Shillings and Pence

Permit me to digress a moment from Nigeria to talk a bit about our African neighbourhood.

If I was a citizen of Kenya, Uganda or Tanzania, and someone asked me about political reforms, I would tell them about:

(a) the need for consolidation of sub-national governing units, of which there are too many in Kenya and Uganda; and the need for federalism in Tanzania and (at the very least) semi-federalism in Kenya and Uganda, with proper devolution of powers to the sub-national governing units.

(b) the need for substantive systemic reforms in domestic politics (less tribalism in Kenya would be a good start), economics, law enforcement (human beings are equally corrupt; what differentiates societies is the likelihood and degree of punishment) and socio-cultural dynamics (the input of decision-making by the citizenry at large must change if the output of decision-making is to change).

What you would NOT hear me say is "we need an expensive new layer of government on top of all the other layers we already have, because even though we cannot pay for our current layers of government (all three countries need foreign aid to cover their basic budgetary commitments), the solution to our problems is to create another layer of expense to pay for. Indeed, the fact that our parliaments are not really democratic, are not really representative or effective, and are terribly expensive shows us the necessity of creating an altogether new parliament which will ultimately be no different from the existing ones, because no one is interested in systemically reforming the root causes of the current parliamentary weaknesses."

I think East African economic integration is a good thing. I am glad they intend to open their markets up to each other. I am glad Rwanda and Burundi will have access to the markets of the three bigger members, and in the fullness of time (and with peace in the Great Lakes) I expect Rwanda and Burundi to have just as much access to the Democratic Republic of Congo's markets (and I am not talking about Rwandan military and commercial interests plundering Congolese resources as has been going on for a while).

The thing is, much of what they have been doing has revolved around creating new jobs for politicians, technocrats and bureaucrats. This is a "human" problem not an East African problem; all over the world, but particularly in international affairs/relations/trade/diplomacy, it seems the "solution" to any problem is the creation of a new agency with new jobs for politiicians, technocrats and bureaucrats. When it fails to solve the issue, we just create another agency. After a while there are five or ten or fifteen agencies, all ostensibly committed to solving a single problem ..... a problem which never actually gets solved.

The politiicians, technocrats and bureaucrats usually claim the failure is due to the fact that they were not given enough POWER. At which point, one of two things happens. Either (a) they are not given any additional power, and the complaints of powerelessness take on the appearance of a permanent, recurrently uttered, excuse for failure; or (b) they are given additional power, which marks the start of a long process of ever-greater power being demanded and transferred even as the core reason given for the initial transfers either lapses into irrelevance or remains unresolved despite ever-more power being held centrally.

But I digress.

In my view, East African economic integration requires two vital and indispensable pillars:

(a) Monetary unification under a single EAST AFRICAN SHILLING, rather than the current reality of three separate, independent shillings in Kenya, Uganda and Tanzania. They don't even have to worry about the politics of creating a new East African Central Bank; all they need do is transform the three independent Banks into branches of a single, merged institution. Of course it is not as easy as all that, but you get the drift, don't you?

(b) Upgrades to the transportation and communications networks. Rail, roads, electrical grids, telecommunications, it all needs billions in new investment, in upgrades, repairs and maintenance. In fact, given that all these countries have fiscal difficulties at the governmental level (needing aid to cover basic budget functions), small economies, and scarce supplies of capital, it would have made sense for them to both rationalize (and federalize) their domestic governance rather than opting instead for creating expensive and unnecessary new "East African" governmental entities. Every spare shilling they can scrounge up needs to be committed to transportation and communication upgrades, and not to new jobs for politicians, bureaucrats and technocrats; indeed, the numbers of jobs and broader economic activity that would be generated directly and as a future consequence of these upgrades dwarfs the number of "white collar" jobs created in new bureaucracies.

For the record, I am calling for a single shilling, but I am not necessarily supportive of the single currency plans for an "Afro" (Africa-wide) or an "Eco" (West-Africa-wide). There is such a thing as an optimal monetary territory, and many economic theories discussing and debating what that optimum actually is. Do not automatically assume that the euro-zone or the USA are optimum zones; there is much done (for example fiscal transfers) which quietly forces disparate economic zones of the USA into a single monetary whole. Sticking to the fiscal transfers example, I do not think Africa as a broader whole, or wealthier African countries as a specific group, have the financial resources to pay for that kind of thing. I think there is a certain efficiency to optimality, and to allow the different equilibria to adjust depending on the real economic circumstances of a place.

But that is a discussion for another time.