Debt Budgets: A post budget political economy analysis of EAC Countries 2024/25 budget priorities, viabilities, risks and how governments can restore public confidence

Economists have always asserted that you know a country’s priorities from its budget while political scientists further suggest that a state and government’s health is reflected by the budget it makes and implements. In short, show us a good budget and we will show you a prosperous nation!

By Moses Kulaba, Gloria Shechambo, Robert Ssuuna, Dorine Irakoze, and Boboya James Edimond

Governance and Economic Policy Centre

@GEPC_TZ

The budget is an essential social contract that establishes the relationship between the government and its citizens, and the only one renewed annually, yet budget making in East Africa is becoming an exercise in futility.

This brief uses a political economy and trend analysis of the budget allocation priorities and estimates for 2023/4 and 2024/2025 as a basis to evaluate the extent to which East Africa Community (EAC) Countries budget policies and priorities are viable, fit into the local and global context but at the same time promote equity and reduce the economic burden on ordinary citizens.  We exposes the embedded risks, misalignments and further highlights the magnitude of the debt burden plaguing all EAC countries and its likely impact on budget viability and future macro-economic targets. We rekindle the need for an evaluation of budgeting processes in EAC, a revival of citizens participation in budgeting and repositioning the budget at the Centre for public policy. Our final conclusion is that there are malignant risks. Governments must budget better, tax wisely, address debt and strengthen public participation to revamp citizens confidence and trust in the national budget processes.

The 2024/25 Budget Context

The 2024/25 year’s budgeting was met with insurmountable obstacles and political economy pressures never anticipated before. East Africa is undergoing extreme budgetary pressures amidst a hectic political cycle. Governments are experiencing constantly, dwindling foreign aid, high indebtedness, a restless population, apathy to more taxation, ahead of a sensitive election period in many EAC Countries. The years 2024 to 2027 will be election years in Rwanda, South Sudan, Tanzania, Uganda and Kenya. 

Normally election budgets tend to be quite generous as the incumbent regimes seeking re-election avoid taking drastic measures that alarm citizens and discourage their courted voters.   The 2024/25 financial year’s budgets however came at a time of increasing economic hardships, outcries over taxation, violent tax protests, a persistent global economic slowdown and jobless growth. This complicates the budget choices that governments can take and whether the desired budget goals can be achieved.

According to the Africa Development Bank, East Africa and Africa’s is expected to record an economic growth of 3.4% in 2024[1] but we project that this growth could be staggered by a myriad of externalities such as the ongoing tax protests, conflict, climate change hazards and a general slowdown in global economic growth.

Moreover, there is increasing uncertainty about the impact of the continuing Russia-Ukraine war and an escalating and endless Israel-Palestine war on the global economy by exerting political pressures and extracting resources away from development. Besides disruptions in international trade and commerce, the wars have devastating economic impacts on EAC country’s traditional donors such as the United States, the United Kingdom and the European Union.

These traditional donors are constrained with multiple domestic political, social and economic challenges to finance at home.  There is uncertainty about foreign policy shifts. For example, the outcomes of the United States (US) Presidential election may determine a major shift in US foreign policy and therefore the future US-Africa foreign policy cannot be guaranteed.

The European Union (EU) has witnessed a resurgence in nationalistic tendencies and drastic swing to the right with increasing demands for inward looking policies to secure Europe’s future. The EU faces huge political and social challenges such as immigration to tackle. All these constrain EU budgets for external aid assistance and their continued support for Africa is jeopardized.

Faced by such unpleasant realities, EAC governments are obliged to make national budgets that can realistically be achieved, balancing economic and political targets at the same time, while reducing the economic burdens on ordinary citizens. However, a quick review of the 2024/25 national budgets passed by EAC countries indicates that this year’s budgets were a major gamble and fumble. 

Some countries such as Kenya has already failed to pass the test.  Others muddled through however their expectations look ambitious, plans misaligned, over burdened with debt. Precisely, the political and economic budgeting terrain is quite murky and tenacious and end of year collection out turns for 2024/25 financial may never be achieved.  

Yet in recent years, the budget exercise has become of less interest to ordinary citizens, viewed as quite top-down executive driven exercise, led by technocrats with less consideration of citizens views[2]. Questions are asked how can governments in the future balance between political and economic expediency, debt financing and development most significantly restore public confidence in the budget process as means of raising legitimate public money and delivering public goods. In this analysis, we explore and share commentary perspectives to answer this question and what citizens and governments can do.

Aligning EAC Budgeting to Regional and Global Context

The regional and global economic trajectory and potential outlook shows a zig zag pattern or mixed bag of hits and misses.  Globally there are signs of a general economic slowdown and inequitable growth. 

According to the OECD’s latest Economic Outlook, the global economy is continuing to growing at a modest pace, The Economic Outlook projects steady global GDP growth of 3.1% in 2024, the same as the 3.1% in 2023, followed by a slight pick-up to 3.2% in 2025[3]. The International Monetary Fund (IMF) baseline forecasts the world economy to continue growing at 3.2 percent during 2024 and 2025, at the same pace as in 2023. The IMF notes that a slight acceleration for advanced economies—where growth is expected to rise from 1.6 percent in 2023 to 1.7 percent in 2024 and 1.8 percent in 2025—will be offset by a modest slowdown in emerging market and developing economies from 4.3 percent in 2023 to 4.2 percent in both 2024 and 2025. The forecast for global growth five years from now—at 3.1 percent—is at its lowest in decades[4]. Even some spikes of growth in some insular countries such as Rwanda, Senegal and regions like Asia will not catapult the global economies to the desired targets of about 7% consistent economic growth over the next three years.

Moreover, multiple reports indicate that over 60% of Africa’s GDP is spent on debt serving and this significantly affects resources available to spend on development and real economic growth. According to the Economic Commission for Africa, the average debt-to-GDP ratio for the entire continent was projected to rise to 63.5% in 2023. The Commission warns that escalating debt levels in Africa are prompting concerns that repayment may not only constrain economic performance but could become virtually impossible for many African countries.

The AfrexExim Bank reports that Africa’s debt burden has grown significantly in the past 15 years surging by 39.3 percentage points between 2008 and 2023, resting at 68.6% of GDP in 2023[5].  At the current interest rates, less developed countries will never wean themselves off external debt and many countries defaulting in the near future is real.

The EAC governments therefore need to be extremely cautious and trend with maximum care on the economic their targets and priorities they make. The following guard rails are essential must be considered in advance planning of the budgets in the current obtaining and foreseeable context.

  • Avoid over taxation and stifling of nascent businesses by taking a precautionary facilitative approach verses ambitious revenue collection targets. Spare disposable incomes in the pockets of citizens and small business could stimulate both consumption, production and growth
  • Addressing economic stagnation, inflationary pressures and jobless growth
  • Addressing climate change and transition to clean energy by encouraging investment and financing of green businesses
  • Harnessing natural resources such as critical minerals to maximize benefits and revenues during the current and future envisaged boom
  • Weaning off the exorbitant external debt pressures and addressing persistent distortions in the global financial lending architecture
  • Designing and setting of long-term goals and tax policies which can drive politics, investment and trade into the future
  • Funding agriculture to support food security, create jobs and agriculture-based industrialization and value addition

An analysis of the budget statements indicates that these critical elements were largely missed by many governments’ economic planners. The net effect of the year’s (2024/25) budget processes is that the midterm and long-term targets in most EAC countries may never be fully gained and economic hardships could remain a persistent future moving forward.

Summary Analysis of EAC Countries Budget Priorities: A detailed Country Analysis of each is available via: xxx

Country Budget Allocation Summary Commentary
Tanzania Allocated Tsh49.35 Tln . Prioritized debt servicing (27%) and infrastructure (11%) with moderate funding of social-economic development sectors. Sectors such as Preoccupied on financing legacy infrastructure projects and continuity, missed revenue targets by 2% over the last two years raising concerns over budget sustainability. Limited citizen participation and budget reliability and credibility of have been flagged by studies and development partners under the FISCUS PEFA report 2022.
Uganda Allocated a budget of Ush72.139 Tln up from up from an initial Ush 58.34Tln (increase of Shs14.050 trillion) proposed in May 2024 and Shs 52.74 Tln in the financial year 2023/24, representing a 36% increase over the last year’s resource envelope. Debt servicing accounts for 57.8% of the total budget allocation with Human Development following at a paltry 14% A quite ambitious budget, overtaking Tanzania’s total budget allocation for the first time in history. Given the economic growth, missed revenue targets and tax protests, it is not clear how those resources will be raised. Moreover, wide spread corruption and over expenditure on political organs and projects has raised concerns, reducing credibility and interest among citizens.
Rwanda For the fiscal year 2024/25 Rwanda passed a budget of Frw 5,690.1 billion (USD4.3bln). Has prioritized Economic transformation pillar (59.6%), social transformation (26.6%) and Transformational Governance (13.8%) Despite stellar economic performance, Rwanda faces constant external threats such as the war in the neighboring DRC and a tainted image from UN accusations of Rwanda as a regional destabilizer.  Over reliance on agriculture is a risk too.
Burundi Allocated 4.4 trillion Burundi francs ($1.5 billion) in the 2024/25 representing an increase of 15% from previous years. Prioritised funding public service and agriculture. Public debt rose from 68.4% of GDP in 2022 to 72.7% in 2023.Has an international credibility issue to regain. Opportunities in Burundi’s critical minerals sector could offer a major breakthrough.
Democratic Republic of Congo (DRC) 2024 budget data is scanty, reports indicate DRC prioritized funding defense against the war in the Eastern Part of DRC and public service. Social development sectors and infrastructure are still underfunded DRC Faces serious instability in the East, and public management challenges, a debt problem. Potential from its mineral wealth but a risk of expensive resource backed loans is real
South Sudan Failed to pass the 2024/2025 national budget. In the FY 2023/2024, allocated a budget of South Sudanese Pounds2.105 trillion (USD1.32bln). Prioritized infrastructure (22%). Other social development sectors took less than 10% each. South Sudan has a huge external debt estimated at over USD $ 2,051,335,901 The government’s petroleum revenues have suffered from the ongoing conflict in Sudan, stifling its economy and ability to raise revenue. Many public servants and essential social delivery are yet to be paid. The ongoing conflict amidst reports of corruption and a huge national debt will affect the country’s future economic possibilities.
Kenya Failed to pass a budget of Ksh3.99Tln    and reverted to using the Finance Bill 2023 to raise revenue. The country has witnessed wide spread violent tax protests, forcing the government to backdown on major tax measures.  The government is under siege and not able to tax. With a bludgeoning external debt, a government under siege and restless population opposed to more taxation, Kenya’s economy is at its weakest.  Kenya was downgraded to Junk status making it more expensive to borrow and raise external capital.  A risk of an economic meltdown is real.

Risks to EAC Countries National Budget Priorities, Viability and Success

In the final Analysis we identify the following risks to the 2024/25 budgets and budgeting generally in  East Africa

Debt Risk: Huge public debt risk is real and if unchecked will literary transform EAC governments into debt collectors on behalf of their lenders. At the current rates, over 50-60% of tax collected by EAC governments in the next 2-3 years will be spent on debt servicing, effectively locking the region into a permanent cycle of debt payment and slow progress. As observed by Uganda’s legislator, Hon Semuju Nganda, “Next financial year (2024/25) Uganda will spend Shs 34 trillion (close to half) on debt servicing  and yet the country thinks it is processing a budget.” The debt risk is significant.

Political and Democracy risks.  Politics and governance in EAC are driven with political alliances and favoritism.  As governments head towards elections there is an increased risk of proposing ambitious budgets that are unviable and could be misaligned with citizens demands. Moreover, large proportions of the budget are being spent on politicians (large cabinets, large parliaments, political advisors, Governors, MCAs etc) and political enterprises such as subsiding political parties. Political parties with representation in parliament have become state enterprises funded by public resources. This is a risk

Credibility risks– The national budgets are losing credibility as statements of macroeconomic policy and social contracts between the governments and citizens. Citizens are increasingly getting detached from the budget with stronger perceptions that their views do not matter- The tendency is never to understand government incentives and plans. If unaddressed will drive constant apathy and resistance against taxation and revenue collection strangling public expenditure.

Economic growth and equity risks: Caused by among others persistent jobless growth, misaligned priorities, unfulfilled earlier economic promises, global economic slowdown and shifting economic policies that may have significant impacts on the EAC countries and region’s growth. The risk is that Budgets may not create tangible economic impacts on ordinary people.

Conflict and Distress risks- This risk is aggravated by the ongoing internal protests against taxation and civil wars such as in the ones in Somalia, Sudan, South Sudan and the DRC. The risk is that available resources will continue being channeled towards war. Further, the international conflicts such as the Ukraine-Russia war will disrupt global supply chains of essential such as grain and redefine geo-economics’ alignments affecting volumes and direction flow of supportive development linkages to the EAC Countries.

Climate Risks: Unpredictability of whether patterns affecting heavily agricultural reliant countries and economies such as Burundi, Uganda and Rwanda. Affecting food supplies and foreign revenues from agricultural sources.

Corruption and Public Management risk– Rising opulence and failure to tame corruption, place and enforce guard rails to mismanagement of public expenditure, exacerbating resistances or rebellion against taxation and budgets generally.

Forward looking, Restoring National Budget Credibility and Public Confidence

  1. Develop and pass realistic national budgets with less ambitious and white elephant projects to be funded in the next few years
  2. Leverage on existing natural resources such as critical minerals and the abundant blue economy as new levers to driver the economy further
  3. Mitigate expectations of large streams revenues from fossil-based projects such as Oil and Gas, factoring in the climate change global pressure to decarbonize and how this could impact on fossil-based revenues in the future
  4. Repurpose investment in young people (the Gen-Z) with jobs created in non-traditional fields and professions such as technology, e-commerce, content creation and redistribution of economic opportunities and wealth beyond the political class
  5. Re-channel heavy investment into agriculture, as a ‘go back to basics’of agriculture as the backbone of our economies, given its potential and ability to cushion other sectors of the economy, including providing food security and incomes to millions of citizens. Remember a hungry person will always be an angry person. Addressing agriculture and food constraints can radically address the spiraling costs of living and desperation that we are currently experiencing in the region.
  6. Tax rationally, modestly, and spend less on nugatory public finance expenditures, tame corruption and malfeasance of public resources. Clearly punish the corrupt and reward the best performers.
  7. Ramp up a global campaign against debt and reform the shylock global lending system which is designed to largely constrain and drain more resources from less developed countries. 
  8. Avoid mistakes in Tax policy and administration that we experienced this year. Be consultative, listen to the views and concerns of stakeholders with mutual respect and consideration. No one wants more demonstrations and violent tax protests next year.

 

NB: The full policy brief and individual country analysis reports for Tanzania, Uganda, Kenya, DRC, Rwanda, Burundi and South Sudan  will be published soon

 

[1] https://www.afdb.org/en/news-and-events/press-releases/41-african-countries-set-stronger-growth-2024-keeping-continent-second-fastest-growing-region-world-african-development-banks-economic-outlook-71384

[2] https://theconversation.com/kenya-protests-show-citizens-dont-trust-government-with-their-tax-money-can-ruto-make-a-meaningful-new-deal-234008

[3] https://www.oecd.org/newsroom/economic-outlook-steady-global-growth-expected-for-2024-and-2025.htm#:~:text=The%20global%20economy%20is%20continuing,up%20to%203.2%25%20in%202025.

[4] https://www.imf.org/en/Publications/WEO/Issues/2024/04/16/world-economic-outlook-april-2024

[5] https://media.afreximbank.com/afrexim/State-of-Play-of-Debt-Burden-in-Africa-2024-Debt-Dynamics-and-Mounting-Vulnerability.pdf

The Petals of Blood: Dissecting the contagion effect of Sudan war on South Sudan and EAC with lessons on governance and state failure

The Sudan war has been raging for almost a year, with catastrophic effects now spreading beyond Sudan’s borders, affecting its neighboring South Sudan and the East Africa Community (EAC) in many ways.

By Moses Kulaba, Governance and Economic Policy Centre & James Boboya, Institute of Social Policy and Research (ISCPR), South Sudan

According to the United Nations, since it started, the war has now destabilized the entire region, leading to the deaths of more than 5,000 Sudanese and displacing millions both within the African nation and across seven national borders.[1]  Sudan is now home to the highest number of internally displaced anywhere in the world, with at least 7.1 million uprooted.[2] More than 6 million Sudanese are suffering from famine, and these numbers are growing every day.  The health system has broken down, and more than 1,200 children have died from malnutrition and lack of essential care. [3]The UN now describes the Sudan conflict as a forgotten humanitarian disaster, while the International Crisis Group has warned that Sudan’s future, and much else, is at stake.

Lest we forget, within a short period, the third largest nation in Africa, with a size of more than 1.8886 million square kilometers and at least 46 million people, has no properly functioning government, and all state institutions have collapsed with the effects of its meltdown spilling over to its neighbors, particularly South Sudan.

South Sudan is host to thousands of Sudanese refugees forced across the border into South Sudan, exerting social and economic pressure on an already fragile state that was already sinking under the burden of its own civil war and internal conflicts.

The Norwegian Refugee Council (NRC) reports that more than 500,000 people have now fled from the war in Sudan to South Sudan. [1]This means that over 30 percent of all the refugees, asylum seekers, and ethnic South Sudanese were forced to flee Sudan since the war exploded in April 2023 for protection in one of the poorest places on earth. “South Sudan, that has itself recently come out of decades of war, was facing a dire humanitarian situation before the war in Sudan erupted. It already had nine million people in need of humanitarian aid, and almost 60 per cent of the population facing high levels of food insecurity.

As of 28 January 2024, more than 528,000 ethnic South Sudanese, Sudanese refugees, and other third-country nationals had crossed at entry points along the South Sudan border into Abyei Administrative Area, Upper Nile, Unity, Northern, and Western Bahr El Ghazal. The majority, 81 percent, entered at Jodrah before making their way to the transit center in Renk. Ethnic South Sudanese who have crossed the border from Sudan are commonly referred to as “returnees.” Still, in reality, many of them were born in Sudan and have never been in South Sudan, and therefore have no kinship connection in host communities.

The conflict has spilled deeper into other East African countries, with thousands seeking refuge and safety from it. The education system collapsed, sending thousands of learners back home and hundreds who could afford to flee exile to continue their studies. Some of these were admitted to Rwandan and Tanzanian Universities.

The Sudan and South Sudan experiment was a governance disaster in the waiting and perhaps serves as a lesson of how a firm grip on power, corruption, and misgovernance can ultimately lead to catastrophic state failure and collapse.

Donald Kasongi, Executive Director of Governance Links and a former senior officer with the Accord, a regional conflict organization, describes the post-Garang South Sudan and post-Bashir Sudan as a protracted governance failure. The diverse strategic roles of Khartoum, Beijing, and Washington in the Sweet South Sudanese oil are now evident.  So far, none is a victor.

The role of external interests in shaping national discourse has been at play. Sudan is caught between the interests of the West and the Middle East and China, with both interested in controlling access to Sudan’s resources, cultural wealth, and strategic positioning as a buffer between the North and South. Before the war, Sudan identified itself with the Islamic world and pronounced itself as an Islamic state. Despite this alignment, the OIC and the larger Islamic world has not come to its help. Sudan remains an isolated state left to collapse at its fate.

In South Sudan, the Garang vision of a strong independent nation was lost. After his demise most of the post Garang political elites or military war generals became pre-occupied on restoring the lost years at war by amassing wealth through corruption and sharing out of the limited resources from the oil resources. As a consequence, a strong nation is yet to be built. They had won the war but lost their country. The same mistake plays out in Sudan. Perhaps the conflict is a lesson on what it means to lose what is so dear to one- A country.

In short, the transition in both countries (Sudan and South Sudan) were not well managed and what we see are petals of blood from toxic flowers of bad governance which have flourished like a forest planted along the banks of the river Nile.

According to James Boboya, the Executive Director of the South worrisome. The raging war has made South Sudan’s oil exports via Port Sudan difficult. Oil exports have collapsed by more than half from 160,000 barrels per day in 2022 to 140,000 barrels per day in 2023. This was more than half of the previous peak of 350,000 barrels per day before civil war broke out in 2013.[2] The South Sudanese dollar collapsed in value. There is a financial crunch and the South Sudanese government has not paid its public and civil servants for months. There is a risk of insurrection and demonstrations by public servants that will be likely joined by the military. This would plunge South Sudan into chaos and total collapse just like its Northern neighbor.

Moreover, this conflict and its associated effects comes in an election year for South Sudan.  The general elections are viewed as a watershed moment which may see a transition from President Salva Keir to a new cadre of leadership. With the economic crunch, South Sudan may not be able to organize and fund a credible general election. This will be not good for South Sudan’s democracy and desired future.

With the world’s media focused on the Russia-Ukraine war and the Israel-Gaza wars, little is covered about the Sudan conflicts nor the total economic catastrophe that South Sudan faces.

If not addressed, the Sudan war will be soon inside the borders of the EAC. Can the EAC afford to stand by and watch longer as its member state, collapses.  Mediation efforts led by Kenya and Djbouti were postponed last year. Direct talks between Abdel Fattah al-Burhan, Sudan’s army chief and de facto head of state, and General Mohamed Hamdan Dagalo, known as Hemedti, head of the RSF paramilitaries remain futile.  What can South Sudan and the EAC do now to avert further catastrophe?

During a joint webinar organized by the Governance and Economic Policy Center (GEPC) and the Institute of Social Policy and Research (ISCR) in South Sudan in April, a distinguished panel of experts discussed and enabled us to understand the contradictions and magnitude of this war with implications and lessons on extractive governance, and state collapse drawn for East Africa and Africa generally, can be taken to avert the situation and its contagion effect on the EAC and Africa generally. The panelists and participants highlighted some key lessons and takeaways that can be drawn from the conflict.

Key lessons and takeaways

Ethnicization of politics and governance can lead to a spiral of violence and catastrophic state collapse, especially when the strong ruling elite and regime finally lose control of power.

A previously united Sudan started getting balkanized when the ruling elites started practicing the politics of ethnicity and religion pitting the largely Muslims in the northern and western parts of the country against their Christian southerners.  The Christians were portrayed as slightly inferior, denied political and economic opportunity, and subjected to forced Islamisation, and inhumane conditions such as slavery. Faced with what was considered unbecoming conditions the Southerners opted for a rebellion and demand for independence. The first and second Sudanese civil war (including the Sudanese Peoples Liberation Movement (SPLM/A) were born and the political dynamics in Sudan changed for decades after. New factions such as the Sudanese Liberation Army (SLA) and the Justice Equality Movement (JEM) emerged and Sudan never remained the same.  Sentiments for cessation and independence in Darfur flared and faced with an insurgency, President Omar enlisted militias including the Janjaweed to quell the rebellions. Around 10,000 were killed and over 2.5 million displaced. The balkanisation of Sudan was continuing to play out.

Militarisation of politics erodes democratic values and principles which can take decades to rebuild.

Omar Bashir came to power in 1989 when, as a brigadier general in the Sudanese Army, he led a group of officers in a military coup that ousted the democratically elected government of Prime Minister Sadiq al-Mahdi after it began negotiations with rebels in the south. Omar Bashir subsequently replaced President Ahmed al-Mirghani as head of state and ruled with the military closely fused into the politics and governance of Sudan.

The military elites elevated to power during President Omar Bashir’s government enjoyed privileged positions.  Even with his overthrow in 2019, these generals maintained a firm grip on the Transition Military Council and the Civil-Military Sovereignty Council.  These are less likely to accept any position below total control of the central authority. The net effect is that the return to full civilian and democratic rule of state governance in an entrenched militarized political environment such as Sudan can or may take decades to be rebuilt.

Vulnerability to geopolitical manipulation and fiddle diddle can be a driver to political instability and eventual weak governance

Both Sudan and South Sudan have been victims of well-orchestrated geopolitical game plans from external powers interested in taking control of the rich natural resources wealth that these countries possess. Sudan and South Sudan have vast oil deposits and forestry products.  With eyes focused on these resources external powers succeeded in playing one community against another and one country against the other and successfully throwing the region into an abyss of endless crisis. Religion was used as a tool to play the North against the South and continues to be used in some segments of the Sudanese and South Sudanese communities.

Key Takeaways

  1. The East African Community (EAC) governments cannot afford to take a wait-and-see attitude. The problems facing Sudan and South Sudan are latently present in several other EAC countries. For this reason, therefore without taking lessons from Sudan and South Sudan other countries can also easily erupt in the future, bringing down the entire EAC. The EAC has therefore an obligation to ramp up support for the resumption of the peace process and finding lasting solutions for peace and tranquility in the two countries. For this to happen there has to be trust and objectivity of the actors to the crisis and the EAC mediators. 
  1. Stop ethnicization and militarization of politics and state governance: The Sudan experience demonstrates this, whereby the collapse of President Omar Bashir’s strong grip on power let loose the lid off a can of worms that had eaten the state to its collapse. Similar conditions of ethnic rivalry in state governance have created uncertainty about guaranteed stability in South Sudan. In some other EAC member states there have been attempts to elevate dominant ethnic groups to power and military influence in state politics built around one strong leader. The Sudan experience demonstrates that the absence of such a strong leader holding the center together can lead to a lacuna, leading to a trail of conflict and instability leading governance to fall apart and eventual state collapse.
  1. The EAC countries must stop viewing at South Sudan as merely a market but as an independent viable state whose stability is good for the entire region. According to the EAC trade statistics, South Sudan was the leading market for goods from Uganda and Kenya. With a total population of 11 million and a collapsed agricultural and industrial base, South Sudan has provided a ready market for agricultural goods and manufactured goods from Uganda and Kenya. According to UN Comtrade Data Uganda exported goods worth USD483.9Mln and Kenya’s exports to South Sudan were worth USD170Mln. Uganda’s exports to Sudan also increased by 154% from around USD48Mln in 2016 to USD123Mln in 2022.  With the eyes largely focused on trade opportunities, there can be a tendency to lose track of the human suffering that the people in these countries face. Also, the jostle for geopolitical control over trade deals can overwhelm the genuine solidarity intentions of good neighbors. The EAC members should focus on the stability of these countries. 
  1. The International Community Must not give up on Sudan and South Sudan. Despite the donor fatigue and reports of corruption, the international community has a moral obligation to continue engaging with the protagonists in the war, facilitating the avenues for a peaceful resolution of the conflict and providing humanitarian aid to the suffering people. The Sudan and South Sudan conflict must be treated with equal measure with the Ukraine-Russia, Israel, and Gaza conflicts. The EAC must scale up diplomatic efforts and be an Anchor in Chief in this process, coordinating and connecting Sudan, South Sudan to the world. 
  1. The EAC media and Civil society must continue highlighting the suffering in Sudan and South Sudan. With the Israel and Gaza war ongoing, the Sudan and South Sudan stories that were largely covered by the Western media have since died out.  There has been little coverage given within the EAC of the recent developments in this war and how it is affecting its neighbors. Moreover, with limited internet connectivity and restrictive conditions, communication advocacy from inside Sudan and South Sudan is quite difficult.  The media and civil society in the EAC therefore must speak loud on behalf of their Sudanese counterparts

 

[1] War in Sudan displaces over 500,000 to South Sudanhttps://www.nrc.no/news/2024/january/sudan-refugees-to-south-sudan/#:~:text=%E2%80%9CMore%20than%20500%2C000%20people%20have,the%20poorest%20places%20on%20earth.

[2] The East African Business Khartoum unable to ensure smooth export of South Sudan oil https://www.theeastafrican.co.ke/tea/business/khartoum-unable-to-ensure-smooth-export-of-south-sudanese-oil-4564064

[1] Sudan conflict: ‘Our lives have become a piece of hell’ https://www.bbc.com/news/world-africa-67438018

[2] War in Sudan: more than 7 million displaced – UNhttps://www.africanews.com/2023/12/22/war-in-sudan-more-than-7-million-displaced-un//

[3] More than 1,200 children have died in the past 5 months in conflict-wrecked Sudan, the UN sayshttps://apnews.com/article/sudan-conflict-military-rsf-children-measles-malnutrition-ec7bb2a1f49d74e7b5f01afa12f16d99

Tanzania’s new political and electoral reforms : A step to the right, a high jump to go!

 

In early February 2024 the Tanzanian parliament made sweeping electoral reforms by passing three bills governing elections and political parties in Tanzania. If ascended and signed by the President into law, these reforms usher a new political era in Tanzania’s electoral history. However, one major leap to the front remains to cement Tanzania’s political landscape and electoral democracy for the better. Simply put the new reforms are a one step to the right or left but a higher jump is required.

The three bills passed are; The National Election Commission Act 2023, Presidential, Parliamentary and Local Government Elections Bill (2023), The Political Parties Affairs Laws (Amendment) Bill (Amending the Political Parties Act RE 2019 and the Elections Expenses Act, 2010). Among the reforms passed under these bills include;

# Introduces a new and separate law governing the National Electoral Commission. Previously this was covered under the National Elections Act, which seems to be overhauled by the new law.

#  Changing the name of the electoral body from the National Electoral Commission to the Independent National Electoral Commission (INEC).  The spirit of this is to rebrand the National Electoral Commission as a modern independent electoral management institution, capable of delivering on its mandate with minimal potential interference from the executive

# Changes to the selection process of the commissioners via a competitive hiring process presided over by a competent independent selection panel chaired by the Chief Justice of Tanzania Mainland and Chief Justice of Zanzibar as its Vice Chairperson. Previously these were solely appointed by the President.

# Introduces procedure for people to apply for positions at the electoral body.  Under the new proposed law, the position for Director of Elections will be open for all competent citizens to apply and subjected to an interview process whereafter three names will be proposed to the President for appointment. The purpose of this amendment is to detach the electoral commission from the direct ambits of the sitting President, who could also be a running candidate in an election process.

# Amendment of the law to remove a mandatory requirement for City Directors, Municipal Directors, Town Directors, District Executive Director (DED) to serve as returning officer at the district level. Under the new law, any competent officer or person can be appointed or assigned to preside over elections as a returning officer. The purpose was to address the long outcry over potential conflict of interest and lack of separation of the executive from the electoral processes. This matter had been a subject of litigation in courts but without success.

# The removal of automatic declaration of unopposed candidates as winners of an election. The new law requires that even unopposed candidates will still be subjected to a vote. If the number of opposed votes and more than in favour, the candidate cannot be declared the winner. The purpose of this was to avoid political favoritism, political intimidation or buying off of political opponents, and imposition of certain candidates on voters who may not be necessarily the best or favorite candidate for the voters.

By initiating and allowing this process to continue unhindered, President Samia Suluhu Hassan proved that she is a democrat par excellence.  President Samia demonstrated mastery of the political landscape and that she was committed to setting Tanzania on a trajectory of political and electoral reforms at a pace and standard unprecedent before by any of her predecessors.

Perhaps serving as a Vice Chairperson of the previous Constituent Assembly in 2014 and listening to the divergent views, she was exposed to the political pitfalls that dogged her country and always remained endeared to the ideas for urgent political reforms.

Key gaps remaining

Running on this inertia, President Samia can take a key leap to the front by reviving the defunct full constitutional review process towards a writing and adoption of a new Tanzania constitution.

The previous attempt at writing a new constitution suffered a still birth.  After months of collecting citizens opinions and debates by the Constituent Assembly costing billions of shillings, the political gulags killed the process before it could deliver a new constitution. Without major changes, the current new reforms will be curtailed by the Constitution limitations that exist.

A comparative study of Electoral Management Bodies (EMB) conducted by the Governance and Economic Policy Center (GEPC) in 2020 showed that despite some progress, Tanzania failed or fared poorly in many areas and required a major overhaul.  (Read more: https://gepc.or.tz/2020-general-elections-key-electoral-reforms-tanzania-must-take/

When ranked on the common standards and guidelines for electoral management and regulation of political parties developed by the European Commission for Democracy, Tanzania scored unfavorably compared to its neighbors South Africa, Kenya and Nigeria on a number of major electoral management and dispute resolution in the following aspects.

  • Direct appointment of the Chairperson and Vice Chairperson of the Electoral Management Body with out subject to an independent public vetting process
  • Tanzania’s electoral management body had curtailed or restricted powers to organize only Presidential and parliamentary elections. The Minister for local government was responsible for organizing and coordinating local government and municipal elections. The Minister appointed returning officers.
  • The prerogative of finality of decisions made by NEC and Zanzibar Electoral Commission (ZEC) was a major lacuna in Tanzania’s electoral law compared to its neighbors. NEC and ZEC have the exclusive powers to announce Presidential and parliamentary election results. Announced Presidential elections are not subject to challenge in any court of law. This is viewed as an infringement on common standards of democratic practice, rule of law, natural justice and democratic rights to a fair hearing. The exercise of finality of decisions can also be confusing, especially where it concerns matters that can be of concern to both institutions. A case to remember was the ZEC Chairperson’s decision to annual the 2015 Presidential election.
  • Limitations on Independent Presidential candidature. The current constitution and election laws restrict this candidature to members belonging to a political party
  • Lack of clarity and potential clash in the roles of the Electoral Management Body (EMB) and the Office of Registrar of Political Parties (ORPP) during election campaign period and civic education.

What it will take for reforms to succeed

For the new reforms to succeed, Tanzania needs to unpack the current constitution to ensure that its provisions are in synchrony with a new democratic dispensation.

The President will need to address the chronic single party mentality that exists amongst some political party cadres and state operatives.  Many of these are not tolerant to opposing political thought. They may not fully embrace the reforms let alone allow the INEC to function without impediments.  Guard rails must be set for what they can or cannot do  

Safe guarding of women in elections and political parties by ringfencing of women leadership positions in political parties. This must be followed by redesigning the concept of affirmative action by setting term limits for women serving in nominated positions in parliament and local governments as councilors for women and special seats.

Restriction on the use of national resources such as state media and the use national security forces and agencies to support a given political party or its candidates during elections.  This matter is considered sensitive but one that needs to be dealt with.

Moreover, our comparative analysis in 2020 showed that a mere change of name does not fully address electoral management, fairness, transparency, and dispute resolution.  Changes of the electoral body’s name from National Electoral Commission (NEC) to Independent National Electoral Commission (INEC) must be followed by the political will and support to enable its independent functioning.

Experiences from Kenya show that changes in the name did not succeed in fully addressing the underlying crevasses and politically charged currents that faced the electoral body. Kenya’s Electoral commission still faces accusations of political bias and state capture. All presidential elections since 2017 have been subjected to dispute and court adjudication.  Its commissioners and executives face electoral violence, persecution and accused of presiding over botched election results. Tragically, some have been killed while others live in exile because of election related persecution.

As Tanzanians and the political class celebrate these new reforms, we must always be reminded that this is temporary and more steps must be taken. Tanzania is yet to come a full circle as a democratic country. Tanzania has and can still set a new bar higher with a full constitutional review.

SADC in Economic Meltdown; Can Tanzania be German of the Region?

On Saturday 17th August, Tanzania assumed the chair of the South African Development Cooperation (SADC), amidst disturbing economic figures indicating that the region was facing a serious economic meltdown. Can Tanzania be the ‘German’ of the region, playing the economic big daddy role by calling the other states into political order and bailing out the struggling member states?

By Moses Kulaba, Governance and Economic Analysis Center, Dar es Salaam, Tanzania

The SADC is a 16-member state regional economic block established with among others promoting sustained economic growth and sustainable development amongst its objectives. However, the recent economic data indicates that region is witnessing an economic meltdown with most of its member states, except perhaps Tanzania, positing negative or stunted economic growth over the past years.

According to the economic and social indicators data compiled and released by its secretariat the the SADC region posted an estimated average growth rate of 1.4% in 2016 compared to 2.3% in 2015. At country level Tanzania registered the highest growth of 7% among the member states followed by Botswana with a far below rate of 4.3%[i].  

In 2017 Tanzania recorded an economic growth of 7.1% followed by Seychelles (6.3%) whilst Angola registered negative growth for the second consecutive year in order of 2.5%[ii] The region’s growth was increasing at a decreasing rate since the post global period in 2009.

The region’s economic giant South Africa has witnessed rapid economic slowdown, bring along its small neighbors and trading partners under its weight.  Countries such as Zimbabwe were collapsing under the weight of economic sanctions, Namibia and Angola recorded negative annual real GDP (at market price) of 10.8% and -2.5% respectively in 2017 due to the slump in commodity prices and other related risks. Botswana at 2.4% did not perform well either. The region posted an overall trade deficit with rest of the world of USD6.7bln. 

The AfDB report for 2018 warned that the economic outlook for Southern Africa region was cautious[iii]. Broad based economic activity was expected to recover at slow pace, but the outlook remained modest given the diverging growth patterns for the region’s economies. Upper middle income countries turned in low and declining rates of growth meanwhile lower income transitioning economies recorded moderate and improved growth, albeit at reduced rates.

Despite the improvement, economic performance remained subdued as the region’s economic outlook continued to face major headwinds. High unemployment, weak commodity prices, fiscal strain, increasing debt and high inflation.

Real GDP was estimated to have grown at an average of 1.6% in 2017 before increasing to a projected 2.0% in 2018 and 2.4% in 2019.

The future regional growth was expected to be bolstered with primary expectations of increased investment in non-oil sectors such as electricity, construction and technology in large infrastructure projects, mining as well as continued recovery in commodity prices.

However, the latest figures show that the region was not well on that front either.  The decline in commodity prices in recent years reaching the lowest point in 2015 translated into significant income loses for the economies, implying a negative impact on public and private sector spending and therefore growth in employment.

Before the 2008-2009 global recession, the region experienced moderate growth, though individual countries contributed differently. For example, Angola, Mozambique and Namibia exhibited robust growth that collectively outpaced the regional group.

Thereafter, Angola, the region’s foremost oil producer and former raising economic star received the worst bashing with its economy experiencing adverse economic growth effects due to weak oil prices.

Overall the region experienced negative GDP growth with Swaziland (-10.08%), Zimbabwe (-8.38%),  and Angola (-6.31%)  being among the worst hit[iv]  Other Countries such as Zambia, Namibia , Mozambique and Malawi were not performing better either. South Africa reported the highest public debt soaring in billions dollars followed by Angola.

South African Institute of International Affairs observed that intra-regional investment and trade levels had declined markedly since the commodity slump in 2013. Moreover, the trade and economic growth in the region remained imbalanced, exacerbating political strains among member states. Non-tariff barriers and other factors had adversely affected intra-regional trade and investment in recent years.

Assuming the mantle, at the end of its 39th Summit held in Dar es Salaam, Tanzania’ President John Pombe Magufuli was furious with against the Secretariat for having not provided adequate and alert to the political leadership that the region was experiencing an economic meltdown with reduced or stunted growth and an expanding trade deficit.

Speaking at the SADC People’s forum on the sidelines of the main summit in Dar es Salaam, the South African Professor, Patrick Bond, described the situation as alarming, catastrophic and turbulent and yet no one was bold enough to speak about it.

He was perhaps communist in view and radical in approach, blaming what he described as the capitalistic enterprise and its puppeteers for under mining economic justice, risking lives of by putting profit before the people and causing climate change whose effects were ravaging SADC but remained quite revolutionary in suggesting that the ordinary people perhaps needed to send a clear signal to its political leadership that all was not okay. The economic fundamentals were tattered and the regional leaders needed to wake, Prof. Bond lectured.

Can Tanzania emerge and become the ‘German’ of the region?

With this state of the Union, the question therefore arose can Tanzania emerge and become the ‘German’ of the region, playing the economic messiah role by providing both political leadership and economic bail out to its neighbors. 

In 2013 up to 2015 when the European Union experienced economic turbulence, Brussels turned to German to liberate it from the gigantic economic Dracula which was tearing down its economic block and leaving some of its small states indebted and facing bankruptcy. German wrote cheques in financial bailouts, provided guarantees and political prop up for economically struggling states such as Greece, Portugal and Italy.

German relied on its economic prowess and its political might as the industrial central pillar of the European Union. The charismatic leadership of its Chancellor, Ms Angela Merkel, was a distinct asset. Even at the risk of her own political career and constant onslaught from the German far right, Merkel could not tolerate any nonsense and was not ready to allow Europe to fall back.

In the face of the similar economic doldrums which seems now to face SADC, can Tanzania afford such muscle or a German equivalent?

Tanzania has done it before. In the 1960’s until 1990’s when the region was facing serious political, Tanzania pulled up its resources and committed it to the liberation struggle. It hosted training camps and provided pupilage to thousands of liberation fighters. Dar es Salaam became to the political headquarters of Frontline States where the idea of SADC in its current form was initiated and a spring for independence for many of the current South African states.  For some, therefore SADC at 39 years, just came back home.

In assuming the SADC Chairmanship, President Magufuli warned the Secretariat that it will not be business as usual as of now and for the next one year his interest would be to see that resources placed at the disposal of the Secretariat were not spent on conferences but on meaningful tangible projects which benefited the people. Could this be the kind of approach that region needs to take in order to deal with its increasing economic challenges.

An agile kind of leadership which places the people at the heart of politics and fights with cunning shrewdness against corruption, public waste, nepotism and personal drive to accumulate wealth by those in power.

Over the years these have been some of the vices which have dogged the region and bringing the much needed progress to stagnation and ultimate halt in some member states. Comparatively, perhaps the SADC is the largest economic group in Sub-Saharan Africa. With over an estimated population of 337.1 million people in 2017, is larger than its western equivalent, the Economic Community of West African States (ECOWAS) and obviously bigger than the European Union has a just a fraction of the SADC population yet somehow progress has been considerably steady in the other regions.

According to experts the region was faced by multiple non trade barriers and low intra region trade which still at around 20%.  Technically, speaking, the members are happy to do business with other countries outside the region rather than their economic neighbors partners in SADC. The member states are living alongside each other but not fully economically and trade integrated.

Political uncertainties which has dogged the former economic giants of the region such as South Africa, Zimbabwe, Mozambique and Angola created fertile conditions negative to investment and economic growth.  The governments lost grip on the economic mantle and directed attention towards managing internal politics and mechanics for political survival.  

Xenophobic attacks in South Africa could have also created a sense of fear and caused disarray in a fragile informal sector which was quietly the driving factor or fulcrum on which the South African economy relied. Crushing cost of electricity, turmoil in the extractive sector and stalemate in the platinum industry in 2016 perhaps were also a contributory factor to South Africa’s political woes. 

Overall, according, to Professor bond, the region was just poorly governed and a new leadership impetus led by the people was necessary to bring back the declining glories

For many years SADC was so much preoccupied on political stability. With good success, it has managed to tackle conflicts and bring peace amongst its member states. Overall, political conflict in the form of civil wars in the region has been declining with all except the DRC reporting any semblance of a conventional Civil war in recent years. 

Even, this has significantly been downgraded in recent years. Currently, there is no severe risk of any threat from any member state to destabilize any other through an arms insurrection. The ongoing conflict in the Eastern DRC is largely a war of survival for the remaining tribal and ethnic elements rather than a fully-fledged military configuration to overall and capture power in the DRC. If it can be dealt with, then perhaps the war in the DRC will be over or significantly reduced to minimal levels in many decades.

The future wars of the SADC will therefore be largely economic and perhaps resource based on key issues such as land, water and control of the real means of production and profit. Acute poverty could be the other driver of the masses towards insurrection. For Tanzania therefore, to take up the German challenge will be a touch endeavor.

Tanzania’s economic benefit or contribution to the region is too minimal. According to trade statistics, Tanzania is among the least exporters to SADC and its overall trade balance with its SADC neighbors was still low. It therefore lacks the economic might of German stature.

Over the past three years Tanzania’s political leadership has commitment itself to building its economy first before looking outside. Cutting back on public waste and flogging its population into line to start paying up taxes to finance its public service and infrastructure ambitions, Tanzania is building its economy from within.

Throughout the 1960s to the 1990s Tanzania sacrificed a lot in order to politically liberate virtually all the SADC member states and yet gained very minimal in return.  Political historians have even have even argued with some level of confidence that Tanzania under developed itself in sacrifice for others to develop. Tanzania would be therefore quite cautious in economic diplomatic terms and perhaps uncomfortable at this moment in giving out too much of what it has acquired over the years to salvage its economic neighbors.

The conditions in the region appear to have turned so bad in the past few years with persistent drought raving across the region only to be replaced by wrecking floods leaving behind famine and death in communities along its way.  Approximately over 1000 people dies in the last floods in Mozambique and Malawi caused by cyclone Idai and Keneth. Millions at a risk of starvation.  Essential infrastructure such as road and bridges connecting rural areas to urban centers and across countries such as the port of Beira are badly battered and incapable of supporting economic productivity.

The region has not been able to attract in Foreign Investment into its natural resource wealth and flagship infrastructure projects such as the Mighty Inga dam electro power project in the DRC which would have brought life into the SADC power master plan have remained incomplete for many years now. The region is badly in need of both reconstruction and reconfiguration to sustain itself and its ambitions.

At the end of the summit Tanzania’s former President Benjamin Mkapa advised that SADC member states should stop relying heavily on foreign donors for aid to support or finance their development agenda. Building internal capacity through a reliable market for products from the block, investment in education, technology, domestic revenue collection and unlocking the potential amongst its budging population to drive the economies forward would be a better option. Perhaps the SADC leadership should fine tune an ear to the wisdom of its elders.

The meeting concluded with signing off of three development cooperation programs worth 47 Million Euro deal with the European Union under its European Development Fund (EDF) 11 financing round. According to official statement, the funds will be used over the next five-year period to support improvement in the Investment and Business Environment (SIBE), Trade Facilitation Program (TFP) and Support to Industrial Productive Sectors (SIPS) three programs to be implemented by the SADC over the next five-year period

The SIBE program aims at achieving sustainable and inclusive growth and job creation by transforming the region into an investment zone, promoting intra-regional investments, foreign Direct Investment and a focus on Small and Medium Enterprises. The TFP will contribute to enhance inclusive economic development in the region through deepened economic integration while the SIPs aimed at contributing to the SADC industrialization agenda, improving performance and growth of selected value chains. How this EU injection translates into lifting the region from its economic downward spiral will yet to be found out at the next summit when SADC turns 40. What is clear is that something has to be done.

[i] SADC: Selected economic and social indicators, 2016

[ii] SADC: Selected economic and social indicators, 2017

[iii] AfDB: Southern Africa Economic Outlook, 2018

[iv] https://countryeconomy.com/countries/groups/southern-african-development-community

How to manage transboundary petroleum resources as Somalia and Kenya talk conflict off East African Coastline

 

The war of words and negative diplomacy between Kenya and Somalia over the disputed potentially oil and gas rich territory in the Indian Ocean has rekindled the importance of understanding how to manage transboundary petroleum resources. Petroleum does not know political borders. The vagaries of geology have dictated that sometime petroleum resources occur in trans boundary areas. How nation states collectively manage these resources can determine whether they effectively harness the benefits from these resources without going to conflict.

By Moses Kulaba, Governance and economic analysis centre

Management of petroleum resources or revenues from ‘trans boundary or ‘disputed’ areas has always been an issue of controversy in most petroleum resource rich countries.  It is a source of disputes and a challenge to investors, planners and policy makers when parties or Countries fail to agree amicably on the ownership of these resources and revenue sharing mechanisms for resources from these areas.  Trans-boundary resources are also called ‘common’ or shared resources.

In Tanzania and the wider East Africa region management of resources in ‘potentially contestable areas’ and ‘trans boundary’ areas are becoming a major challenge as some of the petroleum resources are found closer or along the boundary areas. It will be even more challenging in the nearby future as the gas and oil starts flowing.  If not addressed it will be a big hindrance to investment and development of the petroleum sector. In East Africa, currently there is no concrete and pragmatic approach to addressing this challenge.

The East African dimension

In a broader East African context, seismic studies have indicated that petroleum resources may be largely found along Trans international boundary areas. This has created disputes and raised challenges for proper resource management and revenue sharing arrangements. For example the discovery of petroleum deposits in the Albertine basin generated trans boundary tensions between Uganda and the DRC along the Lake Albert. There are disputes over petroleum in Unity state along the South Sudan and Sudan border. There are disputes between Kenya and South Sudan along the Nadapal area (Block 11 A & B) and Kenya and Somalia along the Wajir border area (block 1, 2 &3) and Indian Ocean Coastline continental shelf.

In 2014, Somalia filed a before the International Court of Justice, accusing Kenya of encroaching on its potentially rich petroleum rich maritime territory off its continental shelf. Both countries have claimed ownership of an approximately 100,000 square miles in the Indian ocean waters suspected of having vast oil and gas deposits.

The conflict largely arises from a dispute in regards to how the international border between Somalia and Kenya should drawn and internationally recognized. In the case before the ICJ, Somalia wants the maritime boundary to run diagonal, as an extension of the land boundary, while Kenya wants it to run parallel to the latitude, east wards, south of Kyunga. Both countries have relied on the straight-line principle in the International Law of the sea. Somalia wants the boundary to run south east wards and has vowed not surrender what it considers, its territorial integrity.

Figure 3: East African Exploration Map 2010-Source: Vanoil Ltd Energy-Kenya

In recent months there has been an escalation the war of words and negative diplomatic relations. Kenya in April barred Somali Officials from entering into Kenya and further banned unaccompanied luggage from Somalia and required that all aircrafts flying into Kenya from Somalia should temporary land in the Northern town of Wajir for a mandatory security check before flying into Nairobi.

The recent diplomatic row represents a significant development between the two neighbors which could escalate into a full-blown out conflict. It further reflects the common resource quagmire that neighboring petroleum rich nation states often find themselves and further shows that latent conflicts emanating from transboundary petroleum resources exist in East Africa.

It is therefore important that viable solutions are reached even without addressing the international law (Law of the sea) challenges facing Kenya and Somalia and the international political concerns or interests in East Africa yet significant challenges and ways of resolving this problem do exist.

Specific problem

  • There is lack of clarity for policy makers, planners and tax administrators on how to share the revenues from these areas
  • Uncertainty and wavering Investor confidence to fully commit their investment and as a consequence petroleum resources in potentially disputed or Trans boundary areas have remained unexplored. For example, licensed blocks operated by Shell in Tanzania’s waters closer to Zanzibar have remained   unexplored for a long time
  • On a wider East African level there are missed opportunities for joint investment promotion.
  • There is a ‘Race to the bottom’ as East African Countries under cut each other with lucrative fiscal terms in competition to attract petroleum investors into their own territories, without looking at East Africa as a whole
  • There are ongoing and underlying territorial disputes which could erupt into full blown out conflicts, risking the current and future investments into the petroleum sector

Currently, a lot has been written about these possible challenges but very limited pragmatic steps have been taken to address these challenges. There has been some significant discussion about the issue but there have been no pragmatic viable options provided which can be acceptable to the protagonists in the conflict.

If some pragmatic solutions are found for Kenya and Somalia, similar suggestions could also be used to inform approaches taken by other East African governments within the wider East African framework to address similar other potential disputes along their border frontiers.

Some international approach to similar challenges

The answer to nature’s conundrum where petroleum resources migrates within or across a country’s border has always been unitization.  Unitisation is one of the legal devices which seek to remove the destructive competitive elements stimulated by the rule of capture (as advanced in the United States legal tradition under which the title to petroleum belongs to the owner who physically extracts it from a well on his land, even if petroleum has migrated underground from neighboring lands). With unitisation petroleum deposits are exploited as a whole, expenditure is reduced and recovery is maximized.  Unitisation is accomplished through a unitization agreement. A unitization agreement is an amicable solution between parties as individuals, group of individuals or states holding exploitation rights in common petroleum reservoirs by which the reservoirs will be exploited in an integrated manner.  The reservoir is treated as one whole and the costs and revenues shared between the parties according to an agreed formula defined by parameters such as geological technical factors, investment or operational costs and volumes of the reservoir. An international unitization agreement (Unit operating Agreement) can be signed between relevant international companies from both states subject to the bilateral treaty outlining the rights and obligations of each company and issues like selection of operator or determination of tract of participants.

International law remedy and Joint Development Areas

The International law remedy to offshore ‘trans international boundary’ petroleum resources is provided within the ambits of the United Nations Law of the Sea Convention of 1982 (UNCLOS) which obliges states which have not been able to agree on boundaries of their continental shelves and exclusive zones to make efforts to enter into provisional arrangements  of a practical nature to develop the petroleum deposit  located in the overlapping geographical area under dispute whilst not foregoing their sovereignty rights to the deposits  in place  in its territory or continental shelf.

This international law remedy is the backbone on which the idea of Joint Development Areas or Zones is built. Joint development is an arrangement between two states to develop and share in agreed proportions the petroleum found within a geographical area whose proportions the petroleum found in a geographical area whose sovereignty is disputed; and the geographical area is an overlapping area under dispute with undefined boundaries to which the two states are entitled under International law. The JDA is established by a treaty, agreement or any recognisable legal document stating the rights and obligations of each party. The JDA’s can be divided into separate contract areas where deposits can cross the internal boundaries of those contracts and those that cross the JDA’s into third party states.  Both approaches are geared towards securing mutual cooperation and maximizing benefits from the petroleum resources. The treaties or agreements incorporate procedures to minimize disputes and resolve disputes. The following country experiences can be benchmarked:

Possible country experiences for benchmarking

Norway’s experience with United Kingdom

Norway is a good example of the significant economic benefits that can be achieved through strong cooperation and bilateral relationship. Norway has entered various treaties as examples of successful border unitization and management of resources straddling across a vast maritime area between Norway and United Kingdom. On March 10, 1965 Norway and the United Kingdom signed a bilateral delimitation treaty and this agreement constituted the first detailed provisions for action to be taken in the case of a petroleum deposit straddling cross border. This treaty was a voluntary agreement of a maritime border and acceptable cost and revenue sharing formula based on the volume of resources. This treaty provided a basis for three more cross border unitization agreements covering the Frigg, Stratfjord and Murchison Field signed in 1976, 1979 and 1979 respectively.

Norway is also a unique good example of managing Trans boundary petroleum resources by three neighboring states. This experience was demonstrated in the joint management of the Markham Field reserves. In 1965 the United Kingdom and the Netherlands signed a bilateral agreement to establish the boundaries of the Dutch continental shelf, when a petroleum reserve of approximately 700 cubic feet was discovered the licence was awarded to a Dutch company-Ultramar Exploration (Netherlands BV). The discovery was named Markham Field and jointly managed under the Markham agreement signed between the United Kingdom and Norway for unitization of petroleum resources straddling across the maritime borders. The United Kingdom’s health and safety authorities and their Dutch counterparts, the Straatstoezicht op de mijen, had unlimited access to all facilities and information related to the management of the resources. The UK and the Netherlands governments imposed taxes and shared profits as per their fiscal regimes and applicable double taxation conventions The Markham agreement provided a framework for successful development of the field and a possible template for any future unitization between three states

Norway has also taken a pragmatic framework agreement approach in resolving managing Trans boundary petroleum fields without involving distinct intergovernmental treaties. This approach was taken in 2005 by Norway and the United Kingdom in managing the Enoch & Balne Oil fields Norway’s focus has been on securing economic benefits for both states, with provisions made for possible development of resources with infrastructure located on the one side of the boundary. More examples of such approaches include the development of the Boa field which is mostly in Norway and the Playfair fields which are almost entirely in the United Kingdom. Since 2005 Norway has signed more treaties with Russia in the Barents Sea and thus excelled as a champion in managing off shore Trans boundary resources in contentious territories.

East Timor (Timor Leste) and Australia’s experience

In Asia-Timor Leste and Australia are good examples of joint management of Trans boundary petroleum resources. In 2002 East Timor and Australia signed the Timor Sea treaty between the two governments. This treaty enabled the joint development of petroleum resources in the maritime area located between East Timor and Australia. This area also known as the ‘Timor Gap’ had been controversially disputed and subjected to an earlier Timor Gap Treaty in 1989 between East Timor, Australia and Indonesia.

The Timor Sea treaty established a Joint Development Administration (JDA) and provides that Australia and East Timor shall jointly manage, facilitate, exploration, development and exploitation of the resources within the JDA for the benefit of the people of the two countries. The treaty has also provided an acceptable revenue formula whereby 90% of the revenues from the JDA would go to East Timor and 10% would belong to Australia.

The treaty resolved the long political impasse related to the management of the Sunrise and Troubadour petroleum reserves, also collectively referred to as the ‘Greater Sunrise’ which spanned across the Eastern boundaries of the new Joint Petroleum Development Authority (JPDA). The Sunrise and Troubadour deposits were unitized and an acceptable revenue sharing formula agreed. A joint management committee was established to oversee its implementation. To date the approach is a successful model of joint petroleum resource administration in Asia. Similar approaches have been taken by Qatar and United Arab Emirates, Saudi Arabi and Bahrain.

Nigeria and Sao Tome et Principe’s Experience

In cases where countries have longstanding territorial disputes, they can reach out for third parties or independent arbitration panels or international courts of justice to resolve or advice on the best alternative to manage the petroleum resources located in these areas. This approach is referred to as the third-party approach.

This was the approach taken by Nigeria and Sao Tome et Principe in Africa, to create a border upstream cooperation and Joint Development Zones (JDZ) through Unitisation of two major fields (Ikanga and Zafiro) between Nigeria and Equatoria Guinea. On this backdrop, the government of Sao Tome et Principe claimed an archipelago status under Article 46 of the United Nations Conventions of the Law of the Sea (UNCLOS) as based on the 200 miles Exclusive Economic Zone (EEZ) determined by a median line in the North East and the North West as the median line between Sao Tome and Nigeria. The Nigerian government based its claim on the Exclusive Economic Zones Act (CAP 116) and claimed an EZZ which overlapped with Sao Tome et Principe’s zone. The two countries agreed to resolve their differences by creating a Joint Development Zone in the area of overlap to enable exploitation and licensing to proceed. Both countries have since mutual benefited economically.

Relevancy of these Countries’ experience to Tanzania and East Africa’s trans boundary petroleum resources management

As a result of these experiences, unitisation is now a major compulsory feature in petroleum legislations of these countries. The United Kingdom Petroleum Act 1998 and the 1988 Petroleum (Production) (Seaward Areas) Regulations, the Nigerian Petroleum Act of 1969 and the 1969 Petroleum (Drilling and Production) laws impose a compulsory unitization. All licence holders or contractors have an obligatory requirement to agree on a unitization. They are obliged to cooperate if and when reservoirs straddling within or beyond national borders must be developed and it is within the national interests to secure efficient maximum recovery of petroleum. Resources and revenues are managed in agreed manner without losing national or international ownership and sovereignty.

Although the Nigeria and Sao Tome’s case was an arrangement between sovereign states, this approach is relevant to Tanzania, given the similarities of the issues involved. Zanzibar is an archipelago with a specific claim to territorial waters along its coastline. Mainland Tanzania’s 200 miles EEZ overlaps Zanzibar’s territory. Nigeria and Sao Tome’s approach could towards resolving Tanzania’s petroleum resources management challenge with Zanzibar.

These benchmarked examples indicate that geological constrains, territorial disputes, political and economic differences, constitutional limitations and international boundaries should never be a limiting factor to development of petroleum resources located or straddling from one territory to another. Tanzania and the wider East African region can draw alternative solutions to the current challenges facing management of trans boundary petroleum resources:

Possible alternative or supplementing solutions

  1. In Tanzania, within the current constitutional framework there could be a ‘Partial delegation’ of legal powers to Zanzibar to enter into agreements with oil companies (state and non-state actors) subject to the Union Constitution and the Union government’s Petroleum and fiscal management legislations
  2. Delimitation of temporary boundaries for oil and gas management purposes and earmarking specific petroleum blocks which could be legally assigned to Zanzibar’s control for revenue purposes
  1. Establish Joint Development Area (JDA) or Joint Development Zone (JDZ) arrangements modeled successful arrangements like Norway and United Kingdom, Timor Leste and Australia. Agree on unitization arrangements for licensed blocks straddling outside the JDA and develop a revenue sharing formula for managing resources from JDA and Trans boundary areas. Establish a joint petroleum revenue management committee for trans international boundary areas
  1. Develop East African guidelines for unitization and Joint Development Area Management and revenue sharing for Trans boundary petroleum resources.
  1. Either off the above approaches could be adapted in resolving the dispute between Kenya and Somalia

Benefits from these options

If resolved this could lead to peaceful co-existence and increased joint attraction of foreign investment into the areas

Increase investor confidence in East Africa and open up new avenues for investment and value creation in its Petroleum sector.

Unfreeze the current blocks which are closer to Zanzibar for licensing, exploration and development. These blocks have remained unlicensed for many years, despite expression of interests from petroleum companies to develop them

Provide avenues for possible cross border petroleum resources development and sharing of petroleum energy resources at low costs and thus reduce the acute shortages of electricity and over reliance on hydroelectricity for power generation in the region.

References

  • Beyene, Zewdineh and Wadley, Ian L.G. Common goods and the common good: Transboundary natural resources, principled cooperation, and the Nile Basin Initiative. Berkerley, UC Berkeley: Center for African studies 2004.(Breslauer Symposium on Natural Resources Issues in Africa😉 at pg4
  • Cameron P.D: Cross Border Unitisation in the North Sea (Vol. 5 OGEL 2007)
  • Denis V.Rodin: Offshore transboundary petroleum deposits: Cooperation as a customary obligation; Small Masters of Laws thesis in the Laws of the Sea; University of Tromso, Faculty of Law, Fall 2011
  • Perry A: Oil and Gas deposits at international boundaries-New ways for governments and oil and gas companies to handle an increasingly urgent problem (Vol. 5 OGEL 2007);  M.O Igiehon, Present International law on delimitation of the Continental shelf (Sweet & Maxwell 2006
  • Rod Chooramum; Notes to the Field: An English law perspective on the oil and Gas Market, August , 2014
  • Sustainable Development or Resource Cursed: Managing Timor Leste’s Petroleum Revenue, Chapter 4
  • URT: The National Natural Gas Policy, 2013
  • Zanzibar Oil, Gas win cools political heat; The East African Newspaper; http://www.lawteacher.net/free-law-essays/australian-law/joint-petroleum-developmet-area.php
  • http://www.theeastafrican.co.ke/news/Zanzibar-oil-gas-win-cools-political-heat/-/2558/2877248/-/view/printversion/-/1485oatz/-/index.html. Also read: Oil and gas: How EA Can become a key global player; http://www.theeastafrican.co.ke/oil-and-gas…
  • http://www.forbes.com/sites/christopherhelman/2014/01/08/the-10-biggest-oil-and-gas-discoveries-of-2013/ accessed on 19th May 2015 at 7:45 pm
Effects of Cyber Security on Human and Economic Security

New threats to peace and Security:  Extent to which new security threats of Cyber security have affected economic and human security in East Africa

By Moses Kulaba, Governance and economic analysis centre, Dar es Salaam-Tanzania

Cyber security or attacks by using highly sophisticated technology and cyber space to penetrate, modify, adulterate or alter existing ICT infrastructure to inflict significant, damage to a country, an installation, equipment, companies or individuals. According to NATO cyber insecurity is crippling of vital defence and military installations and capabilities to protect human security

Effects of Cyber Security on Human and Economic Security

From a military or defense security perspective, cyber security threat from the following angles or forms

  • Cyberterrorism is the disruptive use of information technology by terrorist groups to further their ideological or political agenda. This takes the form of attacks on networks, computer systems and telecommunication infrastructures.
  • Cyberwarfare involves nation-states using information technology to penetrate another nation’s networks to cause damage or disruption. In the U.S. and many other nations, cyberwarfare has been acknowledged as the fifth domain of warfare (following land, sea, air and space).
  • Cyberwarfare attacks are primarily executed by hackers who are well-trained in exploiting the intricacies of computer networks, and operate under the auspices and support of nation-states. Rather than “shutting down” a target’s key networks, a cyberwarfare attack may intrude into networks to compromise valuable data, degrade communications, impair such infrastructural services as transportation and medical services, or interrupt commerce.
  • Cyberespionage which is the practice of using information technology to obtain secret information without permission from its owners or holders. Cyberespionage is most often used to gain strategic, economic, political or military advantage, and is conducted using cracking techniques and malware.

In recent past cyber-attacks have become quite rampant. In 2008 the Estonian attack in which the entire Estonian Government agencies, financial institutions and broadcasters were jammed by Russian cyber attacker was a good example. In 2010 the reports of attacks on googles mails by Chinese hackers and Sony pictures were a clear reminder of the extent of the risk posed by Cyber security.

Cyber-attacks have capabilities to disrupt government systems, transport and communication infrastructure and defence capabilities.

However, from a human and economic security perspective, cyber insecurity has largely affected social and economic sectors. Cyber security has globalised or regionlaised organized crime. According to the UK government’s Cyber Security Breaches Survey 2017 found that the average cost of a cyber security breach for a large business was £19,600 and for a small to medium-sized business was £1,570. According to a CISCO Annual report on cyber security, over one third of organizations that experienced breach in 2016 reported loss of substantial customer opportunity and revenue loss in more than 20%

Effects of cybercrime of human and economic security in East Africa

Experts have described the East African digital economy as weak and vulnerable to multiple cyber attacks

“Essentially, in terms of cyber resilience, the Kenyan digital economy can be likened to a slow, plump gazelle stumbling through the ‘cyber savanah’’ in the full view of an agile, informed and hungry cyber predator, keen to sink their teeth into their sumptuous prize”

In 2016, African countries reportedly lost USD2bln in cyber-attacks. Remittance based economies, which depend on electronic wire transfers of money from its foreign sources and nationals living abroad via the international financial system were the worst hit

Effects on Financial systems

Financial transactions such as banking and money transfer services have been the largest targets affecting millions of people. In East Africa it was reported that Kenya was the worst affected with a total estimated of loss of USD 171Mln while Tanzania lost USD85million and Uganda lost USD 35million in its financial sector.

Tanzania’s cyber security report for 2016 warned of critical dangers facing the country. According to the report technology adoption is driving business innovation and growth in Tanzania, while at the same time, exposing the Country to new and emerging cyber security threats. Terrorists, spies, hackers, fraudsters are increasingly motivated to target Tanzania’s Information, Communication and Technology (ICT) infrastructure due to the value of information held within it, the report indicated.

One of the major risks was lack of awareness amongst technology users. According to the report over 1.6 million Internet Portals (IPs) were publicly accessible and over 138,000 network security events were reported.

Effects of exposure through interconnected and domestic gadgets

Cybercrime has reduced human security risk through exposure to interconnected things such as medical devices, smart TVs, cars and other gadgets. Research has found potential vulnerabilities in dozens of devices such as insulin pumps, and implantable defibrators. Hundreds of connected TVs are potentially vulnerable to click fraud, botnets, data, ransomware. Cybercriminals have developed mechanisms to remotely take control of personal gadgets such as remotely opened cars, personal computers.

Threat to privacy and confidentiality

There is a security risk of breach of confidentiality and personal privacy on vital confidential documents and personal data. As governments become digitalized through the drive for e-government, confidential government documents and personal details of its citizens are now more exposed to cybercrime. From passports, birth certificates, medical reports, pension numbers and personal IDs are now interlinked via the electronic networks

Costly policing and administration in cyber defence

Fighting cybercrime is very costly to police and enforcing cyber security diverts the already constrained government resources away from financing vital social services such as education and health. According to  cybersecurity readiness report very few governments and companies can afford to invest in highly sophisticated cyber security defence systems.  The Kenyan Cyber Security report highlighted that about 44% of financial institutions run on a paltry cyber security budget of USD1-1000 annually. About 33% of financial institutions in Kenya have spent nothing on all matters of cyber security.There are limited skills to manage and address it and keep ahead of cyber criminals, the report warns.

Regional attempts to counter and fight cybersecurity

Regional initiatives to combat cybercrime have been initiated through specialized units now established in the military and police forces of the East African states. However, they are still ill trained and under equipped to effectively contain the threats.

In conclusion, it is evident that the threats of piracy and cyber security has been increasing and pause a major threat to human and economic security of the region. Piracy and Cybercrime are highly organized global crimes with vast networks operating miles away. The weak counter measures and lack of adequate resources to counter these threats suggest that these will remain security threats to the region for longtime.

Indeed, given the increasing threat that cyber-crime has generated it is probable to suggest that future wars may/will not be fought on the battle fronts but in cyber space. Soldiers of the future will not be Generals commanding battalions and platoons of mobiles soldiers marching across battle fields.  The generals of the future will be technologically savy individuals sitting in high-tech offices and issuing commands to remote computers, gadgets and robots deployed to engage targets thousands of miles away.

 

Reference:

State fragility and conflicts

The Countries in the East African region are prone to varying degrees of state fragility and conflicts. The countries are defined by latent, perennial, intermittent and protracted conflicts. The causes and drivers of these conflicts are many and complex and include political and resource governance concerns, manipulation of ethnic, political and religious identities, mobilisation and manipulation of a largely unemployed youth force.

Even though the multi-party system established in many of the countries in the region since the 1990s has endured. Elections in the region are as much a ritual than a democratic process. There are widespread reports of bad electoral management and electoral fraud with none of the elections held during the past few years fully passing the test of free and fair.

Natural resource-based conflicts and the zealous appetite to control extractive resources and benefits have pushed Countries such as Sudan, the Democratic Republic of Congo and Somalia into war and conflicts. The prospects for petroleum resources occurring largely in border lying areas threaten further efforts for regional stability and co-existence.

Incumbent presidents have largely relied on state institutions and armed forces or rigged elections to remain in power and countries such as Rwanda, Burundi, Uganda, Djibouti, DRC and Eritrea have had constitutional changes to facilitate the extension of presidential term limits while Sudan and Tanzania are pushing for similar changes.

The region is faced by an ever-looming threat of terrorism.  New in this regard is the increased radicalisation and recruitment of women and children into the terror groups. An example of this is the Mombasa police station attack by 3 women in September 2016 and hence the importance of addressing gender dimensions in efforts to counter violent extremism.

With over 1000 ethnic groupings subscribing to a multitude of faiths of which Islam and Christianity are the largest, the region is one of great diversities. More often than not these diversities have been captured by ethnic, political and religious elite to destabilise social relations and drive conflicts in the region. Ethnic tensions and at times violence have been hallmarks of election campaigns in countries such as Kenya where elections are won on the basis of ethnic bargaining rather than due democratic practices.

  • UNECA: Building Trading capacities for Africa’s Transformation: A critical review  of Aid for Trade, UNECA, Addis ababa, 2013