalist theory will play in explaining the processes at play in the region.

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Research Design

Over the following section, this paper is going to elaborate on the methodology and operationalisation of the above-mentioned hypotheses, as well as the case selection strategy and nature of the research design.

The main aim of this thesis is to track the processes that have led to the current levels of integration both in the form of cooperation and the cession of sovereignty to regional institutions, using intergovernmentalism to provide a theoretical explanation. As such, this thesis is going to make use of “explaining-outcome process tracing” (Beach and Pedersen, 2013). This method aims to identify the intervening causal processes between the independent and dependent variables (George & Bennett, 2005). Due to the use of intergovernmentalist theory, it is important to emphasise that “theories are used here in a much more pragmatic fashion – that is, as heuristic instruments that have analytical utility in providing the best possible explanation of a given phenomenon” (Beach and Pedersen, 2013). In addition, the research design will not follow a detailed tracing of causal sequences, but rather construct an analytic explanation, as suggested by George and Bennett (2005). As such, the research design is able to map out the different influences that have led to the current stage of integration in the EAC, without having to follow a linear sequence of events.

Despite the fact that intergovernmentalism has largely been used to explain regional integration in Europe, this paper aims to use the theory on the case of East Africa. As such, this case calls for a deviant case selection strategy, especially when considering that the application in this case would represent a

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theoretical anomaly (Seawright & Gerring, 2008). Levy (2008) provides a justification for the deviant case selection strategy, as it focuses on the applicability of the causal mechanisms posited by the theory. In this case, that entails the use of intergovernmentalism to explain the extent of integration in the East African region. Furthermore, as I have elaborated upon in the sections above, the existing literature already seems to indicate that many of the scope conditions of intergovernmental theory are present in the context of the EAC, including the fact that integration has been state-controlled and the lack of supranational powers of the EAC (Hamad, 2016; Kasaija, 2004).

What makes this case worthy of research is that it provides valuable insight into the processes of regional integration that are currently occurring in the East African Community, but also how intergovernmentalist theory can be applied to cases outside of Europe. Furthermore, with such a long history of cooperation, one might expect that integration would have progressed further (Maxon, 2009). It is this very puzzle, which warranted this case selection. The theory might provide some insights as to where the EAC is headed in terms of integration. Furthermore, the current literature so far has failed to find an adequate theory to make sense of the current integration process, and as such there is a gap that this paper aims to fill.

In the following paragraphs, I will be discussing the variables in each of the hypotheses, and how I aim to measure their effects on the core outcome of interest, namely the progression of regional integration. The first hypothesis focuses on the establishment of the common market and the role of interstate bargaining. As such, the independent variables constitute the evidence of interstate bargaining, with the dependent variable being the eventual creation of

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the common market. As part of the explaining-outcome process tracing, this hypothesis aims to find the intermittent variables that explain the current stage of integration. Intergovernmentalist theory posits that member states establish their bargaining positions first (Cini &Pérez-Solórzano Borragán, 2016). These would be a representation of their preferences, but also the concessions and cooperation they are willing to offer. The second step to the establishment of the common market would be interstate bargaining. To confirm this hypothesis, the evidence would have to point towards member states being engaged in negotiations, as well as offering and accepting concessions. In this context, it is also important to consider the state-controlled nature of integration, as this provides essential support to intergovernmentalism.

The second hypothesis concerns itself with the control of member states over the speed and depth to integration. As such, it analyses the commitment by states to seek greater cooperation and to cede sovereignty in the form of a monetary union. By tracking the process that has led to the difficulties in establishing the monetary union, this paper aims to analyse the steps following the ratification of the monetary union protocol (Anyanzwa, 2018a). I hope to find evidence for the fact that governments, although initially committed to establishing the monetary union, are now hesitant to pledge themselves to further institutionalisation. Although there may be evidence for the inability of member states to meet targets set by the protocol, the hypothesis posits that the process has stalled mainly due to increasing pragmatism and the hesitations of states to commit. With the control over the integration of the monetary union as the dependent variable, I aim to look at developments that have caused commitment to the monetary union to decrease, or evidence for member states’

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reluctance to cede sovereignty on fiscal policy. I aim to measure this fluctuation in commitment by analysing the extent of implementation in legislation, but also statements made by member states regarding the continued integration of the monetary union.

The main source of data used for the analysis consists of official documents published in the repository of the EAC, as well as articles published by news media outlets. The online EAC repository provides a total of 882 official documents, which range from internal documents to press releases and communiqués (EACIR, 2018a). Dependent on the nature and origin of the source, the documents are further broken down by, for instance, country of origin, institution of origin or simply which branch the source originated from (EACIR, 2018a; EACIR, 2018b; EACIR, 2018c). Finally, it is also worth mentioning that there are 193 documents in the repository that have originated from the East African Legislative Assembly, one of the branches of the EAC (EACIR, 2018d). These offer an insight into parliamentary proceedings and resolutions. Secondly, this thesis will be making extensive use of news articles that cover the integration processes of the EAC. The institution is often the subject of media coverage and news reports (Ligami, 2013; Havyarimana, 2018; The Citizen, 2016). This enables an external view of the integration processes, a necessary pre-requisite, as I do not expect to find the complete picture from official government sources.

In view of wanting to include the role of Rwanda and Burundi, the time frame that this thesis focuses on mainly lies in the post-2007 period. Furthermore, the subjects of analysis, namely the establishment of the common market and monetary union, have occurred in the period since. The paper does

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make use of sources that date as recently as 2018, thereby allowing for a tracking of the long-term evolution of integration in the region.

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Analysis of Regional Integration in the EAC

Before this paper further delves into the discussion of the hypotheses, I wish to devote a brief section to the process of integration in the region. In addition, I aim to highlight the discrepancy between public commitment to integration and how this has played out in reality. The main puzzle that both this paper and the hypotheses address is whether integration is stalling despite members supposedly wishing to go as far as political union (Havyarimana, 2018). In the process of institutionalising regional integration, the EAC members have established a fully functional customs union and common market. Furthermore, the bloc is in the process of establishing a monetary union, which it considers the penultimate step to political union (EALA, 2014). Over the coming pages, both the establishment of the common market and the monetary union are going to be analysed with the hope that they offer insight into the speed and depth of integration in the EAC.

Regional integration in the EAC remains a linear process, with the establishment of the common market and the ratification of the monetary union protocol the two most recent, significant steps. Both developments point towards the continued commitment of member states to institutionalise integration in the region and foster greater cooperation. As a result, trade grew from $1.5 billion to almost $5.1 billion between 2005 and 2015 (EAC, 2015). What’s more, with member states meeting annually for EAC summits to discuss future roadmaps and the issues that face the EAC, it appears that the EAC is on track to becoming a success story (EAC, 2018a). And while Foreign Direct Investment (FDI) into the bloc can fluctuate at times, it has recently overtaken

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Southern Africa as the main destination of foreign investment due to its attractive business environment (Ernst and Young, 2018).

Cooperation on other fronts seems also to be increasing. With the establishment of one-stop border points along the Kenya/Tanzania border, member states are improving the livelihoods of cross-border communities (EAC, 2016a). Kenya has on multiple occasions called for greater integration and closer cooperation (Kenyatta, 2016). Rwanda’s president, Paul Kagame, has urged fellow member states to remain committed to regional integration, while the same can be said of Uganda (Museveni, 2018; Kagire, 2018). On the surface, the process leading to political union appears to be well on its way, and with the continued support of member states, as well as the successful implementation of collectively agreed policies, it should only be a matter of time (EALA, 2018c).

However, some commentators are pointing towards evidence that the integration process is not running as smoothly as might appear to the public (Rwagatare, 2017). Among rising doubts, Tanzania has had to reaffirm its commitment to the EAC (EAC, 2008a). Relations between Burundi and Rwanda have grown confrontational, causing some to question whether this could mark the beginning of the end for the community (Ubwani, 2018). Ambitious infrastructure projects have been under threat due to disagreements between member states, and Burundi has been boycotting summits and the EALA (Kagire, 2017a; Kagire, 2017b).

As a result, there seems to be growing concern that regional integration will fall short of the supranational ambitions of the EAC. Hence, this paper is going to trace the two most recent steps that the EAC has taken, namely the establishment of the common market and monetary union. In analysing these

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two developments, this paper hopes to conclude on the quality and possible future of regional integration in the bloc.

Hypothesis 1: The Common Market Protocol

Following intergovernmentalist theory, one of the most significant steps in tracing integration processes is the establishment of bargaining positions (Cini & Pérez-Solórzano Borragán, 2016). In this regard, it is important to highlight that the foundation of the common market has always enjoyed support from the member states. Examples of this include EAC heads of state summit communiqués published in the run up to the ratification of the protocol, as well as speeches by the heads of state calling for continued commitment to the common market initiative (New Times, 2009). Thus, while the details still required mapping out, the political will to bring into existence a single market was present.

The common market protocol would still be negotiated to reflect the preferences of the member states, as certain concessions would still be required by some member states. As is seen in Figure 1, Tanzania, Uganda and Kenya represent the biggest economies in the region, whereas Rwanda and Burundi run significantly smaller economies.

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To take the example of Burundi, in 2008, just under a quarter of imports (24.43%) came from fellow EAC member states, whilst the county exported only 12.3% (World Bank, 2018). This negative trade balance put Burundi in a considerably worse bargaining position. In contrast, whilst 1.64% of all Kenyan imports came from fellow EAC members, Kenya exported 24.41% to EAC members, highlighting a remarkably positive trade balance and hence bargaining position in the common market negotiations (World Bank, 2018). Tanzania, on the other hand, imported 5.55% of its total imports from fellow EAC members whilst its share of exports to fellow EAC members lay at 11.4% (World Bank, 2018). With a 12.61% share of imports and 21.89% share of exports, Uganda also enjoyed a positive trade balance in relation to its fellow EAC members (World Bank, 2018). Lastly, Rwanda’s trade balance was more or less equal, with 35.73% for imports and 35.39% for exports (World Bank, 2018). Nonetheless, the country was highly reliant on demand from Kenya, as 31.71% of all exports in 2008 went there. The above figures, especially if GDP is taken into account as well, highlight Tanzania’s, Kenya’s and Uganda’s advantages when laying down

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their terms for the details of the common market protocol, and how much likelier Rwanda and Burundi were to offer concessions.

The intention of the common market was to increase the trade volume of the member states and at the same time to intensify cooperation to increase the financial stability of the region (Gastorn & Masinde, 2017). Based on the bargaining positions established above, one would expect that Rwanda and Burundi would be calling for a more open common market that would allow for easier trade. This is due to their much smaller economic size, and hence interest in further attracting investment and labour to develop their economies. This is reflected in Rwanda’s position during the common market negotiations, in which Rwandan President, Paul Kagame, remarked that “a host of non-tariff barriers continue to raise the cost of doing business and render our region uncompetitive” (Kagame, 2008). This point if reflected by a Burundian government observer report that points towards Burundi’s continued push for open borders as it would enable the country to access maritime trade routes, instead of remaining landlocked, which has harmed Burundi’s trade potential (OAG, 2009). Furthermore, the late Burundian minister for EAC affairs, Hafsa Mossi, has pushed for greater integration so as to ensure that Burundi could reap the benefits of “larger markets, economies of scale, larger pools of human, financial and physical capital” (Arusha Times, 2009).

The push for open borders was not received well by Tanzania and constituted one of the biggest roadblocks in the establishment of the common market. This is made evident in meeting reports of the High Level Task Force (HLTF) for the establishment of the common market. Tanzania has had to reaffirm its commitment to both the EAC and the common market on several

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occasions, in part because they have been more critical of uncontrolled integration (EAC, 2008a; EAC, 2008b). In general, Tanzania considered migration and land ownership particularly sensitive issues that have resulted in an uneven integration process, with some countries moving faster than Tanzania (DANIDA, 2014). Examples of this include the fact that Tanzania refused to accept identity cards as travel documents, the right to possession of land and the free movement of labour (EAC, 2008b). Thus, while some countries in the EAC have proceeded to ease immigration for fellow EAC members, Tanzania has been allowed to opt out of this.

However, as the biggest economy in the region, Kenya was also able to force certain concessions on its neighbours, including Tanzania and Uganda. This occurred mainly as a result of concerns about the mass import of agriculture products from Tanzania and Uganda (KIPPRA, ODI & IDS, 2007). These trepidations, which had already been raised years earlier, meant that Kenya was allowed to keep its taxes on imports high to cover losses in revenue for Kenya (Panapress, 2005). Simultaneously, Kenya has also been granted the concession of keeping its value added taxes lower than the rest of the EAC, despite calls for uniformity in line with other members. This has allowed Kenya to keep costs on domestic products lower while sparing consumers an increase in commodity costs (Business Daily, 2018). Nevertheless, Kenya is not the only country having to offer concessions, with Burundi having to levy taxes on their most-important industry, the agriculture industry (SIDA, 2012). This has meant that Burundian agriculture products have at times remained uncompetitive in relation to the rest of the member states.

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One of the main elements to a common market is the removal of (non-tariff) barriers to trade. Despite the existence of a number of trade agreements between the member states, many non-tariff barriers were still in place and require greater cohesion among member states. Whether it relates to improving clearance issues for goods and services, the improvement of transport infrastructure or restrictions on certain goods, the establishment of a successful common market hinged on countries openness to remove such barriers (World Bank, 2008). However, differences between the extent of non-tariff barriers have meant that barriers to trade have remained in place, and require further bargaining. As a matter of fact, the EAC Elimination of Non-Tariff Barriers Act was only signed in 2017, highlighting how long it took for countries to agree on measures (The EAC Elimination of Non-Tariff Barriers Act, 2017). Tanzania originally left levies for railway transport in place, which were revised after complaints by member states. In turn, Rwanda and Uganda denied Tanzanian rice imports market entry, which was an issue that had to be resolved at later EAC meetings for fear that Tanzania would reciprocate (Oiro, Owino & Mendez-Parra, 2017).

As this paper elaborated upon earlier, the establishment of the common market does not only refer to the process leading up to the ratification of the common market protocol, but also the resulting implementation. In this regard, although the common market still has certain obstacles to overcome, it has been successful in increasing cooperation between member states. Internal tariffs have been eliminated within the common market over a five-year period following the ratification of the protocol (Davoodi, 2012). However, non-tariff barriers remain in place, and states continue to pledge that they will ease trade

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up until as recently as 2018 (Olingo, 2018). Thus, while the establishment of a successful common market has made considerable leaps, it still requires further concessions and bargaining to run more smoothly. However, as is seen above, the process does highlight how interstate bargaining has resulted in the current nature of the common market, leading me to confirm the first hypothesis. Furthermore, as predicted, this has enabled a greater insight into the progress that the EAC region has made in regional integration.

Hypothesis 2: The East African Monetary Union

This paper looks at the extent to which member states control the speed and depth of integration in the monetary union that would mark the following step of integration for the EAC. The monetary union protocol was officially ratified by the member states as early as 2013 (EAC, 2013). However, before its ratification, Durevall (2011) already highlighted the need for a successful common market for an effective monetary union. Taking into account the struggles surrounding the establishment of the common market, it is perhaps not surprising that the full integration of a monetary union has been stalling and is now behind schedule (The East African, 2018a). As such, the following analysis is going to trace the implementation process of the monetary union protocol to investigate whether this can be attributed to a lack of commitment or political will.

To initiate this process, the member states of the EAC committed themselves to establishing a monetary union institute that would both track the creation of a common currency and pave the road for further integration of common fiscal policies (EAC, 2013). Five years after said ratification of the

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monetary union protocol, the EALA passed a bill for the institutionalization of the East African Monetary Union (EAMU), which “is expected to provide for the functions, governance and funding for the Institute as well as other related matters” (EALA, 2018a). Furthermore, the EAC council passed a bill establishing the East African Statistics Bureau, which will be essential in the establishment of a single currency (Ligami, 2017). Prior to this, the EAC found itself in the macroeconomic convergence stage (Nkwame, 2017). As part of this process, the member states initiated the harmonisation of exchange and monetary rates, as well as fiscal policy and banking coordination (UNECA, 2015).

However, despite the successes of passing critical legislation, “member countries are struggling to meet the macro-economic convergence criteria”, as well as “the critical pieces of legislations required to set up Monetary Union institutions” (Anyanzwa, 2018b). This means that policies agreed on in the EAC forum are not being enacted by the member states, thereby not only undermining the effectiveness of the EAC, but also stalling further integration. This lends support to the idea that although legislation may be passed by the EALA, the fact that it is not implemented by the member states slows down regional integration. This point is reflected by regional commentators such as Adam (2013), who cite increasing pragmatism in the establishment of the monetary union. In addition to this, the chief economist at the National Bank of Rwanda, Professor Thomas Kigabo, pointed towards the fact that member states needed to be committed “not just on paper but committed to implement what is in the protocol” as well (CNBC Africa, 2018). One explanation as to why the implementation of the monetary union has started falling behind schedule is provided by intergovernmentalism. The theory

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posits that member states will always act in their national interest, and that the speed and depth of further integration depends on this (Cini & Pérez-Solórzano Borragán, 2016). In addition to this, the theory suggests that as rational actors, member states prefer not to cede sovereignty as they lose control over the integration process and the adherence to their national preferences. However, the institutions that have to be established for a successful single currency in essence remove national autonomy over monetary policy (African Business, 2014). Furthermore, “issues of national sovereignty, which African governments have been particularly reluctant to cede, will become more problematic if central bank policies are deemed to be less than favourable to their national interests” (Duale, 2014). This is further echoed in a report published by the EALA (2013), which highlights how monetary union would require governments to cede sovereignty. Hence, this reluctance to cede sovereignty, in conjunction with the aforementioned increased pragmatism, explains some of the difficulties in establishing a fully functional monetary union.

By failing to pass key legislation on the institution of the monetary union, countries have lagged behind in their implementation of the protocol (The East African, 2018a). As a result, the implementation of the monetary union has fallen behind by two years, making it unlikely that the target of 2024 will be reached (EALA, 2018b). What’s more, an editorial by The East African (2018a) points towards “the lack of clear commitment on the part of member states” to establish a functioning monetary union. Especially in the wake of the Eurozone crisis, which highlighted the struggle of having a common fiscal policy across member states with varying economic strength, the enthusiasm for such a union slowed down at the global level (Adam, Allsopp and Vines, 2016).

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The explanation provided by intergovernmentalist theory regarding states’ reluctance to cede sovereignty is found most noticeably in Tanzania, who have vocalised fears over fast tracking integration, wanting instead to move ahead more slowly (Muramira, 2012). Other commentators point towards the fact that the EAC remains summit driven, and that institutions such as the monetary union can only be successful is member states sacrifice sovereignty (Semakula, 2017). The result has been that protectionism has remained in place as member states are seeking to prioritise national preferences over what would otherwise be an uncontrolled monetary union (Kafeero, 2018).

The evidence presented points towards the fact that the speed and depth of regional integration is controlled by member states. As posited by intergovernmentalism, member states will agree to pool their sovereignty and establish the necessary institutions for the monetary union, but only under the condition that integration continues to adhere to national preferences. Hence, this leads to the confirmation of the second hypothesis, and provides a further explanation why integration has slowed down. However, this does not entail a lack of commitment or political will, but is instead a sign of wanting to proceed rationally and only in as much as it benefits the individual member states.

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Conclusion This analysis provides a process-based discussion on the regional integration of the EAC by tracing the progress that has been made in the past decade. This is particularly important in the wake of a number of articles doubting the future of the EAC. Chief amongst these are articles questioning the continued commitment of member states and the seemingly slow pace of integration (The East African, 2018a). Other commentators have pointed towards the repeated trade conflicts between Kenya and Tanzania, or the boycotting of heads of state summits by Burundi (Otondi, 2016; The East African, 2018b). And others still point towards the continued disregard for human rights and good governance by member states including South Sudan and Burundi, but also the increasingly tense relationship between Burundi and Rwanda to highlight the growing cracks in the community (Ligami, 2018; Ubwani, 2018).

However, despite these hurdles, there are positives to be noted in the integration process. Member states are continuing to implement both the common market and the monetary union, and the community has grown by a further member, namely South Sudan. Although commentators are concerned about the fact that the speed of integration appears to have slowed, this paper posits the conclusion that this comes merely as the result of continued interstate bargaining, as confirmed by the first hypothesis. In addition to this, the second hypothesis highlights how political commitment has shifted to a more controlled form of integration that allows member states to account for their national preferences, and has hence caused a more cautious progression of integration.

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The outcomes as described above are further supported by intergovernmentalist theory, which puts an emphasis both on commitment to national preferences and interstate bargaining to explain the speed and depth of integration (Puchala, 1999). The conclusions of the hypotheses lend support to the idea that theories such as intergovernmentalism can and possibly should be applied in regions beyond their original scope of Europe, as, in this case, it allows for a state-centric analysis of a region in which governments are inclined to retain much power and cede little control (Stratfor, 2013). Finally, the application of intergovernmentalist theory provides a counter-argument to the aforementioned criticisms of the EAC, as it allows for a more positive outlook on EAC integration despite the reluctance of member states to cede sovereignty and commit to an uncontrolled form of integration. This is because intergovernmentalism does not exclude the possibly of the pooling of sovereignty, but posits that this occurs only in relation to the preferences of member states.

This paper set about discussing the progress of integration in the EAC. For this purpose, integration was measured as the increasing institutionalisation and cession of sovereignty. By tracing the processes behind the establishment of the common market, monetary union and enlargement, this paper is able to conclude that rather than integration stalling, as posited by certain regional commentators, member states are shifting to a more pragmatic, state-controlled form of integration in which member states prioritise and protect national preferences. In direct response to the research question, it is these factors that have caused regional integration to appear as though it has slowed. By establishing the continued presence of interstate bargaining and a shift, rather

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than erosion, of political will, this paper is able to establish that integration is merely progressing more gingerly, and will most likely continue to progress. Thus, this paper also considers it reasonable to predict that the East African Community will continue to integrate, though increasingly cautiously as the cession of sovereignty becomes increasingly inevitable. Political federation may yet materialise so long as it remains in the interests of all member states.

Tracing integration processes in the EAC remains a difficult challenge due to the limited information the EAC makes public regarding negotiations and council discussions. While this remains a particularly important challenge for the general public in the community who struggle to track progresses the EAC has made, it also means that this paper has had to rely heavily on sources and commentators from outside the institutions to draw significant conclusions. To ensure further conclusiveness and reconfirm the causal relationships analysed in this paper, future research could focus on finding further accounts from inside the institutions.

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