Despite possessing massive potential in natural resources, individual states within East Africa remain too small, and too fragmented, to fully utilise these resources in the global arena, without being exploited by larger and more developed economies. The hope of citizens as such lies in an East African Federation and, further down the line, a fully-integrated African state.
The scramble for East Africa is on. According to a US geological survey the region is sitting on 9 trillion dollars worth of oil and gas. Whether this figure also includes the potentially resource rich horn of Africa – Somalia & Ethiopia – is not stated clearly, but East Africa certainly has caught the world’s attention and every major global player now wants a piece of the action. Consequently, we, as citizens of East Africa, are faced with critical policy choices, which will make or break us.
The Case For Economic Integration
For the better part of the period after independence, East Africa has operated as small, "independent", balkanized states that have been inward, rather than outward, looking. Only a tiny fraction of the populace realized how detrimental this mode of operation was for the region as a whole.
In a globalized economy, huge economic blocs are better placed to productively participate in economic activity that improves the living standards of their citizens. As small balkanized states, a self-imposed ceiling ensures a vicious scramble amongst the moneyed elite for a piece of a very small cake. In this scenario, social mobility is next to impossible as the poor fall victim to a system that does not creates decent jobs – and in effect only rotates the meagre resources available to those who already have.
A tiny balkanized country of 40 million people like Kenya simply cannot compete on any level with a relatively socially-cohesive country of 300 million people like the U.S.. So broadly speaking, our hopes and dreams of a better future for our children lies in an East African Federation and, further down the line, a fully-integrated African state.
The magic bullet for economic development is in creating economies of scale. Mass production and mass consumption are the drivers of economic growth. No state within East Africa and arguably in the horn of Africa has the numbers to go it alone. In fact across the whole of Africa, only Nigeria can boast of the kind of numbers needed to grow and sustain economic activity on a large scale – and even Nigeria is dwarfed by the larger emerging economies like China, India and Russia.
So as suspicious as we are of each other, the fact is that Africans can only rise together. It is important to note that it is in the interest of the West and Asia for us to remain divided because they will retain a massive bargaining power over us. Africa is resource rich and if we worked together, we could form a price fixing cartel like OPEC for all our resources, in the process extracting a bigger portion of value from the global economic system.
With bigger markets, harmonized laws and tax regimes our businesses will no longer have to participate in a race-to-the-bottom by engaging in mafia style territorial business where the winner takes all. A larger base of consumers will also be able to support all kinds of industries and ventures.
The Role Of Banks
I also see the role of African banks as development institutions. Speculation and risk averse loan provisions will not create jobs worth speaking of, so our banks have to be incentivized to make more loans to the productive sectors of our society, while government can help facilitate this by offering guarantees. But banks must also act responsibly and carry out due diligence while also deepening it's efforts to provide technical as well as financial support to the economy. The only reason for banks to exist is to facilitate economic growth.
We are sitting on a massive opportunity, the possibility of pulling millions of Africans out of poverty but the work starts with changing our perspective of who we are and our place in the world.
By John Seno
John Seno is a Kenyan businessman who runs several companies including Random Group Limited and OTB Africa Limited. Seno is also a strategic adviser to Kehl Design Agency, which specializes in Branding and Web development. Read more of John’s Seno Perspective at his blog.
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