Why am I not feeling this growth in my pocket? FFD interviews Aidan Eyakuze
Foresight For Development blogger Ruth Aine Tindyebwa interviews Aidan Eyakuze on the future trends of East Africa as emerged in the SID latest 'State of East Africa Report 2013'.
by Ruth Aine Tindyebwa | Released in November 2013, The State of East Africa report 2013 quickly soon became a hit. Why? It relived information and raised so many questions. It gave answers to the theories that the East Africans had, that for a long time remained unanswered. The report has made stops in all of the East African cities, it has been handed over to the civil society, government and the general public. The report talks about the present state of East Africa, why the region is as it is at the moment and more importantly what this means for the future. I caught up with one of the authors Mr Aidan Ayekuze and we had a brief chat.
The report talks quite a lot about inequality in East Africa: Why is it important that we think about this and have this conversation especially as we look to the future?
The five East African Community countries have already delivered a stunning and sustained economic growth rate of over six per cent during the past decade. However, the Treaty for the Establishment of the East African Community commits them to balanced and harmonious growth, equitable distribution of benefits and a people-centred, market-driven regional integration process in as a way of creating One People, One Destiny. To what extent are these objectives being met?
Millions of ordinary East Africans are asking a more basic question: 'Why am I not feeling this growth in my pocket?' The answer turns on the extent to which the growth process is inclusive, and whether the fruits of that growth are shared equitably among the region’s people. Inequality, of opportunity and outcomes, is one of the world’s most pressing social challenges and a growing risk to national, regional and continental stability.
East Africa is no exception. The post-election violence in Kenya of 2007/08, the riots in Mtwara in southern Tanzania against the construction of a gas pipeline to the capital, the political crisis in South Sudan are all to some extent driven by the deepening sense of inequality in the region. We must understand its dimensions, causes and drivers in order to tackle its negative effects. These include not only a serious threat to social cohesion but a major slowdown in the growth and poverty reduction process itself.
East African integration is one of those issues that we seem to be allocating time and energy to these days: in your opinion, having looked at the state of East Africa, are we ready to integrate?
Yes we are. The common challenges we face – poverty, ecological pressures, massive youth populations which are unskilled for the 21st century economy and thus remain unemployed, violent conflict within and around the region, an increasingly volatile world economy into which we all export – make it imperative that we integrate our resources.
Uganda and Tanzania have the ability to produce food in abundance for the region, making bread and sugar cheaper for the common man in Kenya and Rwanda. Tanzania has coal and natural gas in such abundance as to provide reliable electricity to all the homes, business and factories in the region. Kenya’s financial resources can unleash the region’s productive capacity through investments if they were allowed to move much more freely across East Africa.
We should integrate for positive reasons – to take advantage of the wider opportunities that present themselves in the region. However, I sense that the “negative” reasons for integration – individual countries cannot hope to prosper given the challenges they individually face – may be more compelling.
Can our economies handle a unified currency? And if not: what do we need to do to get to the desired goal?
Fundamentally, a currency is only as valuable as people think it is. In other words, citizens must trust that the paper or coins they hand over - which have no intrinsic value in and of themselves - will buy the things they really value – a haircut, an ice-cream, accommodation for a night or a year. Ultimately, citizens must trust that their governments will uphold the value of the currency. When that trust is lost, a Zimbabwe-style currency devaluation is the result.
Technicalities aside, the five EA economies are not yet ready to have a single currency at this time (2014), but that is why the Presidents signed a Monetary Union protocol on November 30, 2013 with a 10-year roadmap to achieving a single currency. The ultimate goal is to set up institutions (such as an East African Central Bank) and processes (such as how to finance budget shortfalls in member states) that will enable citizens to be confident that their hard earned wages, profits, and savings will retain their value (i.e., be able to buy at least the same amount of stuff as before). Without such trust, the day the common currency is introduced, everyone will flee from it by exchanging their ‘old’ shillings and francs into US dollars, euros and yuan.
Michael Meyer recently wrote an article after reading the report and mentions two things: Social Bribery - African leaders delivering the promise of progress without the results. Do you see any hope beyond this?
Yes. The hope really turns on the willingness of citizens to interrogate the many promises that are made especially during election campaigns [East Africa is almost always in campaign mode!]. The free laptops promised to Kenya’s primary school kids in 2013 have yet to become a reality. The promise of a secondary school in every ward in Tanzania was delivered but without the requisite teachers and equipment to produce learned kids, resulting in some of the worst Form 4 results ever produced in the country in 2012. The free maternity care promise in Kenya risks overwhelming the public hospitals and clinics, while putting traditional birth attendants out of work.
As with every form of corruption, social bribery has real costs and unintended consequences. Citizens should be ready to interrogate the credibility of these promises before rewarding those who make them with public office. If this is done more often, there will be hope. The State of East Africa Report 2013 is an attempt at catalyzing such interrogation in the public domain.
Secondly, he talks about the widening prosperity gap in the region: in layman's language – How bad is this? Should we be worried? What needs to be done to iron this out?
In writing the report, we asked ourselves, 'What if the East African Community were a single country – a Federal Republic of East Africa – and its $83 billion income in 2011 was distributed according to the most recent income shares obtaining in each constituent state?' The result paints a stark picture of the differences between the rich and the poor.
The richest 10 per cent of East Africans, about 14.1 million people would have shared $29 billion in 2011 leaving each with $2,100. They live in East Africa’s cities and towns, work in industry or in the professional services sector, earn a wage many multiples above the minimum wage and have access to the best education and medical services available in the region. Their children are most likely in private schools where they are taught for much longer than their peers. There is little difference of opportunity between men and women or the young and the old. Their ‘East Africa’ is like a Moldova in Europe or a Honduras in Central America.
The poorest 40 per cent of East Africans, numbering 56 million people, would share $12.7 billion among themselves in 2011, leaving each with an income of $225 for the year. They live in the rural areas or in the slums around East Africa’s towns and cities. Those lucky enough to find work get a wage that is often below the poverty line, let alone the minimum wage. They have no health insurance and their children face a 40 to 80 per cent higher chance of dying before their fifth birthday compared to their richer compatriots. Those who survive are more likely to be stunted and attend schools lacking such basics as power, water and toilets, and where they are taught for only a quarter of the recommended time. This combination of poor nutrition and negligible schooling leaves them unable to operate in East Africa’s modernizing, service-oriented economy. It guarantees that they will bequeath their poverty to their children and grandchildren. The peacetime ‘East Africa’ they live in feels closer to Somalia or the Democratic Republic of Congo (DRC) at the lowest points in their recent conflict-ridden past.
What should be done about this worrying and widening gap? We propose some ideas in three domains that could be discussed more broadly. While there is little that is new, it is worth considering each with the explicit perspective of reducing the cap between rich and poor in the region.
1. Economic policy should focus on increasing productive capacity and promoting product diversification (what to produce), fostering horizontal and vertical integration across and among sectors (how to produce), multiplying growth poles across the region (where to produce), engaging in market development, trade promotion and facilitation (where to sell). Stated differently, it also means to significantly increase value addition over primary production.
2. The challenge for social policy is to navigate the “triple pressure” that East Africa faces. The first comprises citizens’ growing expectations for more and better social services delivered by the public sector. The second source of pressure is a shrinking public purse due to declining aid flows coupled with the difficulty of raising domestic resources. The final pressure comes from the changing roles of the private sector and civil society in the face of the growing social stratification of service provision (as the rich seek private solutions leaving the poorest households to rely on ‘free’ but poor quality state services).
3. Three elements of East Africa’s political domain need to be considered. The first is the very concept of democracy and what it means for the inclusion and empowerment of the region’s poorest citizens. Are the ballot boxes powerful or just empty vessels that reinforce the lack of improvement? The second touches on degree to which government influences the activities of economic agents towards a set of specific objectives. Should East African governments be more hands-on (dirigiste) or hands-off (laissez-faire) in the management of the economy? The third concerns the division of authority, decision-making and executive power between central and local government. Can the centre hand over real executive power to the local areas? Taken together, these three dimensions embody the nature of the power relationship between citizens and the state.
And finally, in a few words, what do you see as the future of East Africa?
East Africa’s future depends very much on the attitude of its citizens. If we allow ourselves to be ‘bribed’ by empty promises of prosperity, we could either eventually explode and strike each other in a fit of collective frustration and anger, or be exhausted into slavish passivity by deep disappointment and despair. If we decide to engage more robustly with our national and regional processes, from a position of well-informed and clear-headed commitment to our collective improvement, then the future will be challenging but hopeful and bright. The choice is ours.
* The interview was originally published on Foresight For Development website as 'East Africa's Future' and can be found here