By Victor Kiprop/The Africa Report
Somalia has formally been admitted into the East African Community, becoming the 8th member of the regional bloc.
A meeting of the region’s leaders in Arusha, Tanzania sanctioned the decision on Friday afternoon, ending more than a decade of waiting for the Horn of Africa nation.
“This moment is not just a culmination of aspiration, but also a beacon of hope for a future replete with possibilities and opportunities,” Somalia’s President Hassan Sheikh Mohamud told the summit.
“We’re committed to reforming our institutions, enhancing our infrastructure and creating an environment conducive to trade and investment in Somalia,” he said.
Work starts now
Plagued by decades of political instability, prolonged violence and economic isolation, Somalia hopes its admission into the EAC will be a major turning point for the development of the country of 17 million people.
Somalia first attempted to join the bloc in 2012, but was rejected on the basis that it did not meet the basic requirements for membership as per the treaty of the establishment of the EAC. They include respect for universal principles of good governance, democracy, the rule of law, respect for human rights and other civil liberties.
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The bloc now comprises eight member states — Uganda, Burundi, Rwanda, Tanzania, Kenya, South Sudan, Democratic Republic of Congo, which was admitted in April 2022 and Somalia — with more than 300 million people and a combined Gross Domestic Product of more than $315bn.
“Intra-regional trade between our countries is now at 27%, compared to 17% elsewhere in the continent,” Kenya’s President William Ruto said at the summit.
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“We’re far off from where Europe is 70%, but the fact that we’re making strides in the right direction means shortly we will catch up with our peers globally,” he said.
Somalia boasts of a 3000-kilometre coastline that is seen by the EAC as a pathway to untapped markets in Europe, the Middle East and Asia.
Among the eight EAC member states, four countries —Uganda, Burundi, Rwanda and South Sudan — are landlocked, and have been relying on the ports of Mombasa in Kenya and Dar es Salaam to handle their trade goods.
Somalia boasts of a 3000-Kilometre coastline that is seen by the EAC as a pathway to untapped markets in Europe, the Middle East and Asia.
Customs union advantages
Somalis have investments in at least five of the seven countries in the bloc, according to Abdulsalami Omer, the special envoy of the president of Somalia to the EAC.
“It’s time for businessmen and women from the region to [go to] Somalia and invest and participate in the rebuilding of Somalia,” he tells The Africa Report.
The integration of Somalia into the EAC customs union will allow it to benefit from reduced tariffs and non-tariff barriers that have in the past impeded bilateral trade between Somalia and its neighbours.
High tariffs had raised food, consumption and energy prices in the country.
By electing to join the bloc, Somalia will also tap into the region’s existing infrastructure projects, including transport corridors and energy networks. This also gives Somalia a way to integrate into the region’s future joint infrastructural projects.
Security still an impediment
Despite the huge potential, there are concerns that security challenges facing the country could deny it the ability to reap the benefits of joining the bloc and drag the entire region more into conflict than business.
The security challenges facing Somalia are not unique to it, says Omer.
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“I think the security situation in Somalia will improve when we are part of the community. We need the community to help us to stabilise the security in Somalia,” says Omer.
As with South Sudan, the fragility of Somalia’s key institutions could also prove a major challenge to its economic integration to the regional bloc.
Somalia’s economy remains largely underdeveloped, relying mainly on livestock, agriculture, and fishing and could struggle to compete against other diversified economies like Kenya’s.
Due to lack of confidence in the Somali shilling, the US dollar remains the dominant currency. The country is also heavily indebted and is banking on an IMF-led debt relief program to come out of debt distress.
“What we need is the customs part opening the borders and harmonising the rules and regulations. The first thing we will do is the customs union, and I can assure you that we can do it in two years,” Omer says.
Slow integration
South Sudan (2016) and the Democratic Republic of Congo (2022) were the latest entrants into the bloc before Somalia, and have both faced similar challenges resulting in a slow process to be able to access the Customs Union.
South Sudan joined the EAC eight years ago, but up to now they’ve not yet acceded to the Customs Union
“South Sudan joined the EAC eight years ago, but up to now they’ve not yet acceded to the Customs Union because they’re struggling in terms [of] the institutional framework. But that is the basis of integration,” John Bosco Kalisa, executive director of the East African Business Council, tells The Africa Report.
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“We have to find ways of helping them. We have to bring them on board and find ways of supporting the institutional capacity of these new members to address these challenges” Kalisa says.
The International Monetary Fund (IMF) projects that Somalia’s economy will grow by 3.7% in 2024.
Original Story from The Africa Report: https://www.theafricareport.com/329070/somalia-gains-entrance-to-the-eac-but-work-starts-now/
