Tragedy of Conflict, Economic Exclusion, and Meeting Public Economic Expectations in Times of Crisis: The Case of South Sudan

 

Authors: Boboya James Edimond,  Institute of Social Policy Research, South Sudan & Moses Kulaba, Governance and Economic Policy Centre

South Sudan continues to face profound economic and governance challenges rooted in prolonged conflict, institutional fragility, and structural economic exclusion. Despite abundant natural resources, particularly oil, the country has struggled to convert this wealth into broad-based economic development and improved social welfare. Persistent instability, weak public institutions, and economic mismanagement have exacerbated poverty and constrained the state’s capacity to meet public expectations for economic opportunity and effective service delivery.

This paper examines the interplay between conflict, economic exclusion, and public expectations during periods of crisis in South Sudan. Drawing on recent economic assessments and development literature, it argues that sustainable recovery requires comprehensive institutional reforms, economic diversification, and inclusive governance capable of addressing structural inequalities and restoring public trust.

Furthermore, the analysis contributes to ongoing regional debates on East African Community (EAC) national budget plans and the broader implications of the US–Israel–Iran war on energy and economic outlooks in the region. The conflict involving the United States, Israel, and Iran has caused major disruptions in global energy markets, including sharp rises in oil prices and risks to key chokepoints such as the Strait of Hormuz, which carries roughly 20% of the world’s oil supply (2026 Strait of Hormuz crisis). These external shocks underscore the need for prudent, timely resource allocation and resilient fiscal frameworks to support post‑conflict reconstruction and strengthen regional economic resilience.

  1. Introduction

South Sudan gained independence in 2011 amid widespread optimism about the prospects for peace, political stability, and economic transformation. However, the country soon experienced severe political instability and violent conflicts that undermined its development trajectory. The outbreak of civil war in 2013 and recurring localized conflicts since then have significantly weakened the economy, damaged infrastructure, and displaced millions of citizens.

Conflict has had devastating effects on economic activity, reducing agricultural production, disrupting trade networks, and discouraging private investment. As a result, economic growth has remained fragile and heavily dependent on oil revenues. The country’s economic structure is highly vulnerable to external shocks, particularly fluctuations in global oil prices and disruptions to export infrastructure.

Recent economic assessments indicate that South Sudan’s economy has experienced sustained decline over several consecutive years. The economy was projected to contract by approximately 30 % in the 2024/25 fiscal year, largely due to disruptions in oil production and declining export revenues (World Bank, 2025). Resources mobilized or provided by development partners for post-conflict reconstruction have often been misused, while the country’s narrow tax base further constrains domestic revenue generation. In addition, annual national budgets have frequently been delayed or left unpassed before the National Assembly, undermining fiscal planning and disrupting efforts toward post-conflict reconstruction and development.

At the same time, citizens continue to expect the government to deliver economic stability, employment opportunities, and improved public services. This growing mismatch between public expectations and state capacity has emerged as one of the defining governance challenges in South Sudan, exacerbating public dissatisfaction and weakening trust in state institutions.

Contribution to the Ongoing Debate: EAC Budgets and the Implications of the US, Isreal and Iran War.

The analysis presented in this paper also contributes to broader discussions in regional dialogues, such as webinars and policy forums, on the East African Community (EAC) national budget plans and the implications of the US-Israel-Iran war for the region’s energy and economic outlooks. The EAC’s collective capacity to plan and implement effective national budgets is increasingly strained by both internal fiscal weaknesses and external shocks. As of the 2023–24 fiscal year, multiple EAC member states — including South Sudan — have experienced significant budget shortfalls and delayed remittances to the regional budget, impeding the bloc’s ability to fund operations and coordinate shared developmental priorities (EAC Secretariat, 2025).

The recent Middle East conflict between the United States and Iran — especially disruptions around the Strait of Hormuz — has major implications for global energy markets and regional economic stability. Roughly 20% of the world’s oil and natural gas trade flows through this strait, so prolonged tensions have driven up global oil prices and heightened supply chain risks, with ripple effects across Africa, including East Africa (Arita, S., Chakravorty, R., Kim, J., Lwin, W. Y., & Steinbach, S., 2026).

For EAC economies that are net importers of energy, the surge in crude oil prices increases the cost of fuel, transportation, and basic commodities, complicating fiscal planning and national budget implementation. Analysts have already warned that East African countries may face rising inflationary pressures, depreciating currencies, and widened current account deficits as a result of these disruptions. This trend makes it more difficult for governments to allocate resources toward development priorities while managing macroeconomic stability.

These regional debates underscore the interconnectedness of domestic fiscal policies and global geopolitical dynamics. They highlight the importance of strengthening EAC fiscal frameworks and diversifying energy sources to mitigate the economic fallout from international conflicts — a theme that aligns closely with the findings of this study on South Sudan’s economic vulnerabilities and the broader institutional challenges facing fragile economies in East Africa.

  1. Conflict and Economic Disruption

Armed conflict has been one of the most significant obstacles to economic development in South Sudan. The destruction of infrastructure, displacement of populations, and disruption of productive activities have severely constrained economic growth. Research indicates that conflict has destroyed key infrastructure, including roads, bridges, hospitals, and schools, while also disrupting agricultural production and supply chains (Journal of Developing Country Studies, 2024; Acheampong & Enders, 2024). The displacement of more than 3.8 million people has weakened the labor force, reduced productivity across multiple sectors of the economy, and increased dependency on humanitarian assistance (Journal of Developing Country Studies, 2024; UNHCR, 2025).

Photo Credits: UN News

The economic losses associated with conflict are substantial. Multiple studies estimate that armed conflict has resulted in billions of dollars in economic losses due to reduced productivity, destruction of physical assets, and declining investment flows (Zhou & Hsiao, 2025; Akol, 2024). The destruction of economic infrastructure raises the cost of reconstruction and slows the pace of post‑conflict recovery, placing an additional burden on already fragile public finances (Collier et al., 2024).

Furthermore, persistent instability has significantly discouraged both domestic and foreign investment. In the absence of a stable political and security environment, businesses face heightened risks that constrain economic expansion and limit job creation. Post‑conflict countries such as South Sudan, characterized by weak governance structures and fragile economic fundamentals, are particularly vulnerable to external regional and global shocks (IMF, 2024). Disruptions in key sectors—such as energy and trade—have had severe consequences; for instance, interruptions in oil production have resulted in estimated revenue losses of approximately $7 million per day, further straining government finances and fiscal sustainability (World Bank, 2025b).

  1. Fiscal Policy, Taxation, and National Budgets

An examination of South Sudan’s fiscal framework reveals deep structural weaknesses in revenue generation and public financial management. Government revenue remains overwhelmingly dependent on oil, which accounts for around 90% of total government revenue and approximately 95% of exports (African Development Bank, 2023; IMF, 2024). This high dependence exposes the economy to external shocks, particularly fluctuations in global oil prices and regional disruptions affecting production and export routes.

Domestic revenue mobilization remains extremely limited. South Sudan’s tax-to-GDP ratio was estimated at approximately 4.1% in FY2022/23, with projections of about 5.8% in FY2023/24, making it one of the lowest in Sub-Saharan Africa (IMF, 2024). Moreover, non-oil revenues contribute less than 20% of the national budget, reflecting a narrow tax base and weak capacity for tax administration (World Bank, 2023). Key tax instruments such as value-added tax (VAT) contribute minimally, further highlighting structural inefficiencies in revenue collection.

On the expenditure side, fiscal data indicate volatility and weak budget credibility. Total government revenue declined from 34.7% of GDP in 2022/23 to about 26.5% in 2024/25, largely due to falling oil revenues, while expenditures remained relatively high at around 28–36% of GDP over the same period (IMF, 2024). This imbalance has contributed to recurring fiscal deficits and rising public debt, which is projected to reach approximately 48.6% of GDP in 2024/25 (IMF, 2024).

In addition to these structural constraints, persistent delays in the preparation and approval of national budgets have undermined fiscal discipline and effective public expenditure management. Weak transparency and governance challenges have further compounded the problem, with reports highlighting the mismanagement of significant public resources, including oil-backed financing arrangements (World Bank, 2025). These challenges disrupt service delivery, weaken development planning, and limit the government’s capacity to respond effectively to post-conflict reconstruction needs.

  1. Economic Exclusion and Persistent Poverty

Despite its natural resource wealth, South Sudan remains one of the poorest countries in the world. Poverty levels remain extremely high, reflecting deep structural inequalities and limited economic opportunities.

According to the South Sudan Poverty and Equity Assessment, approximately 92% of South Sudanese live below the national poverty line, while extreme poverty affects more than two-thirds of the population (World Bank, 2024). Poverty is particularly severe in rural areas, where most households depend on subsistence agriculture. Limited access to markets, poor infrastructure, climate shocks, and ongoing insecurity severely restrict agricultural productivity and household income (World Bank, 2024; ISS Africa, 2026).

Economic exclusion in South Sudan is also evident in limited access to education, healthcare, financial services, and formal employment opportunities (World Bank, 2025; Journal of Developing Country Studies, 2024). Weak institutions, governance challenges, and mismanagement of public resources have further constrained the equitable distribution of economic opportunities, entrenching inequality (World Bank, 2023; IMF, 2024).

Additionally, inequality in access to economic opportunities fuels social grievances and undermines national cohesion. Large segments of the population remain excluded from economic growth, increasing the risk of conflict and political instability (Radio Tamazuj, 2025; ISS Africa, 2026). External shocks—such as regional instability, disruptions in oil exports due to conflict in Sudan, or global geopolitical tensions affecting energy markets—further exacerbate vulnerability, limiting South Sudan’s capacity to achieve sustainable economic resilience (World Bank, 2025a; African Development Bank, 2023).

Addressing these challenges requires inclusive governance, strengthened institutions, and targeted investments in social services and rural development. Without these interventions, structural poverty, economic exclusion, and inequality are likely to persist, continuing to undermine South Sudan’s long-term development and stability (World Bank, 2024; ISS Africa, 2026).

  1. Public Expectations and Governance Challenges

While economic conditions remain difficult, public expectations for economic improvement continue to grow. Citizens expect the government to provide employment opportunities, infrastructure development, and access to essential services such as healthcare and education.

However, the government faces severe fiscal constraints that limit its ability to meet these expectations. South Sudan’s economy remains heavily dependent on oil revenues, which account for over 90 % of government revenue and the majority of export earnings (World Bank, 2021).

This heavy dependence on a single resource exposes the country to significant economic volatility. When oil production declines or prices fall, government revenues drop sharply, resulting in reduced public spending and delayed salary payments for public servants.

External shocks have also worsened economic conditions. For example, disruptions in oil export infrastructure linked to regional conflicts have led to significant fiscal crises and foreign exchange shortages. These challenges have contributed to inflation, food insecurity, and declining purchasing power among households (IMF, 2024).  The gap between public expectations and government capacity to deliver services, therefore, continues to widen.

Photo Credit: FAO

  1. Structural Economic Vulnerabilities

South Sudan’s economic challenges are deeply rooted in structural vulnerabilities that limit long-term development.

First, the economy remains highly dependent on oil exports. Oil revenues constitute the majority of government income, making the country vulnerable to fluctuations in global commodity markets and geopolitical disruptions.

Second, economic diversification remains limited. Key sectors such as agriculture, manufacturing, and services remain underdeveloped due to insecurity, poor infrastructure, and limited access to capital.

Third, the country faces recurring humanitarian crises driven by climate shocks, flooding, and food insecurity. These crises place additional pressure on government resources and undermine household resilience.

Fourth, institutional weaknesses limit effective economic governance. Weak public financial management systems, corruption, and limited administrative capacity reduce the effectiveness of development policies.

Addressing these structural challenges is essential for building a resilient and inclusive economy.

  1. Conflicts and Regional Integration

South Sudan has gradually increased its economic integration with regional and international partners, thereby expanding trade opportunities but heightening its vulnerability to external shocks. As a member of the East African Community (EAC), South Sudan is economically linked with neighboring countries such as Uganda, Kenya, Ethiopia, and Sudan. While regional integration enhances market access and trade flows, it also exposes the country to the spillover effects of regional instability.

The ongoing conflict in Sudan has had particularly severe consequences for South Sudan’s economy. Since South Sudan relies on pipelines that run through Sudan to export its oil, the conflict has disrupted production and transportation, leading to significant declines in oil export revenues. Given that oil accounts for the bulk of government income, these disruptions have constrained the government’s ability to finance its national budget and deliver essential public services.

Beyond the region, South Sudan has in recent years strengthened its economic and strategic ties with Middle Eastern countries, including the United Arab Emirates, Saudi Arabia, and Qatar, particularly in the energy and investment sectors. While these partnerships provide important sources of capital and market access, they also increase the country’s exposure to global geopolitical dynamics.

In this context, conflicts in the Middle East—especially tensions involving the United States and Iran—could have significant economic implications for South Sudan. Such conflicts may trigger volatility in global oil prices, disrupt energy markets, and affect investment flows. For a fragile, oil-dependent economy like South Sudan, these external shocks could undermine economic resilience, exacerbate fiscal pressures, and negatively influence the country’s economic outlook for 2026.

  1. Policy Pathways for Inclusive Economic Recovery and Outlook

Achieving sustainable economic recovery in South Sudan requires a coordinated approach that integrates peacebuilding, economic reforms, and institutional strengthening. The following policy pathways are critical:

Durable Peace and Political Stability – Ensuring lasting peace and political stability must remain a top priority. Without a secure environment, key economic activities such as trade, agriculture, and investment cannot thrive, and public confidence in the state will remain low. Stability provides the foundation for rebuilding infrastructure, attracting investment, and enabling productive livelihoods.

Economic Diversification – Reducing dependence on oil revenue is essential. Investments in agriculture, infrastructure, and small-scale enterprises can broaden the economic base, enhance resilience, and generate employment. Improving agricultural productivity, in particular, can strengthen food security and provide income opportunities for rural populations, who represent the majority of South Sudanese households.

Transparency and Accountability in Resource Management – Effective and transparent management of natural resources, especially oil revenues, is critical. Prudent resource allocation can finance development programs, expand public services, and reduce opportunities for corruption that undermine public trust and fiscal stability.

Human Capital Development – Investment in education, healthcare, and vocational training is necessary to cultivate a skilled and healthy workforce capable of supporting long-term economic transformation. Strengthening human capital also enhances innovation and productivity across all sectors of the economy.

Institutional and Public Financial Management Strengthening – Strengthening public institutions, including fiscal management systems, enhances government capacity to plan, implement, and monitor policies effectively. Strong institutions are necessary for efficient service delivery, improved budget execution, and the creation of an enabling environment for private sector development.

By pursuing these interconnected policy pathways, South Sudan can foster inclusive economic recovery, build resilience to internal and external shocks, and create conditions for sustainable development and long-term stability.

  1. Conclusion

South Sudan’s economic and governance challenges are deeply intertwined with its history of conflict, institutional fragility, and structural economic dependence on oil. Despite significant natural resource endowments, the country has struggled to translate its wealth into inclusive growth, poverty reduction, and effective public service delivery. Persistent instability, weak fiscal management, and limited domestic revenue mobilization have further constrained the state’s capacity to meet growing public expectations.

This paper has shown that the interplay between conflict, economic exclusion, and governance deficits continues to undermine development efforts. Declining oil revenues, a narrow tax base, and recurrent delays in national budget processes have weakened fiscal stability and disrupted post-conflict reconstruction. At the same time, increasing regional and global economic integration—through membership in the East African Community and expanding ties with countries such as United Arab Emirates and Saudi Arabia—has exposed South Sudan to external shocks, including the spillover effects of conflict in Sudan and geopolitical tensions in the Middle East.

Addressing these challenges requires a comprehensive and sustained reform agenda. Strengthening public institutions, improving transparency and accountability in resource management, and broadening the domestic tax base are critical steps toward enhancing state capacity. Equally important is the need for economic diversification to reduce overreliance on oil and build resilience against external shocks. Moreover, ensuring that scarce public resources are allocated efficiently, transparently, and in a timely manner will be essential for restoring public trust and supporting long-term development.

Ultimately, sustainable peace and economic recovery in South Sudan will depend on the government’s ability to align public expectations with institutional capacity, foster inclusive governance, and create an enabling environment for investment and growth. Without these reforms, the cycle of fragility, economic decline, and unmet expectations is likely to persist, undermining the country’s prospects for stability and prosperity.

 

  1. References

Acheampong, T., & Enders, W. (2024). Conflict, infrastructure loss, and economic trajectories in fragile states. Journal of Peace Economics and Development.

Akol, L. (2024). Economic cost of conflict in South Sudan: Infrastructure, productivity, and investment. African Journal of Development Studies.

African Development Bank. (2023). South Sudan economic outlook 2023. African Development Bank Group.

Collier, P., Hoeffler, A., & Söderbom, M. (2024). Post conflict reconstruction and the economics of rebuilding. Oxford University Press.

EAC Secretariat. (2025). East African Community budget and fiscal reports 2023–24. EAC Secretariat.

International Monetary Fund (IMF). (2024). South Sudan: Staff-monitored program review and economic outlook. IMF.

Journal of Developing Country Studies. (2024). The impact of armed conflict on economic growth and sustainability in South Sudan.

Radio Tamazuj. (2025). 11 million South Sudanese faced extreme poverty in 2024 – report. Retrieved from https://www.radiotamazuj.org

United Nations High Commissioner for Refugees (UNHCR). (2025). South Sudan displacement report 2025. UNHCR.

World Bank. (2021). South Sudan economic update: Pathways to sustainable food security. World Bank.

World Bank. (2023). South Sudan economic monitor: Enhancing domestic revenue mobilization. World Bank.

World Bank. (2024). South Sudan poverty and equity assessment. World Bank.

World Bank. (2025a). South Sudan economic monitor: A pathway to overcome the crisis. World Bank.

World Bank. (2025b). South Sudan economic update: Urgent reforms for stability and growth. World Bank.

Zhou, X., & Hsiao, C. (2025). Conflict-driven economic losses in fragile economies. Journal of Conflict and Development.

Arita, S., Chakravorty, R., Kim, J., Lwin, W. Y., & Steinbach, S. (2026). Strait of Hormuz Closure and Global Fertilizer Trade Disruptions. NDSU Agricultural Trade Monitor, 2026(3), 1–26.

Reuters. (2026). Egypt’s energy import bill more than doubles as global prices surge. Retrieved March 18, 2026, from https://www.reuters.com/business/energy/egypts-energy-import-bill-more-than-doubles-global-prices-surge-2026-03-18/?utm_source=chatgpt.com

ISS Africa. (2026). South Sudan country profile — Poverty and inequality analysis. Retrieved from https://futures.issafrica.org/geographic/countries/south-sudan/?utm_source=chatgpt.com

 

 

East Africa’s 2026/27 Budget plans and implications of US-Iran war on energy and economic outlook

Author: Moses Kulaba, Governance and Economic Policy Centre

In February the major East Africa Communities Countries (Uganda, Kenya, Tanzania, Rwanda and Burundi) presented to their budget expenditure framework papers and plans in which governments outlined their tax budget proposals and priorities for 2026/27 financial years. The plans are now tabled before their country’s respective parliamentary committees for scrutiny and deliberation.

This paper reflects on the East African Community (EAC) countries budget and tax proposals in the context of economic and tax justice, equity and fairness and the implications of the US, Israel and Iran war on East Africa’s economic outlook for 2026/27. The paper finds that economic benefits from increased budgetary expenditures have been uneven and the US, Israel and Iran war has adverse implications on the region’s economic performance

According to the framework papers, Kenya plans to spend Ksh 4.7 Trln, Uganda UGx78.24 Trln (U$ 21.78 bln) which is about 12.7% increase and Tanzania will spend a record Tsh61.9Trln representing 9.7 % increase compared to previous budget. The governments will raise from tax and non-tax measures with Tanzania focusing more on domestic tax mobilization strategies due to donor aid restraints arising after the violent 2025 general elections. The countries have laid out key expenditure priorities with Education, security, health, infrastructure ranging among the top.

Country

2025/26 budget

2026/27 plans

+/-

Key Priority areas

Uganda

UGX 72.4 Tln

($20 B)

UGX 78.24 Tln

($21.78 B)

+12.7%

Econ transformation, Infrastructure, Fiscal Strategy, Infrastructure (EACOP)

Kenya

Ksh 4.2 T to 4.3 T ( $32-33 Bln)

Ks4.7Tln

+173bln

Education, Security, Health and Agriculture

Tanzania

Tsh56.49 Trln ($21.7–$22.07 Bln)

Tsh 61.9 Trln

+9.7%

Energy, Health, Education, Domestic Revenue Mobilization

Rwanda

Rwf 6,952.1 Bln

 

(US$57.5 Mln)

–

– 27.8% (GDP)

Infrastructure (Bugesera Intl Airport, Recurrent expenditure cuts

Burundi

Bf 5.2 trln

( $1.77 billion).

–

–

Infrastructure, Agriculture, Social development projects

South Sudan

SSP 7.00 Trln

–

–

Wages, debt servicing, and infrastructure development.

Dem Republic Congo

Cf 49,846.8 bln ($17.5 bln to $17.6 bln)

–

–

Security, infrastructure, agriculture, and social services

 

Despite the grandeur of the plans, experiences from the past budgets and analysis of their implementation outcome and economic impacts on ordinary citizens shows that the devil lies in the details. Increasingly, the budgets and their tax plans have been not equitable, just and fair.

Over the last three years, the EAC Countries have increased budgetary expenditures, increased taxes and suppressed inflationary pressures but recorded unevenly distributed economic prosperity. Unemployment, income and food poverty are still persistent.

The World Bank reports poverty rates in East Africa are generally high, with significant variations by country and region. In 2022, approximately 39.8% of Kenya’s population lived below the national poverty line. Other estimates for 2022 indicate international poverty rates (at a day) of 42.3% for both Uganda and Rwanda, and 32.4% for Sudan, with rates often higher in rural, arid, and semi-arid areas. Data indicates that while some countries have made progress, substantial challenges remain, with high debt servicing and vulnerability to external shocks affecting poverty reduction efforts

For instance, according to a study by Kenya’s National Bureau of Statistics household food poverty rates have increased and about 65% families in Nairobi barely afford two meals a day over lack of money. As of 2024, approximately 70% of households in Nairobi experienced food insecurity, ranging from moderate to severe. The conditions are worsening with recent reports in 2025 indicated that the majority of residents can no longer afford three meals a day, and many are skipping meals or stopping cooking altogether due to high costs together[i] The situation is worse in the informal settlements where over 65% of Nairobi residents live (The Standard times)

Further reports indicate widening income inequality and impacts in Kenya. While around 25% of Nairobi households fall into the middle-income group, only a small minority (about 3.54% or 58,818 households) belong to the upper-income group, suggesting that for a large portion of the population, purchasing two proper meals daily is a financial challenges

The poverty rates in Tanzania and Uganda remain high and have remained stagnated or declined at very modest rates over the last five years.

Tanzania’s poverty rate remains high, with approximately 49% of the population living below the international extreme poverty line of $1.90 per day, a figure that remained stagnant between 2011/12 and 2018. While economic growth has been steady, about 27% of the population still lives below the national basic need’s poverty line. Poverty is heavily concentrated in rural areas, where over 57% of inhabitants are considered multidimensionally poor[i]

Uganda’s national poverty rate has shown improvement, declining to 16.1% in 2023/24 from 20.3% in 2019/20, according to the Uganda Bureau of Statistics. Despite this, a significant portion of the population remains vulnerable, with 57.2% experiencing multidimensional poverty based on 2016-2022 data. Rural areas, where poverty is concentrated, have seen slight improvements, with poor individuals decreasing to 5.3 million in 2023-2024

Graph showing Budget Expenditure growth, population, economic growth and Poverty reduction trends

Figure 1:  GEPC Research Data analysis

Despite what looks like well-structured priority sectors, the expanded budgetary expenditures are yet to be reflected in the pockets of ordinary citizens.

What is ideal budget and economic growth rates to cut poverty

Based on the World Bank and Africa Development bank projections, the national budget are ‘modest’ and insufficient to cut poverty. To put a dent in the poverty rates at the current population growth rates, the economic growth would need to be sustained between 7-10% for a period of about 5 years.  To achieve that level of sustained growth the budget expansion rates would require to consistently remain between 15-30%. The governments would require to target high fiscal multiplier efficiency.

With the current budget proposals, projected revenue collections and expenditure priorities characterized by significant portions of the national budgets spent on recurrent expenditure (salaries) and debt serving, achieving poverty reduction and economic justice targets in the EAC countries are unattainable.

Limitations to achieve ideal budget expansions and equitable economic growth for poverty reduction

Moreover, EAC countries’ economies and tax plans are still exposed to large external debts and vulnerable to internal and external shocks.  In 2023 Kenya and Uganda experienced violent tax protests. The DRC, Rwanda, Burundi and South Sudan are still affected by conflicts that have stagnated their economic progress.

Rwanda plans to on fiscal consolidation with a reduction from 28.7% of GDP in 2025/26 to 27.8% of GDP in 2026/27 and projected economic growth of approximately 7.1% to 7.5% in 2026, driven by strong performance in services, industry, and continued public investment. However, these plans and growth trajectories are negatively affected by an ongoing conflict in the Eastern DRC which has adverse effects on Rwanda mining and tourism sector.

The DRC and South Sudan struggled to pass their last budgets on time while Burundi has struggled to service a huge external debt burden. The country heavily relies on domestic revenue (including occasion tax hikes on imports and services) and borrowing from domestic banks due to fiscal constraints and lack of external support. The Burundi, DRC and South Sudan experience demonstrate the tragedy of conflict, economic exclusion and meeting public economic expectations in time of crisis.

The high poverty rates, persistent conflicts and failure or delayed passing of the national budgets in our conceptualization constitutes a breach in public expectations, exacerbates the distance between the state and the public, creates further civil apathy and failure to deliver economic outcomes, which can lead to a vicious cycle of poverty economic exclusion, more conflicts and eventual state collapse.

Implications of US, Israel and Iran war on budget and regional economic outlook

The ongoing US, Isreal and Iran war characterized with a spike in oil and gas prices and logistics supply chain disruptions in its first days, will affect energy outlook, may thwart economic growth projections and budget plans in the short and midterm. The impacts will be worse if the war continues for more than six months.

Photo credit: Los Angles Times

The EAC and Middle East economic nexus

The EAC economy has been increasingly integrated with the Middle East, particularly, the Gulf Cooperation Council (GCC) like the UAE and Saudi Arabia through a combination of high-volume trade, strategic infrastructure and financial aid. Since 2015 the Middle East has become to the top logistical hub and EAC’s export partners and The EAC is energy import reliant on the Middle East for petroleum products and Uganda and Kenya have signed fuel agreements to manage supply for potential disruptions. The GCC countries provide aid, infrastructure investment and currency stabilization facilities as was the case with the Kenya-UAE loan in 2025.

EAC countries have struck strategic partnerships beyond commerce. Gulf capital is present in infrastructure investments such as modernization of ports roads and sovereign investments focusing of mining, agriculture, forestry and tourism. This has increased aid dependence and debt exposure to gulf financing. Moreover, the over reliance on Gulf petroleum imports leaves EAC countries’ economies industrial production and transport sectors locked to the gulf and vulnerable to any shocks from the region.

Various models indicate there is a positive correlation of GDP elasticity with respect to world oil prices (i.e the ratio between percentage change in GDP and percentage change in World oil prices).  Prolonged high oil prices test global resilience, raising risks for growth, inflation and monetary policy. A 10% increase in oil prices, if sustained for most of the year, is estimated to reduce global economic output by approximately 0.2% and increase global inflation by about 0.4%. This acts as a tax on consumers and increases business production costs, slowing down growth in oil-importing economies.

An increase of 25% would lead to 0.5% loss in GDP and an increase by 50% will lead to 1% of loss of GDP. A doubling of oil prices can cause up to 14% of loss of economic outputs in countries over the years. In less developed countries like those in the EAC, where agriculture sector is the key contributor to GDP and the sector Is relatively less oil intensive due to less developed countries. However, the percentage of GDP loses in these countries are still higher compared to those of developed countries.

Based on these projections, we can the following risks and implications.

Key risks and implications

  1. Higher energy costs and disrupted logistics and generalized economic confidence shocks that will constitute meaningful drag on economic growth projects to slow down in Q4 of the 2025/26 budgets and Q1 and Q2 of the 2026/27 budgets and generally a gloomy economic outlook if the war continues for more than six months.
  1. Middle East export and import market disruptions affecting largely EAC’s agriculture sector, which is the major economic growth driver. The war has affected exports from the middle east of Ammonia and Sulphur, which are vital ingredients for the production of fertilizers, a vital product supporting the agricultural sector.
  1. Potential decline in aid, infrastructure investments and budget support from the Middle East as the GCC look inwards to finance their defence and war efforts. This will also trigger an aid squeeze from other regional blocks such as the EU as they focus on protecting Europe.
  1. Geopolitical pressures for realignment as the major contending powers the US and Isreal pressure EAC countries to choose sides, given some of their historical strategic and cultural relationships with Iran as a source of energy.
  1. The war represents in my theoretical construction a parody of the ‘Economic Big Boss and the Babies’, in international relations where the larger economic powers dictate the terms and the ‘babies’ deal with the negative consequences irrespective of their will, choice, location and contribution. In this construction of international relations one dominant state or group of states acting in consent and consort and through various means including state craft create an asymmetrical power relation with others analogous to a ‘Parent and baby relationship, where the stronger power exerts its spere of dominance beyond the physical and juristic territorial boundaries as recognized under international law, compelling the weaker states to act and respond to demands, desires, actions and geopolitical effects  of the bigger state.
  1. The world is yet to fully recover from the loss of markets and inflationary pressures the US global tariffs and were working towards realignment of new trading partners in the middle east. This war will add uncertainty to this economic quagmire. As the global economy snarls and slags, the EAC economies could follow too, albeit with levels and pace.
  2. The success of the US and its allies in the middle could increase appetite for it to attack elsewhere setting in motion a spiral of violence, war and economic disruptions around the world. It is widely believed that the US’s success in Venezuela and Isreal’s success in Palestine and Lebanon could have motivated its attack of Iran.

Key recommendations

Tax and budgetary actions.

Reclaim public trust and social contracts to serve via a just, fair and equitable taxes and redistributive budgetary policies.

To mitigate the unequitable distributed economic growth and achieve East Africa’s budget trajectory and economic outlook will require something beyond the traditional ‘invisible hand’ economic theory approach to correct.  The traditional approach suggests free markets naturally achieve optimal efficiency.

Keynesian economics fundamentally challenges the traditional “invisible hand” concept, arguing instead that economies can get stuck in prolonged recessions. Keynes believed the “hand” is not self-regulating during crises, necessitating active government intervention (fiscal policy and other interventions) to manage booms and busts or serious economic disruption.

Strategic recommendations

  • Pursue intra Africa regional trade so as to shelter against external shocks in the middle east
  • Increase investment in renewable energy sources to reduce over reliance from Middle East fossil petroleum
  • Pursue new geopolitical realignments to hedge against the potential fall out and of the middle east and other turbulent blocks

[i] World Bank Group: Poverty and Equity brief, Sub-Saharan Africa, Tanzania April, 2020 available at : https://databankfiles.worldbank.org/public/ddpext_download/poverty/33EF03BB-9722-4AE2-ABC7-AA2972D68AFE/Global_POVEQ_TZA.pdf#:~:text=Using%20the%20international%20extreme%20poverty%20rate%20of,people%20are%20considered%20poor%20along%20this%20line.

[i] The Standard Newspaper; Why majority of Nairobi residents can no longer afford to eat,  February, 08, 2025, available, at https://www.standardmedia.co.ke/national/article/2001511317/why-majority-of-nairobi-residents-can-no-longer-afford-to-eat

 

[ii] Apolo Rosabella, Strengthening food and nutrition security in Nairobi’s informal settlements, Africa Cities Research Consortium (ARC), February, 2024 available: https://www.african-cities.org/new-paper-strengthening-food-and-nutrition-security-in-nairobis-informal-settlements/#:~:text=New%20paper:%20Strengthening%20food%20and%20nutrition%20security%20in%20Nairobi’s%20informal%20settlements,-Feb%208%2C%202024&text=Since%20independence%2C%20Kenya%20has%20grappled,residents%20of%20low%2Dincome%20households.

 

INVITATION TO A WEBINAR ON ELECTORAL DEMOCRACY-ADDRESSING MONEYOCRACY VIOLENCE AND IMPUNITY IN EAST AND AFRICA GREAT LAKES REGION

You are invited to our next webinar on Elections and Democracy: Addressing the challenge of Moneyocracy, Violence and Impunity in East and Africa Great Lakes Region

As you may be aware the East and Africa Great Lakes region is going through another electoral cycle yet the region stands at a critical crossroads, where the promise of electoral democracy is being challenged and potentially eroded by a surge in moneyocracy, violence, shrinking civic space, and the manipulation of political and legal institutions. This webinar will expose the complex interplay of corruption, commercialization of politics, and state-sponsored repression that has transformed elections from peaceful contests into battlegrounds of titanic fear and exclusion.

Our distinguished Speakers will be:

  1. Mr Don Malish, Researcher, Human Rights Expert and Colosseum Member, Governance and Economic Policy Center

Mr Don Bosco Malish is a seasoned professional with over 20 years of experience in human rights, democracy promotion, and social justice. Before venturing into private practice, Don worked as a Senior Executive for the Open Society Foundations, where he  managed a substantial grant portfolio and supported initiatives focusing on governance, rule of law, and human rights across Eastern Africa, with a significant focus on South Sudan. He has a deep understanding of the local human rights, governance and elections contextual  challenges facing East Africa. Don is currently a distinguished independent researcher, consultant and Colosseum (Advisory Council) member of the Governance and Economic Policy Centre

  1. Mr Mulle Musau, Regional Coordinator Elections Observer Group (ELOG), Kenya

Mr Musau is an elections expert with over 20 years experience in electoral democracy, with special interest in Elections and Ethics in governance. He has been involved in Elections observation both domestic and international from 2007. Currently the national coordinator for the Elections Observation Group (ELOG) in Kenya and the regional coordinator for the East and Horn of Africa Election Observers Network (E-HORN).

  1. Deus Kibamba, Executive Director Tanzania Information Bureau & Jukwa la Katiba, Elections Expert, and Lecture in International Relations

Mr Kibamba is an experienced political and governance expert, researcher and analyst with over 20 years’ experience in international development. He trained in Political Science and Public Administration, with an international relations major. He has been actively involved in electoral processes in Tanzania and served as an international observer in a number of missions across Africa. His research interests have focused on the Constitutional aspects of the electoral democracy. He is the founding Director of Tanzania Information Bureau (TIB) and a Board member of Jukwaa la Katiba Tanzania, an independent organisation focusing on promoting constitutionalism and elections in Tanzania. Deus is currently a distinguished  lecturer in International Relations and Diplomacy at the Tanzania – Dr Salim Ahmed Salim Centre for Foreign Relations, Kurasini, Dar es Salaam. 

  1. Moses Kulaba, Executive Director Governance and Economic Policy Center, Moderator

Moses Kulaba is a political economist, Governance, policy and tax law expert, and trained as an economic diplomat with over 20 years of experience in the public and civil society sector.  Has researched and written on the subjects of  elections and governance, including the Ten Principles for free and fair elections in Tanzania. He is currently the Executive Director of Governance and Economic Policy Centre

Date: Friday, 29th August, 2025

Time:  15:00 (3PM) Nairobi Time, 14hrs (CAT), 12pm Lagos

Register in advance for this webinar via: https://us06web.zoom.us/meeting/register/A-yOjAcRStCEn2Y3U3B97Q


After registering, you will receive a confirmation email containing information about joining the meeting.

 

 

Webinar on Geopolitics of Critical Minerals and implications for Eastern and Southern Africa

Topic: An Analysis of the strategic gains and risks offered by the EU Strategic Partnership, Lobito Corridor and Minerals for Security deals on East and Southern Africa’s Critical Transition Minerals

The surging demand for minerals critical to green transition offers potential economic benefits for mineral rich countries however the dash to secure their supply chain has kicked off geopolitical interests, competition and realignments whose outcomes could have long lasting relationship with divergent unforeseen impacts.

With the Eastern and Southern Africa combined as a single economic bloc, the region has the highest concentration of critical green transition minerals such as cobalt, coltan, nickel, graphite, tungsten, tantalum, copper in the world. Yet the history of governance and management of the mineral sector has never yielded very positive dividends for mineral-rich countries in the region. Minerals have fueled conflicts in the DRC and Mozambique, Debt traps in Zambia, political patronage and environmental concerns in Zimbabwe and economic inequalities in South Africa and Botswana.

This webinar will provide an overview of the critical mineral wealth in Eastern and Southern Africa with a particular focus on the strategic gains and risks that geopolitical initiatives such as the EU Strategic Minerals Partnerships, the Lobito Corridor and emerging minerals for security deals offer. It is estimated that the mining industry needs to invest $1.7 trillion over the next 15 years to extract and supply enough metals for renewable energy and Africa possess almost half of these.   

The webinar will discuss the geostrategic machinations at play by superpowers such as the US, Europe, Russia and China in the context of the dash for control of critical minerals for the green transition and the current extractive governance challenges facing the region. While strategic alliances may not entirely be a bad idea, there are concerns over the underlying possible geopolitical, security and perceived neocolonial undertones that may come with these initiatives.

And how the historical socio-economic justice concerns of similar geopolitical jostling, security guarantees at the Berlin conference and hinterland to port initiatives contributed to the colonial exploitation of Africa’s resources for benefits elsewhere. Moreover, the mineral for security deals are tainted with opacity, designed with a biased potentially exploitative and a perceived neocolonial mindset aimed at rewarding the dominant superpower and the aggressor against the victim in exchange for its resource. The minerals for security deals are negotiated behind closed doors and their full terms are not availed neither to the public nor the citizens of the mineral rich country.

Amidst this mineral dash and possible geopolitical balkanization, it is feared that without strategic positioning, the Eastern and Southern Africa critical minerals rich countries could again miss out from this mineral boom.

Our expert speakers at this webinar will delve deeper into this topic, highlighting on the possible risks and benefits that the region can garner from these initiatives and measures the region can take so as to avert the risks and maximize benefits from these partnerships. This webinar is organized by the Governance and Economic Policy Centre in Collaboration with Botswana Watch Organisation. 

Our distinguished speakers will be

  1. Ketakandriana Rafitoson, Executive Director, Resource Justice Network (formerly PWYP): Key concerns for critical minerals Governance and our desired sustainable future. Dr Ketakandriana is a political scientist, researcher, activist, and human rights defender with distinguished career in anti-corruption, where she served as leader of Transparency International Chapter in Madagascar. Her work mainly focuses on issues of resource governance, anti-corruption, citizens’ participation, good governance and democracy.

 

  1. Adriano Nuvunga, Executive Director, Centre for Democracy and Human Rights (CDD), Mozambique: The Geopolitics of critical minerals, neocolonial extractivism and conflict. Prof Adriano Nuvunga is a Mozambican scholar, anti-corruption advocate and human rights defender. He is the director of the Center for Democracy and Human Rights (CDD), an organization that promotes democracy and protects human rights in Mozambique and Professor of professor of political science and governance at the Eduardo Mondlane University in Maputo. He has widely published on resource governance and violence in Mozambique’s Cabo Delgado province.

 

  1. Mr Robert Lestatsi, Executive Director, Botswana Watch Organisation; Assessing the Lobito corridor project and Africa’s desired benefits from critical mineral wealth. Robert Letsatsi is the Executive Director of Botswana Watch (BW), an organization focused on promoting transparency and accountability in Botswana. He is also involved with the PWYP coalition in Botswana and the UNCAC Coalition, an international anti-corruption network. Additionally, he has been involved in advocacy of mineral resource governance and training on human rights violations, in collaboration with Ditshwanelo – The Botswana Centre for Human Rights.
  1. Moses Kulaba, Executive Director, Governance and Economic Policy Centre, Moderator. Mr Moses Kulaba is a Governance and political economist, tax law expert and economic diplomat with more than 20 years of active service in international public, private and civil society sector.  Prior to joining GEPC he served as the East Africa Regional Manager for the Natural Resources Governance Institute, where he worked with various stakeholders including governments to advance governance of the extractive sector. Has served on the international board of the EITI and in consultancy roles for DFID , the EU and the UN on governance, extractives and peace processes in Eastern and Africa Great Lakes region.

 Date: 30th July, 2025

Time: 12pm EAT, 11 AM Gaborone (CAT) and 9 AM Lagos

Login:  https://us05web.zoom.us/j/84450912293?pwd=lwabYIwsvJ27A8bP0v8hVQpaUOaYQ3.1

Meeting ID: 844 5091 2293

Passcode: 7XFcHc

Assessing Implications of Trumps Tariffs on Intra East Africa’s Regional and International Trade

By Moses Kulaba, Governance and Economic Policy Centre

Effective 5th April 2025 (with a pause of 90 days) the US President Donald Trump slapped a global tariff of 10% on all exports to the US. The US tariffs has caused a lot of turbulence and uncertainty about the future of the WTO rules based global trade as we knew it. The future of EAC -US trade is unknown and during this period loses will be counted particularly in the agriculture, textiles, apparel and handcrafts sector. However, in the midst of turbulence, the EAC has an opportunity of re-inventing its intra-regional and international trade, and perhaps emerging stronger.  This policy brief analyses the implications of the US tariffs on EAC intra-regional trade and what options the member states can take.

Background on EAC -US Trade Relations and Trade Flows

The East African Community (EAC) and Sub-Saharan Africa generally have been major trading partners with the United States for decades and so far, the fastest growing markets in the world according to the International Monetary Fund.  The US has signed multiple trade agreements allowing smooth trade flows across the two regions, with the US enjoying an overwhelming trade surplus for decades. In 2008 the U.S. signed Trade and Investment Framework Agreements (TIFA) with the EAC regional economic block in 2008.

The purpose of the TIFA was to strengthen the United States-EAC trade and investment relationship, expand and diversify bilateral trade, and improve the climate for business between U.S. and East African firms. Earlier in 2000 the US had passed the African Growth Opportunity Act (AGOA), a trade preference program that allowed selected goods from EAC duty free market entrance into the United States. AGOA had helped expand and diversify African exports to the United States, while at the same time fostering an improved business environment in many African countries through the application of eligibility requirements.  In 2015, the U.S. Congress extended AGOA through 2025. 

According to the Office of US Trade Representative data the U.S. goods exports to East African Community in 2022 were $1.1 billion, up 2.0 percent ($22 million) from 2021 and up 15 percent from 2012. U.S. goods imports from East African Community totaled $1.3 billion in 2022, up 40.4 percent ($367 million) from 2021, and up 121 percent from 2012. The U.S. trade balance with East African Community shifted from a goods trade surplus of $211 million in 2021 to a goods trade deficit of $135 million in 2022[1].Although the US suffered a goods trade deficit in 2022, it has continued to enjoy trade surpluses with individual EAC member Countries as reported by the US trade Administration.

Table of US-EAC Trade flows and Surplus for 2023-2024

Country

Total Goods Trade with US 2024 (USD)

US Exports

(2024)

US Imports

(2024)

Surplus (2024)

% Increase in Surplus compared to 2023

Kenya

1.5Bln

782.5Mln

737.3Mln

45.2Mln

110 (454.6Mln)

Tanzania

778.1Mln

573.4Mln

204.7Mln

368.7Mln

45.8 (115.8Mln)

Uganda

238.9 Mln

106.3 Mln

132.6 Mln

26.3Mln

574.3 ($31.9Mln)

Rwanda

75.0Mln

44.8Mln

30.2Mln

14.5Mln

4,060 (($14.2Mln)

Democratic Republic of Congo

576.4Mln

253.3Mln

323.1Mln

69.8M

20.9 ($18.4 Mln)

Burundi

$10.4Mln

$6.6Mln

$3.7Mln

$2.9Mln

224.3 (5.2Mln)

South Sudan

$60.1Mln

$59.3 Mln

$0.8Mln

$58.5 Mln

16.0(8.1Mln)

Somalia

$51.6Mln

$49.1 Mln

$2.5 Mln

$46.6Mln

0

Source: Office of US Trade Representative data analyzed and presented by GEPC researcher

Over the years, through its trade diplomacy, the US had cemented long lasting relations paving way for other strategic economic, political and security relations, with the EAC member states including defense. With the new tariff wall, if not changed, this long-term relationship could be bound for a new trajectory.

Knock-on Effects of Tariffs

Tariffs have knock offs whose effects can trickle down the goods and services value chain in many ways, affecting both producers, exporters and consumers down the trade supply chain.

A tariff is a duty imposed by a national government, customs territory, or supranational union on imports of goods. Besides being a source of revenue, import duties can also be a form of regulation of foreign trade and policy that burden foreign products to encourage or safeguard domestic industry[1]. At their core, tariffs are simple: they raise the domestic price of imported goods. But their effects ripple through the economy in complex ways – altering prices, wages, exchange rates and trade patterns.

Simply put, a tariff is a tax on imported products. It creates a difference between the world price and the domestic price of a product. Tariffs raise the price of imported goods relative to domestic goods (good produced at home).  For example, if a US Tarif of 10% is applied on world price of coffee of USD200, the domestic price of coffee in the US market becomes USD 220 per kilogram. The government collects the difference of USD20 dollar as tariff revenue to finance other public expenditures.

Tariffs can also affect the world price of a product, particularly when they are imposed by a large economy. The logic is that higher domestic prices reduce domestic demand, which in turn lowers world demand, and thus world prices. In our example, the world price might fall to $150 after the tariff is imposed, resulting in a domestic price of $165. In this case, part of the tariff is effectively paid by foreign producers[2].

This cost-shifting creates incentives for large economies to unilaterally impose tariffs. However, this so-called optimal tariff argument overlooks the possibility of retaliation. If country A imposes tariffs on country B, country B has an incentive to respond in kind. The end result is a trade war that leaves both sides worse off[3].

With the current US tariffs, the prices of goods entering into the US market will increase by 10%. For example, the price of coffee will increase by 10% making it more expensive for Americans to afford. Similarly, the costs for other agricultural products, textiles and handcrafts will suffer the same fate. The resultant effect of this will be a low demand for these goods in the US markets affecting EAC farmers and exporters. We can further illustrate this with a simple of the effects of the tariffs on handicrafts from the EAC. 

Because of increased tariffs and a decline in demand for the Makonde carvings, the exporter of Makonde Carvings and paintings will buy less. The Makonde carver and painter in Mtwara and Mwenge will lose business and sell less. The transporter of Makonde carvings will have little business and therefore send a few trucks to collect and deliver the carvings to Dar es Salaam. The exporter will send a few containers and therefore the port handlers and clearing firms will have no business. The Makonde artist may completely close and ultimately the transporter and port handler may lay off staff. A similar experience can be the same for the Coffee producer in Uganda and Kenya, whose knock off effect of the US tariffs will trickle down the supply chain in a similar manner.

Tariffs in the Context of WTO and GATT rules

In the World Trade Organisation (WTO) rules-based system, when countries agree to open their markets for goods or services, they “bind” their commitments. A country can change its bindings, but only after negotiating with its trading partners, which could mean compensating them for loss of trade[1].

Under the WTO (GATTs, GAT and TRIPs agreements) international trade and commerce is run based on a rule-based system and principles. These include;

  1. Most-Favoured-Nation (MFN), which requires treating other people equally. Under the WTO agreements, countries cannot normally discriminate between their trading partners. Grant someone a special favour (such as a lower customs duty rate for one of their products) and you have to do the same for all other WTO members[2]
  2. National Treatment of foreigners and locals equally where by imported and locally-produced goods should be treated equally — at least after the foreign goods have entered the market. This also applies to services, trademarks, copyrights and patents. (Article 3 of GATT, Article 17 of GATS and Article 3 of TRIPS) although there can be some variations in applications depending on an existing arrangement such as a Regional Economic block or once a product, service or item of intellectual property has entered the market can be a subject to customs duty or any other applicable duties.
  3. National treatment only applies once a product, service or item of intellectual property has entered the market. Therefore, charging customs duty on an import is not a violation of national treatment even if locally-produced products are not charged an equivalent tax.
  4. Freer trade gradually through negotiations and reducing of trade barriers such customs duties (tariffs), import bans or quotas, selective restriction on quantities, bureaucracy and exchange rate policies.
  5. Predictability of trade through binding commitments and transparency. This encourages investment, job creation and consumers can enjoy the benefits of competition
  6. Promotion of fair competition, with an allowance of a limited. number of tariffs for limited protection, allowing thriving of domestic industry and protection against entry of harmful products.
  7. Generally, encouraging development and economic reforms aimed at increasing global trade flows and particularly allowing less developed countries to equally enjoy benefits of the global trade system.
    Tariffs as Tools for Trade Policy and Geopolitical Statecraft

    Tariffs are not universally banned from trade policy. Tariffs can be a useful tool for protecting domestic industries, generating revenue, and supporting economic development, especially in developing countries. They can equally be used as a foreign policy instrument to advance economic diplomatic ties between nations.

    According to the WTO, tariffs must not be used as weapon for trade distortion, carry the risk of increased costs for businesses and consumers, potentially stifling economic growth and competitiveness. However, the recent US Trump measures reorganize the rules on International Trade. Tariffs are now used as a political tool for advancing geopolitical and national security interests, including cajoling other trading partners and WTO member states into curving in to pressure aimed at achieving domestic political gains.

    There are contending views (including from the US Council on Foreign Relations) that according to the WTO rules, the US Trump tariffs are illegal, arbitrary, based on a wrong formular, not reciprocal, distortionary[1] and must be fought either at the WTO or through reciprocal measures taken by affected Countries. Poor application of tariffs can spark a contagion effect of tariffs wars across nations.

    Implications on EAC Trade and economic growth
    1. Rise in prices of EAC Export products in the US market by a commensurate percentage in response to the tariff charges unless the EAC exporters absorb or the US government cushions the consumers in someways
    2. Decline in export volumes EAC goods to the US by a commensurate percentage decline, depending on the tariff elasticity of the good affected by the US imposed tariffs
    3. Increase in import driven inflationary pressures in the EAC causing on the already current inflationary pressures in the EAC region
    4. Potential slow down in the regional economic growth in line with the IMF projected global economic slowdown of 2.8% in 2025 due to disruptions in global trade
    5. Shortage in supply of US dollars due to declining inflow from trade with the US. This could exert some depreciation of domestic currencies, as the dollar demand to purchase imports increases.
    6. Incentivize the rise in the use of Tariffs and blockades by countries in the region as tools for trade policy and coercion to achieve specific strategic interests, as countries mimic US behavior
    EAC Response options for Trade Creation and Diversion to new markets

    To date the EAC as a regional block has remained silent while its respective member states have decided to individually not to retaliate.  Uganda’s Ministry of Finance, clearly stated that it had taken a decision not to retaliate[2].  Similar statements were made by Kenya’s Ministry of Trade[3].

    Uganda’s trade volumes with the US were small and the US was a major beneficiary of this trade relationship, enjoying a goods trade surplus, while its nationals enjoyed cheap high quality agricultural exports such as coffee, tea, fruits and handcrafts from the EAC.

    The AGOA partnership agreement was bound to expire at the end of 2025 and the US and EAC were already on the road towards negotiating new trade arrangements, if AGOA was not extended. Moreover, some Countries such as Uganda, Burundi, South Sudan and Somalia were not eligible for AGOA in 2024 due to among others sanctions imposed by the US for various reasons (including conflicts, human and political rights violations) and were already searching for markets elsewhere.

    The EAC as a regional block was pushing for increased intra-regional trade. The East African Business Council, an apex body of businesses and companies, has always been concerned with low volumes of intra EAC trade as compared to other economic regions. 

    This has been widely linked to existence of tariff and non-tariff barriers, including stringent rules of origin, Stay of Applications which allows member states to charge or exempt different tariffs on some specific goods different from the Common External Tariff, differences in taxes such VAT, Income Taxes and Exercise duties. It was further concerned with the bilateral negotiations of trade deals with third parties. The East African Business Council (EABC) advocated and has been pushing the EAC to continue negotiating the EAC-EU Economic Partnership Agreements (EPA) and the EAC-UK EPA as a region to avoid creating mistrust and distortion of the EAC Common External Tariff (CET)[4]

    The new US tariffs therefore offer the EAC and Sub-Saharan Africa region with a window of an opportunity to disconnect itself from the US markets by deepening intra-regional trade, diversifying and diverting its trade to other regions such as Africa via Africa Continental Free Trade Area (AfCFTA), the EU, the Middle East and China.

    AFCTA offers flexible rules and unfettered free access to a market population of about 1.3 billion people and a combined GDP of approximately US$ 3.4 trillion[5]. The AfCFTA aims to eliminate trade barriers and boost intra-Africa trade. In particular, it is to advance trade in value-added production across all service sectors of the African Economy[6]. There are a lot of opportunities in the AfCFTA for the Private sector in the EAC as it offers a larger and diversified market for goods and services. According to President Museveni Uganda will now focus on African markets[7]

    The EU has been a major trading partner and EU trade in goods (imports and exports) with the EAC has risen steadily comparatively to 2007 volumes[8]  In 2023 the EU trade in goods and services with the EAC region amounted to EUR106Bln. The EU trade in services amounted to EUR 5.9bln. If compared to 2022 the EU trade in goods with the EAC region reached EUR 5.7bln while imports from the EAC were EUR4.9bln. Exports in services were valued at EUR3.0Bln compared to EUR2.9 bln imported from the EAC[9]. The major exports to the EU from the East African Community are mainly coffee, cut flowers, tea, tobacco, fish and vegetables. Imports from the EU into the region are dominated by machinery and mechanical appliances, equipment and parts, vehicles and pharmaceutical products[10].  Kenya and Tanzania were the leading EU trade partners.

    China is already a major trading partner with the EAC and had surpassed the EU and the US. In 2023, China was the largest source of imports for the East African Community (EAC), with imports valued at $11 billion. The EAC’s exports to China in the same year were valued at $15.8 billion. China is closely followed by the United Arab Emirates (UAE) at US$6.4 billion in 2023[11].

    From the statistics, the EAC already enjoys a trade surplus with China. Although there are concerns over unethical business conducts, including the risk of stifling industrial growth by flooding the EAC with cheap substandard goods, China remains a huge market of about 1billion people, it is the second largest economy in the world and the largest one in RCEP with a GDP of 16,325 billion USD in 2022 (World Bank, 2023).  Chinese demand for EAC products is enormous and projected to grow.

    The EAC also has an opportunity of benefiting from arbitrage practices, whereby producers from highly US tariffed countries set up business to produce, buy, sell or reroute their products via the EAC to take advantage of the tax and price differences. In this case highly taxed countries such as China and Lesotho would be interested in setting up business in EAC.  Kenya has already made a move with President Ruto’s visit to Beijing to attract Chinese businesses to set business in Nairobi.

    Recommendations

    For this to happen, the EAC and its member states will have to

    1. Diversify, Divert and Create trade. This happens when new or existing regional economic grouping (Free Trade Areas or Customs Unions) leads to creation of new trade that never existed before or leads to shifts in trade flows from efficient nonmember exporters to non-efficient member exporters among others due to preferential tariffs charged amongst member states.
    2. Invest in processing and industrial production of agricultural products and raw materials into finished products that can be sold or consumed locally and in the new markets
    3. Address existing tariffs and non-tariff barriers to trade such as VAT, Excise duties, income taxes, bureaucracy and infrastructure which have been an obstacle to intra-regional trade.
    4. Revive old economic partnerships with the EU and explore new partnerships with the EU, South America, Middle East and China
    5. Establish linkages between the farmers and manufacturer so as to create value and sustainable supply chains of quality products for the market
    6. Address political differences, instability and conflicts affecting cordial economic cooperation and free flow of goods across EAC and African borders.

     References 

    European Commission: Trade and Security available at https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/east-african-community-eac_en

    Ralph Ossa; Views of the Chief Economist, World Trade Organisation, available at: https://www.wto.org/english/blogs_e/ce_ralph_ossa_e/blog_ro_11apr25_e.htm accessed 14 April 2025

    The New Times (May 02, 2025) available at https://www.newtimes.co.rw/article/21152/news/africa/eabcs-adrian-raphael-njau-advocates-for-stronger-eac-market

    WTO; Principles of the Trading system available at: https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm#:~:text=In%20the%20WTO%2C%20when%20countries,the%20case%20in%20developing%20countries.

    [1] https://www.cfr.org/blog/five-things-know-about-trumps-tariffs

    [2] Mr Ramadhan Ggobi , Permanent Secretary for Treasury made these remarks while addressing a press conference at the Ministry of Finance

    [3] Mr Lee Kinyanjui, PS for Trade, Kenya in an Interview with  Citizen TV available on Citizen digital via https://www.citizen.digital/news/what-it-means-for-kenya-after-us-imposes-10-export-tariff-trade-cs-kinyanjui-n360379

    [4] https://www.newtimes.co.rw/article/21152/news/africa/eabcs-adrian-raphael-njau-advocates-for-stronger-eac-market

    [5] https://au-afcfta.org/about/

    [6] ibid

    [7] https://eastleighvoice.co.ke/african%20markets/140091/museveni-says-uganda-to-focus-on-african-markets-amid-us-tariff-hike

    [8] https://www.europarl.europa.eu/RegData/etudes/BRIE/2024/766228/EPRS_BRI(2024)766228_EN.pdf

    [9] ibid

    [10] https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/east-african-community-eac_en

    [11] https://www.eac.int/trade/79-sector/trade#:~:text=China%20is%20the%20dominant%20source,US%246.4%20billion%20in%2020

Webinar Series: Assessing Implications of Trumps Tariffs on Intra East Africa’s Regional and International Trade

The rules of world trade are being redefined. We are delighted to invite you to plug and join in as we explore and discuss this interesting topic on regional economic cooperation, trade and investment. 

The East African Community (EAC) and Sub-Saharan Africa generally have been major trading partners with the United States for decades and so far, the fastest growing markets in the world according to the International Monetary Fund.   Since 2001, the US has signed multiple trade agreements (including AGOA in 2001 and TIFA in 2008) allowing smooth trade flows across the two regions, with the US enjoying an overwhelming trade surplus for decades. Under AGOA EAC selected products had duty free access to US markets. US trade relations with EAC member states were booming.  For instance, in 2024 the US trade surplus with Rwanda increased more than 4000% compared to 2023.

Effective 5th April 2025 the US President Donald Trump slapped a global baseline tariff of 10% on all exports to the US. The US tariffs have caused a lot of turbulence and uncertainty about the future of the WTO rules based global trade as we know it. The future of EAC -US trade is unknown and during this period loses will be counted particularly in the agriculture, textiles, apparel and artifacts sector. However, in the midst of this turbulence, the EAC may have an opportunity of re-inventing its intra-regional and international trade, and perhaps emerging stronger by looking elsewhere. 

This webinar will enable stakeholders and the public understand the issues at play and the potentially new World Trade Order that we could moving towards. Expert speakers at this webinar will analyze the implications of the US tariffs on EAC intra-regional and international trade and what options the EAC block and member states can take.

The Governance and Economic Policy Centre (GEPC) is a regional governance and development policy organization, based in Tanzania, interested among others in promoting economic and fiscal governance, with a national and regional focus on East and Africa Great Lakes Region.

The webinar is organized as part of GEPC’s project on promoting regional economic cooperation, trade and investment implemented in collaboration with the Africa Economic Diplomatic Study Circle (AEDSC), a loose network of practicing professionals, students of economic diplomacy, international relations and development based on the African continent, working to promote Africa’s position in the global space.

Our distinguished speakers will be;

Ms McDowell Juko, Chairperson East Africa Business Network (EABN): Elsa Juko-McDowell, a native of Uganda, is a remarkable individual with a deep passion for people and business. Her journey began in 2015 when she joined the East Africa Chamber of Commerce (EACC), an 18-year organization devoted to fostering trade and investments between the United States and East Africa, currently known as the East Africa Business Network. owns multiple businesses, including real estate development, investments, and consulting ventures. Additionally, Elsa serves as a North Texas District Export Council member.  Can be reached via: info@eabn.co or chairman@eabn.co

Mr. Adrian Njau, Ag. Executive Director, East African Business Council: Adrian Njau is the Executive Director of the East African Business  Council (EABN), the apex advocacy body of private sector associations and corporates from the 7 East African Community (EAC) Partner States (Kenya, Democratic Republic of the Congo, Tanzania, Rwanda, Burundi, Uganda and South Sudan). Adrian holds a Master’s Degree in International Trade and a Bachelor’s Degree in Economics, both obtained from the University of Dar es Salaam. His academic background is complemented by professional certifications and specialized training in trade, investment, policy and regional integration from Switzerland, Singapore, and Sweden, among others. With over two decades of experience, Adrian has been instrumental in research and policy at the Chamber. Can be reached via: Email: info@eabc-online.com

Mr Robert Ssuna, International Trade and Tax Expert, Researcher and Consultant, Governance and Economic Policy Centre:  Robert is an Independent Consultant on Tax Trade and Investment. He is Chartered Economic Policy Analyst (CEPA), a Fellow of the Global Academy of Finance and Management with over 15 years of experience in economic policy analysis focusing on tax, trade, and investment at national, regional, and global levels. He is also a member of the Base Erosion Profit Shifting (BEPS) Monitoring Group. Prior to this, he served as a Supervisor Research Statistics and Policy Analysis in the Research and Planning Division of the Uganda Revenue Authority. Can be reached via: ssuunaster@gmail.com

Hon: Dr Abullah H Makame, Member of East Africa Legislative Assembly (EALA):  Dr Makame, is a distinguished member of the East African Legislative Assembly (EALA) based in Arusha, Tanzania, where he is a commissioner and a former Chairperson of the Standing Committee in Agriculture, Environment, Tourism and Natural Resources. Dr Makame has served in various senior capacities in both the Government of United Republic of Tanzania and Zanzibar; academically, his docorate is from Birmingham UK and MSc from Strathclyde – Scotland, he holds a Professional Certificate in International Trade from Adelaide and has published both locally and internationally. Dr Makame serves in various boards across the EAC region. Can be reached via email: abdullah.makame@gmail.com

Mr Moses Kulaba, Executive Director & Convenor, Governance and Economic Policy Centre: Mr Moses is a political economist, tax and economic diplomat with more than 20 years of active service in international public, private and civil society sector.  Prior to joining GEPC he served as the East Africa Regional Manager for the Natural Resources Governance Institute, where he worked with various stakeholders including governments to advance fiscal policies and governance of the extractive sector. Has served on the international board of the EITI and in consultancy roles for UN, DFID and the EU. Can be reached via : moses@gepc.or.tz or mkulaba2000@gmail.com

Webinar Date: Tuesday, 6th May, 2025

Time: 10:30AM-12:30 PM (Nairobi Time)/ 9:30AM (CAT)/ 7:30AM (GMT)

Online Participation via Google meet video link: https://meet.google.com/odd-ysgh-dtf

Tanzania’s Mining Investment Climate: Reforms that government should take to attract and retain new mining investors

According to the Ministry of Minerals, government stands ready to facilitate investor meetings and explore potential business ventures in Tanzania. However, investors operating under the current mining regime in Tanzania still face challenges which require a thorough regime review and fix, for the challenges to go.

Author:  Governance and Economic Policy Centre

Tanzania is endowed with a variety of mineral resources and has been successful in attracting large mining investments. However, over the past few years, this investment curve stagnated and has zigzaged out, as potential new investors stayed away in fear of a potentially unpredictable regulatory mining regime.  In order to attract and retain new large-scale projects, investors suggest, that pertinent reforms must be made.

This brief traces Tanzania’s mining history and from an investor perspective, shows how the country started losing the momentum and its share as a leading mining destination. It proposes some actions and reforms that could be made to reclaim its glory while at the same time achieving a win-win regime for sustainable mining and development.

Tanzania’s mining in a historical context

Mining and minerals trading has a long history in Tanzania, dating back to 18th century when Arab traders plied the Tanzanian coastal towns bringing spices from the Arabian gulf in exchange for gold, copper, iron and other minerals.  Records show that the German colonialists discovered gold in Geita and Sekenke (Singida) where the first gold mine was established in 1909.

In 1940 a Canadian Geologist Dr. John Williamson discovered the Mwadui Kimberlite pipe and established a diamond mine there.  After his death in 1958 his heirs sold the mine to De Beers (50%) and the British colonial government (50%).

In 1971 the government of Tanzania nationalised all mines.  The State Mining Corporation (STAMICO) took ownership of the Diamond mine and run it between 1974 to 1993 when years of ill maintenance took their toll to cause an urgent need of recapitalisation and equipment overhaul.  This need came at a time when the country was going through a tough economic situation that it was not possible to accommodate the need.  A decision was made to invite De Beers to the rescue. They agreed to recapitalise the company and in return acquired a 75% stake in the mine in 1994.  In 2009 DE Beers sold their 75% stake to Petra Diamonds.

Following economic troubles of the seventies, raising fuel prices, geopolitical tensions between ‘east and west’, the 1978/79 war between Tanzania and Uganda, low commodity prices for the country’s backbone agriculture produce (cotton, coffee & sisal) exports, the Tanzanian economy continued to deteriorate to the extent that the country was left with no other option but to embrace free market economic policies advocated by the Bretton Woods Institutions. 

With advice and guidance from the World Bank and IMF, Tanzania liberalised its mining sector and invited foreign investors.  This was during the 3rd phase government of H.E. Benjamin William Mkapa (RIP). The shift to free market economy and liberalised mining industry required new policies, laws and regulations.

New Mining Reforms and knock off effects

A Mineral Policy was formulated in 1997.  The policy gave way for private sector to take the lead in mineral exploration, development, mining, beneficiation and marketing.  Instead of being an active participant, the government would become the facilitator, the regulator and the administrator. This policy was complimented by the Mining Act 1998.

The Mineral Policy 1997 and accompanying Mining Act 1998 together with personal efforts by the late President Benjamin William Mkapa resulted in foreign mining investors in their multitudes flocking the country.  In a span of about eleven years (1998 – 2009) six large scale gold mines were opened.  These are:

  • Golden Pride Mine in 1998, owned by Resolute Mining Limited of Australia
  • Geita Gold Mine in 2000, owned by Anglogold Ashanti of South Africa
  • Bulyanhulu Gold Mine in 2001, owned by Barrick Gold of Canada
  • North Mara Gold Mine in 2002, owned by Sutton Resources of Canada and later the mine was acquired by Barrick Gold of Canada
  • Tulawaka Gold Mine in 2005, owned by Pangea Minerals – a wholly owned subsidiary of Barrick Gold of Canada
  • Buzwagi Gold Mine in 2009, owned by Barrick Gold

Despite the many benefits that the new mines brought, including improved balance of trade realised by increased gold exports, increased government revenue collection through import & employment taxes, the multiplier effect that was created by new business opportunities to local suppliers and contractors, there was still a public outcry that the country was not getting enough.

It deemed necessary to form various committees and task them with reviewing the country’s policy, law, regulations and public views on the mining industry and compare the findings to the practice in other African countries.  The aim was to improve the playing field to achieve a win-win situation.  Four committees were formed for the cause at different times between 2002 and 2009:

  • General (Rtd) Robert Mboma Committee in 2002
  • Kipokola Committee in 2004
  • Lau Masha Committee in 2008
  • Judge Mark Bomani (RIP) Committee in 2009

Observations and opinions collected from the various committees led to the formation of a new Mineral Policy in 2009 and enactment of the (new) Mining Act 2010.

Vision of the Mineral Policy 2009 was to attain an effective mineral sector that contributes significantly to the acceleration of socio-economic development of the country, through sustainable development and utilization of mineral resources by the year 2025.  This included attaining a GDP contribution of 10%.  Note that the GDP contribution of the mining sector was 2.7% in 2010 (BOT Annual Report June 2011). Focus of the Mineral Policy 2009 was to integrate mining with other sectors of the economy.

It’s interesting to note that:

  • After establishment of the Mining Act 2010 and its accompanying regulations, only one ‘medium scale’ gold mine was constructed – the New Luika Mine in 2012.
  • Thereafter, there have been a limited number of medium scale mines (smaller in size and production capacity than New Luika) which have been constructed, but not a single large scale mine has been built ever since.

Following the change of government in 2015, the Mining Act 2010 was further overhauled in 2017 and led to the current version of the act – Mining Act CAP 123 R.E. 2019.  This overhaul was complemented by two new acts:

  • The Natural Wealth and Resources (Permanent Sovereignty) Act, 2017
  • The Natural Wealth and Resources Contracts (Review and Renegotiation of Unconscionable Terms) Act, 2017

The Mining Act CAP 123 R.E. 2019 introduced new clauses which imposed more control of natural resources by the government.  It banned export of mineral concentrates and put more emphasis on local refining of extracted minerals.  It revoked retention licenses and introduced new clauses to govern local content and corporate social responsibility.  The intent was to see more participation of Tanzanians in management of the foreign owned mining companies and in the value chain of the mined minerals.  Instead of exporting raw minerals the companies were required to beneficiate locally before export. The Government was also enabled by the law to acquire at least 15% un-dilutable free carried interest in Mining Licenses and Special Mining Licenses.

Key takes from the new law on ‘permanent sovereignty’ were introduction of clauses which mandated for:

  • Arbitration of commercial disputes in local courts and using Tanzanian law
  • Review by Parliament of agreements entered on natural resources
  • Local beneficiation of mined minerals
  • Retention of earnings in local banks

The ‘review and renegotiation of unconscionable terms’ act gave mandate for the Parliament to review any agreement on natural resources previously entered by the government, to be reviewed and renegotiated if the terms entered appeared to be unconscionable.

In a 2017 commentary, titled: Tanzania Overhauls Mining Laws, Fines Investor US$190 Billion: Is Your Investment Protected?  the JonesDay, a leading commercial law firm wrote; ‘The new laws heighten the government’s role and power in investment contracts, increase the costs of foreign investment, and substantially reduce investment protections, including international arbitration. Investors should take immediate action to mitigate the risks associated with the Tanzanian government’s actions pertaining to the mining industry[1]. Despite current government reassurances, to date these fears have continued to revibrate among risk averse investors, who remain uncertain of Tanzania’s future investment climate. For these laws have never been repealed.

Factors driving mining investment decisions

To put matters in context, one crucial criterion that attracts mining investors to a country is rich geology that has a scientific potential to host high grade orebodies. Tanzania is among the African countries blessed with such geology.  But to attract mining investors rich geology cannot stand on its own.  Rich geology must be complemented by:

  1. A conducive business environment
  2. A stable fiscal/mining regime
  3. Security of tenure
  4. Political stability and peace in the country
  5. Skilled artisans
  6. Good infrastructure – roads, rails, power, etc.

Over the years until in the recent past the country managed to do well in the list above on items 4 to 6.  Items 1 to 3, however, have been a challenge.

 Wins and missed opportunity

When the first large scale mine was established in 1998 at Lusu ward, Nzega district, Tanzania had a challenging road, rail and power infrastructure.  Some important mining skills were lacking.  But the country was politically stable, mining companies owning Special Mining Licenses had their fiscal issues stabilised by the Mining Development Agreements (MDA) signed with the government, there was security of tenure and a good business environment.  Over time, good progress continued to be made in some areas, but there was deterioration of circumstances in other areas as noted by  investors. 

Frequent and unilateral changes to laws and regulations led to breach of mine development agreements (MDAs).  Some concessions given to investors through the signed Mine Development Agreements were not honoured by the Tanzania Revenue Authority because they were not gazetted, and despite requests from concerned investors the Ministry of Finance avoided gazetting the MDA’s.

Significant improvement and upgrade made to road and power infrastructure; and skills development was defeated by unnecessary red tape brought about by introduction of a multiplicity of regulators who appeared to be more focused in raising revenue through hefty fines rather than providing oversite and regulating the sector.

Security of tenure was put at risk by uncontrolled gold rushes and haphazard trespassing by unlicensed artisanal miners. Investors who had invested millions of US Dollars in green field exploration witnessed invasion of their tenements by unlicensed artisanal miners with no serious intervention by authorities to rescue the situation, allowing the invasions to be politically concluded at the demise of the investor.

In summary, the current mining industry in Tanzania has been a mixed grill of successes and failures. Despite the many ups and downs over the years, several ‘wins’ have been witnessed by the sector following revision of the Mining Act CAP 123 R.E. 2019 and enactment of the laws on sovereignty in natural resources and renegotiation of unconscionable terms on agreements entered by the government on natural resources:

  • Renegotiation of the Mining Development Agreement entered between the Government of Tanzania and Barrick Gold Corporation which led to Acquisition of a 15% un-dilutable free carried stake by the Government in Barrick Gold mining projects in Tanzania (Bulyanhulu & North Mara Gold Mines) and signing of a Framework Agreement between the Government and the company.
  • Acquisition of a 15% un-dilutable free carried stake by the Government of Tanzania in the Kabanga Nickel project (Tembo Nickel Corporation).
  • Acquisition by the Tanzanian Government of a 15% un-dilutable free carried stake in the Ecograph Epanko graphite project
  • Acquisition by the Tanzanian government of a 15% un-dilutable free carried stake in the Peak Resources Ngualla REE project (through Mamba Minerals)
  • Acquisition of a 15% un-dilutable free carried stake by the Government in the Strandline Resources Heavy Minerals Sands project through Nyati Resources
  • Acquisition by the government of a 15% un-dilutable free carried stake in the Evolution Energy Chilalo Graphite project through Kudu Graphite Limited
  • Acquisition of a 20% un-dilutable free carried government stake in the Perseus Mining Nyanzaga Gold Project through Sota Mining Ltd.
  • Increased royalty collections following increase of the royalty on gold to 6% from the previous 4%
  • Increased gold revenue collections through the introduction of 1% inspection fee on gold exports
  • Construction of 3 gold refineries in Mwanza, Geita and Dodoma which have not only facilitated purchase of refined gold by the Bank of Tanzania but have also created employment opportunities to Tanzanians.
  • Enforcement of local content regulations which have in turn facilitated the participation of Tanzanians in the mines supply chain.
  • Enforcement of new local content regulations have made it possible for several Tanzanians to take over senior management positions in foreign mining companies investing in Tanzania
  • Enforcement of new CSR regulations have enabled CSR projects to be managed in a fair and transparent manner, ensuring value for money of the projects.
  • Introduction of the online Mining Cadastre system has revolutionised the licensing process by modernising it. The ‘first come first served’ approach in license application is working fine and fairly.  So long as they have all the required supporting documents in soft / electronic form, applicants are now able to lodge license applications from wherever they are in the world. They just need to be connected to the internet.
  • Significant improvements in power generation and transmission capacity have enabled connection of major mines to the national electricity grid. It was heartwarming to witness connection of the Geita Gold Mine (Anglogold Ashanti) to the national power grid.  This event shall not only save the company millions of US Dollars in energy cost, but it will also increase Tanesco’s revenue.  The Geita mine used to consume about 8 million litres of diesel every month to generate electricity using a rented thermal plant.

But, have the country now achieved a win-win situation? How is this goal going to be realised?

In the business world the investors would always want to maximise their profits and governments would always want to maximise their tax and fees collections to support socioeconomic development.  An attractive and well researched mining regime that involved stakeholder participation in its making is the only one that will manage to at least strike a delicate balance between the profits anticipated by the investors and the taxes and fees anticipated by the Government.

Obstacles that Tanzania Mining investors face

Courtesy Photo: Tanzania Minerals Minister, Anthony Mavunde speaks to stakeholders in Dar es Salaam

According to the Ministry of Minerals, government stands ready to facilitate investor meetings and explore potential business ventures in Tanzania. This unwavering commitment to attracting foreign investment underscores the nation’s dedication to unlocking the full potential of its mining sector. Tanzania Mining industry is highly important since it accounts for a significant share of the country’s export revenues. The Government plans to have this sector contribute 10% of GDP by 2025.

However, investors operating under the current mining regime in Tanzania still face challenges which require a thorough regime review and fix, for the challenges to go.

  • Several advanced mining projects including the ones in Graphite, REE, Heavy Mineral Sands and Gold have continued to struggle in raising project finance due to some clauses in different laws governing the mining sector in relation to the ownership of won minerals as well as banking of mineral sales proceeds
  • Extended negotiations on the making of framework agreements have been one area that frustrates many investors whose projects have reached that stage in their development
  • If left the way they are, some local content procurement tendering procedures have the potential to cause costly delays during the construction phase of the advanced projects
  • If left as currently reads, some wording on Section 56 of the Income Tax Act CAP 332 R.E. 2006 will end up ‘taxing’ capital of exploration companies when shareholding changes. Triggering imposition of Section 56 will cause a 30% capital gain tax on a junior exploration company when part of whose shares are acquired by another company for the intent of capitalising the junior company.  It should be noted here that exploration companies are not operating mines and instead of making money they normally burn money trying to find a mineable mineral deposit.  Trying to tax a non-trading company is weird and unheard in the mining industry.  The only way we can generate new mines to replace closed ones is by promoting exploration – not discouraging, investors say
  • The Income Tax Act CAP 332 R.E. 2006 disallows deduction of Royalty costs when calculating taxable income of a mining entity. This is a concern because no company is allowed to export minerals unless it has paid Royalty, meaning that royalty is part and parcel of the costs incurred to generate revenue of the company and should therefore be an allowable deduction

The above listed are only a few issues of concern to mining investors and something that the Government needs to have another look about or even conduct a study to see their quantitative impact in discouraging mining investment in Tanzania and what will be the impact (pro or cons) if some of the clauses will be amended to reflect investor’s proposals.

Proposed remedial actions and reforms that government should take

 There is a raft of measures that government can take. These include;

  1. Asses the current investment climate with a view to determine whether the 2017 mining reforms achieved any significant dividend to the mining sector
  2. Re-examine the current laws, particularly those passed in 2016 and 2017 to see if there are any remaining clauses that may be of concern to the mining investors. Some changes were made , however government should evaluate and see if there are any areas that need further review, without losing the core purpose of securing maximum value for Tanzania.
  3. Re-evaluate Tanzania’s mineral geology and mining potential in the current context and future mining investments trends, with a view of keeping aligned and on course to attract and retain new large-scale investors
  4. The final approach would be to form yet another task force made of representatives who are experts in the field of mining business and mining taxation, from the government and the mining private sector, to mutually consult and come up with a proposal that would attain a level play field balancing the profit anticipation of the investors and the tax and fees anticipation of the Government.

Minerals will always be a finite resource. Value can only be derived from them when they are extracted from underground and used to the benefit of the country.

The opportunity is still there to exploit minerals in Tanzania for the fair benefit of both the Government of Tanzania (on behalf of its people) and the investors. With tweaks to some of the current mining laws, bolstered with stability and government confidence building measures, the Tanzania can recapture and retain its glory as the prime mining investment destination in Africa.

While contemplating on the next move, the government should also make a thorough assessment of mark-timing mining projects – public (like the Liganga iron ore and Mchuchuma coal) and private ones (like the Kabanga Nickel, Mkuju River Uranium and Nyanzaga Gold), to see how such projects can be fast tracked and brought to production stage. With the speed at which technology is developing in the world, Tanzania faces the big risk of having some of its mineral deposit being stranded.  The coal deposits at Mchuchuma are faced with the highest risk with the current push for the world to go green and stop the use of fossil fuels.

With determination and the right people and policies at the forefront, the government can profitably and timely exploit the country’s minerals for the social economic development of its people.

[1] https://www.jonesday.com/en/insights/2017/08/tanzania-overhauls-mining-laws-fines-investor-us190-billion-is-your-investment-protected

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

How EAC can benefit from its Critical or Transitional Minerals

The EAC has vast deposits of minerals critical to driving technology to support the green industrial revolution and yet the region lacks a proper framework to govern and maximize benefit from this mineral potential.  Our analysis shows that all is not lost. There is still an opportunity for the EAC to reorganize and take a share from the increasing critical or transitional minerals demand.

By Moses Kulaba, Governance and Economic Policy Center

@critical minerals @mineralsgovernance @eac 

What is the EAC’s regional problem?

Critical or transitional minerals are loosely defined as mineral commodities that have important uses to industrial technology to support the transition to a clean energy future, have no viable substitutes, yet face potential disruption in supply. These minerals include (but limited to); Graphite, Coltan, Nickel, Tungsten, Tantalum, Tin, Lithium, Manganese, Magnesium, palladium, Platinum, Beryllium, copper, fluorspar, Holmium Niobium, Rhodium, Titanium, Zinc etc. The EAC has vast deposits of some these and yet the region lacks a proper framework to govern and maximize benefit from this mineral potential.

Minerals as a national resource vs regional resource

The issue of mineral is politically sensitive. It lies at the intersection of national pride and sovereignty. Minerals are considered as a national resource whose value cannot be discussed or shared at regional level. Most countries have chosen to address mineral issues at a national level, carefully safeguarding what they consider their national interests.

Unfortunately, by taking this route, EAC mineral rich countries have exposed themselves to weaker negotiation power, and fallen easy prey to the divide and rule game played by some quick profit accumulation seeking multinational mining companies.  These mining companies take on each country as an independent jurisdiction, setting each up for competition against the other and demanding exorbitant favorable terms to invest.  The net effect is that EAC mineral rich countries have weaker negotiating powers and signed off bad deals. It is perhaps for this reasons that the EAC has selected to focus on protecting aquatic and terrestrial ecosystems such as forests and mountains in shared areas.

Raging political instability and counter accusations for harboring insurgents.  East Africa’s mineral rich regions face raging political instability, with each member states accusing the other of supporting and harboring hostile insurgent’s, violation territorial sovereignty and plundering of the abundant mineral resources.  For example, the DRC accuses Rwanda of supporting the M23 in Eastern Congo while Rwanda has constantly accused the DRC of harboring the FDRL. Similarly, Uganda’s Ailed Democratic Forces (ADF) rebels have found refuge in the DRC.  Burundi accuses Rwanda of supporting hostile rebel groups against the Burundi government. As a consequence, EAC’s mineral rich regions have failed to secure maximum economic benefits from its mineral wealth. Efforts to jointly pacify the region through a military intervention by the East Africa Regional Standby Force failed miserably with the force withdrawn at the end of 2023.

Failure to curb cross border smuggling and illicit minerals trade.  The UNCTAD data from COMTRADE and other online sources show a big difference between reported mineral exports and imports data from receiving countries. For example, in 2021 the DRC reported exporting a net weight of cobalt of 898,869 kg valued at USD 3,277,615 while China reported importing a net weight of 190032 kg valued at valued at USD92,065, 332 in the same period. The difference between the reported export value by the DRC and the reported import value by China was a whooping USD 88,784,717. There are large disparities between the DRC’s minerals trade data with Dubai and similarly Kenya’s mineral trade data with Dubai.

Yet, the vice has continued unabated. The recent arrests of fake gold traders in Nairobi’s upscale Kileleshwa suburb confirms that illicit mineral business is rife in the region. Illicit minerals are crossing borders undocumented, with cartels exploiting the weaknesses in the border control mechanisms to make shoddy deals worth millions of dollars. The arrested illegal mineral traders had fake Uganda Revenue Authority (URA) documents and stamps showing that Uganda was the source country. There are reports that DRC’s gold and coltan is smuggled through Rwanda and Uganda. Rwanda , a fairly none rich mineral country is a large mineral exporter. According to government reports, Rwanda’s annual mineral export earnings in 2023 was USD1.1billion reflecting a 43% increase from USD772bln in 2022. Clearly illegal trade is denying the EAC millions of dollars in economic benefits.

Lack of regional harmonization of the extractive sector regulatory framework. There were attempts to develop a model minerals legislation but all these efforts suffered a silent death. As expressed by one of the EAC members of parliament, Arusha has become a cemetery of good policy intentions. Good at expressing desire and slow at action and implementation.

Poor geological survey data, compared to superior data sets in possession of mineral companies. This has often tilted the negotiation power balance in favor of the companies, leading to signing off poor deals by mineral rich host countries.

What opportunities exist?

 Maximizing on current EAC partners trade in minerals and mineral based products.

According to EAC regional statistics, the trade by EAC partner states in minerals fuels, mineral oils, products of their distillation, bituminous substances and mineral waxes were the most traded with a value of USD810.7million dollars in 2022. This was followed by trade in natural or cultural pearls, precious or semi-precious stones, precious metals valued at USD588.3million. Trade in nuclear reactors, boilers, machinery and mechanical appliances thereof ranked third with a value of USD238million[1]

This therefore shows there are a raw material and there is a market for mineral based products even within the EAC.  Scaled value addition and intra trade in minerals and mineral based products to serve the existing demand can significantly boost internal regional industrialization, create jobs and economic growth

Leveraging on current and future global critical/transitional minerals demand

With a regional approach, the EAC could benefit from the rapidly expanding demand and prices for green transitional minerals. Since 2020 the global commodity prices for Nickel, Cobalt, Coltan, Lithium and Copper has been on the rise. According industry experts, such as Equity Group’s CEO, Dr James Mwangi, the demand for these minerals can only go up, and prices can only go up because of their limited supply versus the global targets to reduce emissions by 2030. It is for this reason that global consumers such as China, Australia are in the rush to secure supply chains all over the World.  Tech players such as Tesla’s Boss, Elon Musk have equally explored possibilities to establish plants in the DRC and Tanzania so as to secure the raw materials and add value at source. So far, neither the EAC nor its member states have capitalized on these interests to develop a regional road map for investments into the green or transitional minerals subsector. Elon Musk’s investment plans have not materialized.

Use critical/transitional minerals demand to forge new strategic economic relationship

According to the Carnegie foundation, the combination of key mineral endowments in African countries and U.S. objectives to reorient clean energy supply chains away from competitors like China can serve as the foundation for a new economic and strategic relationship. In 2022 the US announced its desire to re-establish a new relationship with Africa driven by trade and investment. The EAC can use its abundant critical or transitional minerals potential to negotiate new long-term relationships based on mutual economic benefits away from the traditional donor recipient approach.

Attracting investments in Energy Sector

The EAC has large opportunity for investment into its renewable energy sector. Uranium, a key fuel in nuclear plants and nuclear fission, is found in eight locations in the South Kivu and Katanga provinces in the south of DRC. Tanzania and Uganda have large deposits of Uranium. These clean energy minerals are also backed with hydropower potential of the giant inga dam and Kenya’s geothermal potential.

The EAC commits to development of the energy sector covering both renewable and non-renewable energy sources. This is aimed at facilitating the broader EAC objectives of attracting investments, competitiveness and trade for mutual benefit. Despite this, there has not been joint EAC investment attraction drive purposed towards its regional power potential.  The regional plans to develop the giant inga dam as a flagship Agenda 2023 project contributing to the towards East Africa’s power pool have remained stagnant.

What EAC member states can do

  • Abandon limited nationalistic views and pursue large economic interests, from a regional lens
  • Conduct regional mapping and improve mineral geodata sets
  • Rekindle and accomplish plans to develop regional frameworks for mineral governance
  • Facilitate regional investment campaigns profiling critical minerals and clean energy sources as tier one commodities available for investment for the EAC
  • Stop the guns and think development

What would be the benefits of acting as an EAC region

  1. Joint investment promotions and attraction of the best investors
  2. Increased negotiation power and leverage for better deals
  3. Expanded regional value additional chains and industrial projects driven by large economies of scale. According to global statistics the DRC was the largest cobalt reserve (about 3.6million metric tons yet China was the largest processor(85Mt)
  4. Increased cooperation and opportunities for lasting peace
  5. Expanded economic opportunity and benefit for citizens.

 

[1] https://eac.opendataforafrica.org/

Evaluating East Africa’s economic trends and outlook 2024: What should EAC governments do to reduce further hardships?

The East Africa Community is so far the largest economic block, with 7 members states with a vast territory straddling from the Indian ocean coast to the Atlantic Coast, with a staggering population of estimated 283.7 million citizens, 4.8 million square kilometers of land area and a combined Gross Domestic Product of US$ 305.3 billion[1], the EAC region is a big silent economic giant.  As of November, the UNDP estimated the EAC had 489,766,467 million people (6% of the total world population)[2], making it one of the fastest growing regional economic blocs in the world and number 1 in Africa among subregions ranked by population. Despite this potential, the region faces multiple economic and political setbacks.

In 2023, the EAC faced significant economic meltdown, with depreciating currencies, rising costs of living and political unrests, tainting the prospects for 2024. The rising cost of fuel, high costs of transportation and production, exerted high pressure on the cost of living, with inflation hoovering above 6% and reduced the region’s economic growth to around to about 3.3% in 2023. Already, the tight economic hardship has caused general anxiety across the East Africa region and social-political unrests in some countries such as Kenya.  Governments have experienced a crunch on revenue collections and significant reductions in external aid. They have resorted increasing taxation to shelter the governments against adverse effects of depreciating shilling against the dollar and heavy costs of borrowing which have surged over the past one year.

The latest World Economic Outlook report released in October predicts that the world’s economy will remain on a downward trajectory for the rest of 2023 and 2024, with the rate of growth decelerating to 2.9 percent next year, from this year’s 3.0 percent. Although the World Bank has predicted a positive outlook for East Africa, with a projected growth of 5.7%, amongst ordinary citizens, life is difficult and questions are everywhere. Where have governments gone wrong.

The purpose of this webinar is to facilitate public discussion assessing the current economic trend and government economic performance, with a view of influencing policy priorities, and practical economic choices that governments should make now to cushion its citizen against the rising cost of living and future hardships in 2024.  During this webinar our experts will paint an economic slate of the region and the extent to which socio-economic interventions such the Parish Development Model in Uganda and heavy taxation, can be a solution to the current and future economic quagmire facing the region. Most significantly, they will try to answer whether Kenya is headed to lose its economic mantra and Tanzania could emerge as new economic giant in the region

Expert Speakers

Dr Kasirye Ibrahim, Executive Director, Economic Policy Research Centre (EPRC), Makerere University, Kampala: Uganda’s experience: Are government social interventions such as PDM working to shelter the poor and vulnerable against poverty?

Expert perspectives on Uganda’s economy, the government interventions through projects such as the PDM and a quick glimpse of what 2024 could look like and what practical measures the government should take to avert the increasing economic hardships.

 

Mr Kwame Owino, Chief Executive Officer, Institute of Economic Affairs (IEA), Kenya: Can taxation be a solution and should we expect more taxes moving forward?

Perspectives on Kenya’s economy, the government’s economic hardship interventions and a quick glimpse of what 2024 could look like. With a depreciating shilling, dwindling FDI and choking debt are we likely to see more taxation in Kenya and this gradually snowballing across East Africa? Is there a significant risk that Kenya is or could fall from its pedestal as a major economic hub in the near future?  What practical measures should the government take to avert the increasing economic hardships across the country and the East African region.

Dr Mugisha Rweyemamu, Research Fellow, Economic Social Research Foundation, ESRF-Tanzania: Could Tanzania overtake its regional peers as the new regional economic giant?

Expert perspectives on Tanzania’s economy, the government’s economic hardship interventions and a quick glimpse of what 2024 could look like. With major strides made in attracting tourism, FDI and having a significant cache of valuable Minerals such as gold and green or critical minerals such as Nickel, Tungsten etc., could Tanzania overtake its East African peers to become a major economic hub in the near future?  What practical measures should the government take to avert the increasing economic hardships across the country and the East African region.

Hon: Zittto Kabwe, Economist and President of AcT-Wazalendo Political Party, Tanzania:  What is totally wrong-Could we expect economic-political unrest amongst the youth-What should political actors do to avert a near economic catastrophe and social uprising (Azania Spring) similar to the famous Arab Spring. Is an economic inspired Azania Spring inevitable if things don’t change?

Professional perspectives on the current economic hardships and what governments could do to avert further hardships in 2024. What are governments not getting politically or fundamentally right. In some countries such as Kenya we have seen some socio-political unrests over economic times, are we likely to see this ‘Azania economic springs’ in more countries in 2024?

Moses Kulaba, Convener, Governance and Economic Policy Centre

Can the EAC escape the current global economic meltdown, evade social-economic disruptions to remain soaring above its peers as the strongest economic subregion in Africa. What political-economic choices will make it maintain a comparative and competitive advantage against the tide

 

 

 Date: Thursday, 30th November, 2023

Time:  11AM-12:30 PM EAT

Registration and participation link: https://zoom.us/j/94699182519 

Meeting ID: 946 9918 2519

Passcode:  yJC673

 

[1] https://www.eac.int/overview-of-eac

[2] https://www.worldometers.info/world-population/eastern-africa-population/