By Sitati Wasilwa
The visit by Tanzanian President Dr. Pombe Magufuli in Kenya three weeks ago has been interpreted as the initial step in restoring “good” relations between Nairobi and Dodoma. In recent times, the relations between the two states have been frosty majorly due to ideological differences and lately due to economic differences.
Historically, the divide that separates Kenya and Tanzania is one of ideological fundamentalism. A few years after gaining their independence, the two states identified themselves with two distinct politico-economic and social philosophies; Kenya pursued capitalism while Tanzania religiously adopted socialism (Ujamaa).
Collectivization which characterized the Tanzanian economy had two salient features; state ownership of the basic industries/enterprises and the indifference to competition (Protectionism). The Ujamaa policy that was implemented in Tanzania by Mwalimu Julius Nyerere was a sure road to serfdom of the largest East African state. Another path that led Tanzania to the economic doldrums was the policy championed by Mwalimu Nyerere to finance the liberation struggles in Africa.
Adoption of the Ujamaa policy implied that the country would have a closed economy due to the simplistic notion of protecting the infant industries from external competition. To a larger extent, the state was seen to be fashioning the agenda of isolationism. Recall that one of the ideals of socialism is to strongly advocate for nationalism.
After the collapse of the EAC in 1977, Tanzania closed her border with Kenya for seven years until 1984 out of the fear that Kenya could economically emasculate her.
During the final days of President Jakaya Kikwete’s term, Tanzania was seen to be dragging her feet and in due course delaying to ratify some of the policy and legal frameworks that would lead to a fully fledged Customs Union within the EAC. This lukewarm approach adopted by Tanzania led to the emergence of the “coalition of the willing” which comprised of Kenya, Rwanda, Uganda and Burundi.
The “coalition of the willing” states signed several deals that would see the development of major infrastructural projects in the East African region without Tanzania’s input. The projects would involve the construction of the standard gauge railway (SGR) line linking Kenya with Uganda, Rwanda and Burundi; construction of a pipeline from Lamu in Kenya to the oilfields in Uganda.
Magufuli’s administration has had its own fair share of isolationist and nationalistic policies that are touted to cushion the Tanzanian economy from external competition. There have been cases whereby the work permits of some Kenyans have been cancelled by Tanzanian officials. Not long ago a directive was issued by President Magufuli to limit the number of flights made by Kenya Airways in Tanzania a move which the Kenyan state retaliated by banning Tanzanian tour vans from accessing the Jomo Kenyatta International Airport.
Furthermore, Magufuli’s administration has been avoiding to sign the Economic Partnership Agreement (EPA) unlike the other EAC member states which have already appended their signatures. The EPA would guarantee duty-free and quota-free commodities that would be exported to the European Union from the EAC which is largely beneficial.
President Magufuli’s administration has also embarked on a mission to position Tanzania as the region’s economic hub a move which has generated a lot of uneasiness in Nairobi. This mission began with Rwanda and Uganda rescinding their earlier agreement with Kenya that would involve the inter-linking of the pipeline from Lamu to Uganda and the construction of the SGR from Kenya through Uganda to Rwanda. Both the pipeline and the SGR would have ensured that Rwanda, Uganda, South Sudan and the Eastern part of the Democratic Republic of Congo majorly import their commodities through Kenya via the ports of Mombasa and Lamu.
As a result of the economic sucker punch, Rwanda and Uganda will construct their SGR phases through Tanzania to the port of Dar es Salaam and also the pipeline to the Ugandan oilfields will go through Tanzania to the port of Tanga. This particular move appeared to have isolated Kenya to some degree.
On a general scale, President Magufuli seems to be more focused on developing the country’s economy compared to his predecessor. His vision is to see Tanzania rival Kenya as the biggest economy in the East Africa region.
A Mutually Beneficial Relationship
Despite the suspicions that the Tanzanians have towards Kenyans which are hangovers of the dogmatic ideals of socialism, restoring economic relations between the two states will be mutually beneficial. Ideally, logically and realistically any action by either state to ignore the other would be a lose-lose situation for both.
Kenya is Tanzania’s largest trading partner in Africa with the former importing commodities worth Kshs.33.7 billion in 2015 and most importantly Kenyan companies have invested in Tanzania. Data from the Tanzania Investment Center shows that there are 529 Kenyan companies that operate in Tanzania and they have collectively invested approximately US $1.7 billion. In addition, these Kenyan companies have employed at least 56,000 Tanzanians.
Going forward, both economies stand to gain from each other through various ways. Tanzania having more diverse mineral deposits compared to Kenya seeks to benefit from the latter’s relatively advanced human resources and relatively developed soft infrastructure. Kenya, on the other hand, will benefit by accessing the Tanzanian market for the various commodities that are produced in the country.
Zulekha Ibrahim a Tanzanian financial analyst based in Dar es Salaam states that the frosty relations between Tanzania and Kenya are unnecessary and that having good relations will benefit both of them. She further states that a closer economic cooperation between the two will help to expand their economies.
During his visit to Kenya, Presidents Magufuli and Kenyatta agreed to develop a highway linking Bagamoyo to Malindi and construct another one from Mwanza through Isebania to western Kenya. These major highways will facilitate the movement of people and commodities between the two countries.
Challenges to Better Relations
There are certain challenges that are both prominent and underlying that could still jeopardize the economic relations between Tanzania and Kenya as well as between Tanzania and the other EAC member states. One of the challenges concerns the work permits. Though the Tanzanian government has reduced the cost of obtaining the work permits their existence still works against the principles of the EAC especially regarding the free border movement. The work permits are mechanisms that can be used to check the number of people especially the ‘aggressive’ Kenyans from conducting business in Tanzania.
Secondly, the refusal by Tanzania to sign the Economic Partnership Agreement (EPA) will in particular dent Kenya’s exports to the European Union. The EPA is supposed to be signed by all the EAC member states and Tanzania’s action will imply that Kenya will be categorized under the Generalized Scheme Preferences (GSP) by virtue of being a developing country and the other EAC members falling under the least developed countries category. As a result, Kenya’s exports will be subjected to levies ranging from 12 to 25%.
An underlying challenge whose ratification will elicit a lot of passions and emotions will be the institutionalization of the EAC Political Federation (The East African Federation) as enshrined under Article 5(2) of the Treaty of the Establishment of the East African Community. The process of establishing the East African Federation ought to have begun in 2016 but because certain issues relating to sovereignty need to be formalized no formal progress has been made. If Tanzania has not been committed in actualizing the EAC Customs Union then it will be even harder for her to sign the treaties ratifying the formation of the Political Federation. However, going by the recent events in the EU in relation to Brexit and the perceived dangers of free trade and free borders then the fate of the East African Political Federation hangs in the balance.
The thawing of the relations between Kenya and Tanzania will be beneficial to both countries and to a larger extent the EAC bearing in mind that the two economies collectively make up about 68% of the GDP of the East African region. Magufuli’s visit may perhaps be a signal of positive actions to come by as far as the relation between Tanzania and Kenya is concerned.
The writer is a Researcher & Policy Analyst at Savic Consultants, Nairobi.