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Somalia’s Application to Access EAC Bloc:

By: Mohamed Abdurrahman Mohamed
Monday July 25, 2022

 

 The Opportunities and Challenges. Part (1)

Since March 2012, the Federal Republic of Somalia has been seeking membership in the East African Community (EAC) bloc. The Transitional Federal Government of Somalia (TFG) made the first official request for accession. However, in December 2012, the summit - the bloc’s highest body - considered the application and asked the council of ministers to conduct a verification exercise, but admission was delayed in 2015. Another attempt was made in 2019, and again it was declined during the 21st Ordinary Summit of the EAC Heads of State in February 2021, which noted that the verification process for Somalia’s admission to the EAC had not been undertaken. The repeated delay can be attributed to several factors, including political, security, and economic reasons, as well as a lack of backing and support among the bloc’s member states. In particular, the latest decline was primarily political.

Regardless, the new administration of the FGS has shown determination towards accession to the bloc. In the last week, the president of Somalia, H.E. HSM, attended the 22nd ordinary summit of EAC heads of state as a guest and expressed Somalia’s willingness to be part of the community, and the membership application was submitted for the third time. Though currently, observers believe Somalia has the backing of one of its neighbors, which is a founding member of the regional bloc, and thus the expectation of acceptance is high since the recently concluded summit directed the council of ministers to expeditiously fast-track the verification exercise for the admission of Somalia and report the findings to the 23rd meeting of the summit.

The EAC is one of the most successful regional integrations on the African continent. Despite the shortcomings, the community has made tremendous progress towards economic integration in the region, which is a prelude to the African common market. The economic performance of the partner states is evidence of that. Before the emergence of COVID-19, they experienced a steady growth rate of over 6% per annum from 2015 to 2019, except for South Sudan. Similarly, the bloc has already established a customs union with most goods and services traded duty-free between member states and agreed on common external tariffs with third countries. Further, the 22nd summit reaffirmed the commitment of member states to implement the EAC Common Market Protocol - which was approved back in 2010 - to facilitate the free movement of the labour force, goods, services, and capital in the region. Presently, some progress has been achieved in this regard, despite existing constraints. Nationals of member states, for instance, do not require visas to travel to the other EAC partner states, and the East Africa One-Network Area and inter-operator roaming agreements enable residents to use their local mobile phone numbers in other member countries, even sometimes without incurring roaming charges. In addition, the adaptation of the EAC                    e-passport is ongoing, with Uganda becoming the first nation to fully shift to the new passport.

Principally, Somalia’s admission to the EAC bloc can bring a lot of opportunities to the country and vice versa. It means, inter alia, businesses have access to regional and international markets, including COMESA, AfCFTA, WTO, and perhaps the EU and US markets in the near future since the EAC negotiates with these trade partners on behalf of all member countries. On top of that, Somalia will gain new opportunities for institutional improvements, structural transformation, technological upgrading, and human capital development. But, these significant benefits come with a price because regional integration provides an opportunity for states with similar levels of development to trade and derive mutual benefits from the gains of trade. However, if a small country joins a regional bloc comprising relatively established and industrialized countries without having proper policies and plans to safeguard the local market, inevitably that nation will suffer from large amounts of products imported from partner states. Therefore, Somalia needs to assess both the potential opportunities and challenges of the membership in EAC to reap the maximum benefits from the integration upon the accession to the bloc.

In this context, mutual interest is one of the decisive factors for admission into this regional bloc. Potential members should have something to contribute to the community, hence those who bring significant potential - regardless of their political and security situations - are highly welcomed and most likely to be accepted by all partner states, as in the case of both South Sudan, for its vast oil and gas resources and the potential for infrastructure connectivity, and the Democratic Republic of Congo (DRC), which comes with high-value minerals (estimated to be worth USD 24 trillion), vast arable land, water resources, and a large population. 

Similarly, Somalia is endowed with enormous natural resource wealth, a strategic location, and some of Africa’s most entrepreneurial people. However, despite existing challenges, negative stereotypes about the country are rife and pervasive, and sometimes hamper development opportunities for Somalia, i.e. delays in admission to regional and international multilateral agreements. This issue can be tackled by changing the narrative and adjusting the prevailing image of the country through marketing “the new Somalia” brand among nations to ensure that a perspective shift in the international and regional perception of Somalia is achieved. 

Generally, regional integration has both advantages and disadvantages. It boosts trade and investment, generates economies of scale, enhances competitiveness, promotes peace and security, and improves the bargaining power of low-income countries in bilateral or multilateral negotiations. This, in turn, motivates the business community in the member states to trade and invest within the bloc because of the lack of tariffs or regulations and that will generate enormous employment opportunities and see businesses thrive across the region. In contrast, member states will encounter some loss of national sovereignty and tariff revenues besides trade diversion. Most importantly though, is the concern that if the economy of the potential partner state is not sufficiently developed to compete with other member states, that country could become a “dumping ground”. Hence, many questions have been raised about how the benefits of economic integration may be distributed and the extent to which low-income countries can capture development gains, whilst many economists believe that relatively well-developed economies in the EAC bloc, for example, are the biggest beneficiaries of the integration, at the expense of others within the community, because they sell mainly industrial goods.

Nevertheless, business leaders are far more positive than economists about the benefits of EAC integration. The customs union is a positive step towards building a common market, as well as the wider integration with COMESA is an added advantage. Thus, big businesses conceive long-term benefits in a progressively expanding East African regional market. It is against this backdrop that Somalia should devise evidence-based policies that inform decisions regarding regional integration with EAC to harness the opportunities that come with the accession of this enormous market and capture the highest economic gains for the benefit of all its citizens. This can be achieved through diagnostic assessments and evaluations to identify the aggregate welfare benefits or losses that Somalia gets from the membership of this regional integration.

The article aims to explore the role of regional integration on the economic development of partner states and assess the potential gains and losses that Somalia can attain from being a part of the EAC bloc. The piece concludes with evidence-based recommendations to assist policymakers in setting Somalia’s strategic priorities towards the membership of EAC and how the country can benefit from the inter-trade with other member states by addressing both the challenges and opportunities that lie ahead.

Mohamed Abdurrahman Mohamed, Ph.D. candidate & Economic Analyst
[email protected]



 





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