Could DRC joining the EA Community provide the spark that triggers an economic take-off?

The diplomatic blitz following the application of the Democratic Republic of Congo (DRC) to join the East African Community (EAC) might have surprised many. There is a palpable sense of camaraderie between President Felix Tshisekedi and his regional counterparts – Uhuru Muigai Kenyatta of Kenya, Tanzania’s John Pombe Magufuli, and Paul Kagame of Rwanda.

Any other country applying to join a regional economic community (REC) would have probably gone unnoticed. But not in this case; DR Congo (roughly the size of Kenya, Uganda and Tanzania combined) joining Kenya, Uganda, Tanzania, South Sudan, Rwanda and Burundi is certainly a game changer as reported in The East African. The significance of DRC joining one of the most dynamic regional blocs was captured in the application letter sent to the current chair of EAC, President Kagame, which read in part:

“This request follows the ever-increasing trade between the economic players of the Democratic Republic of the Congo and those of the states of the Community”.

It is precisely on trade that President Tshisekedi has his finger on the pulse. As recent analysis of regional trade ties suggests, there is huge potential for growth in intra-African trade with the EAC scoring the highest in trade integration compared with the Southern Africa Development Community, Economic Community of West Africa States, and the Arab Maghreb Union.

Another promising area is productive integration, where EAC also leads the pack. According to Bloomberg Economics, sub-regional integration is more likely to deliver gains with the East African Community. It might be tempting to go to town about the many challenges facing the region, such as security and infrastructure. But a hedonic approach will be needed to realise the enormous potential that the region has.

It has long been observed that the counties of the region have untapped agricultural potential and natural resources, and a labour endowment that is trained, relatively inexpensive and well-positioned to compete globally. Could DRC joining the EA Community provide the much-awaited spark that finally sets the region alight for economic take-off?

Tit-for-Tat in International Trade is a Zero Sum Game

The global trade war is intensifying with every passing day. And it is making markets jittery.

While the China-US spat is the most discussed in public media, there is simmering tensions, if not fully blown trade wars, between US and EU, Japan and US, and now India and the US. According to Reuters, India announced it will impose tariffs (some as high as 70%) from the 16th June 2019 on 28 US products, including almonds and apples, in retaliation to Washington's refusal to exempt Delhi from higher taxes on steel and aluminum imports.

These spasms in international trade couldn't have come at a worse time. The global economic outlook doesn't look great with most projections pointing to a slump in growth within the next eight to twelve months (if not sooner). There is already uneasiness in most industrial economies about the projected sluggish growth, not least in Europe, thanks to the unending debate about Britain's intended withdrawal from the European Union, Brexit.

In an oped in the Namibian of July 13, 2018, I argued that "the US-China trade war should be a source of consternation for many countries". As I pointed out then and here, trade wars do not only have economic consequences, equally, if not more so, they are a problem in politics as well. There is enough reason to be concerned about the direction that the emerging global order is taking which is arguably more protectionist.

A tit-for-tat in international trade is a zero sum game that will leave the global economy worse off even in the most optimistic outcome. Suggesting that international trade wars is a threat to peace and prosperity would be a gross understatement.