EAC is Now 150 Million Peoples Grand Trading Bloc

By ADAM IHUCHA

The East African Community has become one of largest free trading bloc in Africa, offering crucial opportunities for business and investments, thanks to admission of South Sudan.

The historic decision of 17^th ordinary Summit of EAC Heads of the states in Arusha to admit Juba into community has essentially created a robust common market of over 150 million populations, a key factor in boosting trade and growth.

“South Sudan is a new member of the East African community” announced the chairman of the EAC Heads of the states Summit, President John Magufuli, amid applause from the floor.

Dr Magufuli said that the accession of Juba into EAC would not only expand a regional market, but more significantly, spur intra-regional-trade, a major component for economic growth.

“If South Sudan wants foodstuff, it would source from within the EAC and this will mean a market opportunity for maize growers” he explained.

The World Bank data show South Sudan would add 11 million plus people and Gross Domestic Product of $13.28 billion to the EAC market that has 140 million populations and combined GDP of $110.3 billion.

Now, the 17-year-old EAC with six partner states of South Sudan, Kenya, Uganda, Burundi, Rwanda and Tanzania, offers one of Africa’s largest integrated market and combined GDP of $123.58 billion.

Uganda’s President Yoweri Mseveni said the purpose of EAC integration was enshrined in three words, prosperity, survival and security.

“The purpose is to guarantee our survival, prosperity and security in the competitive world where we compete with giants like China, India, America” Mr Mseveni explained.

When Uganda purchases Kenyan products, it supports Kenyan economy, and the spirit also applies in security issues.

The East African business Council (EABC) Chief Executive Officer, Ms Lilian Awinja said South Sudan admission came in an opportune moment as the business community whets appetite to invest in Juba.

“Business community waited so long for Juba to be admitted into EAC so that they can take chance to do business” Ms Awinja explained.

There’s huge business and investment opportunities in South Sudan in almost every sector, she said, adding that key among them were in oil, real estates, education, agriculture and tourism industries.

According to the WB although South Sudan has vast and largely untapped natural resources, beyond a few oil enclaves, it remains relatively undeveloped, characterized by a subsistence economy.

South Sudan is the most oil-dependent country in the world, with oil accounting for almost the totality of exports, and around 60 percent of its GDP. 

“South Sudan offers a great opportunity not only for business and investment frontiers, but for professionals such as engineers, teachers, medical doctors who are badly needed to help support the country” Ms Awinja noted.

South Sudan broke away from Sudan in July 2011, taking with it sub-Saharan Africa’s third largest oil reserves.

It has 85 percent of Sudan's oil output -- estimated at about 520,000 barrels per day -- this offers the EAC a unique opportunity to attract more foreign direct investments, particularly on hydrocarbon industry.

Juba accession would therefore make EAC as the hottest and fastest-paced hydrocarbon scene on the continent.

In terms of geographical and geopolitical location, South Sudan has potential to link the EA region to North Africa, Central Africa and other continental sub regions, the EAC verification report indicates.

With regard to the geographical proximity and interdependence between Juba and EAC Partner States – the report says, the South Sudan shares borders with Kenya and Uganda.

“There is a sense of belonging and attachment to EAC socially, historically, culturally and geographically,” reads the EAC report.

Indeed, Juba provides a huge market for Kenya and Uganda have more than quadrupled their exports in goods and services to Southern Sudan in the last 10 years.

Available records show that Uganda exports value stands at over $200million, whereas Kenya exports products and services worth over $180million per annum.

Analysts say that South Sudan's early efforts to integrate infrastructure, including rail links and oil pipelines with systems in Kenya and Uganda was a clear message that Juba’s membership to EAC was obvious.

South Sudan vice-president, James Wani Igga said his country drive to join the EAC was not just for economic reasons, but more significantly also for historical, socially and political factors.

Mr Igga said his country’s foreign policy and South Sudanese themselves made it clear that they wanted to join the EAC - rather than being tied to north Sudan.

“This is why we applied to join EAC immediately after the independence to fulfill our dreams” he explained.

Indeed, South Sudan applied for the EAC membership soon after it attained its independence in July 2011.

The admission, however, stalled due to institutional weakness, poor economic management and issues related to the rebellion, which broke out in mid-December 2013.

The former secretary general of the defunct EAC, Edwin Mtei said the South Sudan accession to EAC was a milestone, calling for other African countries like DRC-Congo and Somalia to join the trading bloc.

“The more EAC becomes bigger, the better as it will be more powerful in negotiating table in the competitive world” Mr Mtei who was also the first Tanzania’s central bank governor said.

Indeed, the summit directed the EAC council of Ministers to undertake the verification exercise for admission of Somalia into EAC and report to the next Heads of the states Summit.

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