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The East African Community (EAC)
It’s Time for Business to Take Notice
January 2012
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Table of Contents
Executive Summary ............................. 4
Introduction .......................................... 5
The East African Community (EAC)
What is It? ............................................................6
What is Different this Time? .................................7
What Makes this Market Interesting? ...................9
What Benefits Have Been Achieved so Far? ........11
What are the Obstacles? .....................................13
What Benefits are Expected in the Future? ..........14
Conclusion ............................................ 15
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Executive Summary
The East African Community (EAC), initially consisting of Kenya, Uganda and Tanzania (later
including Rwanda and Burundi), was established in 2000. The aim of the community is to
increase intra-regional trade and to raise the prominence of the East African region
internationally.
When viewed as a single market the EAC compares favorably with other opportunities within
Africa: the population is forecasted to reach 150 million by 2015, GDP growth is expected to
average at 9%, it represents a relatively diversified non-oil based economy within Africa and
one of the easier business environments in which to operate. Furthermore, both North and
South Sudan and the DRC have expressed interest in membership, making the EAC likely to
expand further.
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This is the second incarnation of the EAC, the first unraveled in 1977, and a number of factors
make it more durable than its predecessor. There is less disparity in terms of economic size,
the political systems are aligned and the compositions of the members’ economies are more
conducive to trade. On top of this, landlocked members such as Rwanda are placing regional
integration at the center of their economic strategy and taking an active role in driving progress
forward.
The development of the EAC is planned in four different phases: Customs Union, Common
Market, Monetary Union and Political Federation. The Customs Union phase has been
completed, in which the following were introduced: common external tariff, duty free trade
between members, and common customs procedures. The EAC is now in the Common Market
phase which will introduce free movement of labor and right of establishment and residence.
Changes to date have coincided with a significant increase in levels of FDI and intra-regional
trade, which indicates that the EAC is achieving the goals for which it was formed.
The community still needs to overcome some significant challenges, especially in terms of
prioritizing community initiatives above those of the individual countries and creating the
institutional capacity to drive reforms. Despite these challenges, the political backing for the
EAC is very strong and we expect progress to continue and bringing with it an increasing
number of benefits to organizations established within the EAC. These include: free movement
of staff and resources, access to an expanding market, increased competition between
suppliers and large scale investments in regional infrastructure.
Over the next five years we expect the impact and role of the EAC to increase significantly and
that it will be one of the more important regional factors to consider when planning an East
African strategy.
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Introduction
With close to one billion people and a GDP of approximately $1.7 Trillion, Africa presents a
sizeable investment opportunity. At the country-level, however, the story is less enticing. If one
considers that 3 countries (South Africa, Nigeria and Egypt) account for over half of Africa’s
economic activity, it is quite clear that the remaining 51 countries suffer from a lack of scale.
Furthermore, with intra-regional trade at a meager 10%, compared to almost 40% in North
America and 60% in Western Europe, the investments that have been attracted are quickly
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drawn out of the region as a payment for imports.
To address these challenges, African countries have united together to establish Regional
Economic Communities (RECs). These RECs aim to boost regional integration and economic
development and, thereby, improve the profile and competiveness of its member nations. The
most prominent RECs in Africa include: Southern African Development Community (SADC),
Economic Community of West African States (ECOWAS), Common Market for Eastern and
Southern Africa (COMESA), and East African Community (EAC).
Over the last 5 years, it is the EAC which has made the most progress and instituted the
broadest range of reforms. The recent applications of both South and North Sudan to join the
community indicate that from a geopolitical perspective the EAC has been a success. The
business impact, however, is not as clear:
Are the benefits of the EAC cascading through to the business environment and is the
EAC an important factor to consider when planning your entry strategy for East Africa?
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EAC – What is It?
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The EAC is a regional intergovernmental
organization that aims to strengthen the
economic, social, and political integration
among its five member states: Kenya,
Tanzania, Uganda, Rwanda, and Burundi
(Figure1). Broadly, the organization aspires to
create a large economic area to attract both
foreign and domestic investors, increase
economies of scale, enhance efficiency due
to greater competitiveness, and reduce
poverty in the region. Since its re-inception a
decade ago, the EAC has made significant
progress in terms of social and economic
development, political cooperation, and
regional integration, leading to an overall
positive business outlook. The region’s next
phase of the development aims to diversify
products/services, develop infrastructure
network, and establish a robust institutional
framework.
The EAC is an
International
Governmental
Organization (IGO)
established in 2000
and consists of
Kenya, Uganda,
Tanzania, Rwanda
and Burundi
For the global business community, the EAC
serves as a single market with numerous
growth opportunities, including:
The EAC aspires to
create a large
economic area to
attract both foreign
and domestic
investors, increase
economies of scale,
enhance efficiency
and reduce poverty
in the region

A population of ~137 Million people –
Expected to exceed 150 Million by 2015
(Figure 2)

Expected to expand geographically –
Anticipated addition of South Sudan

Diversified non-oil based economy

Forecasted ~9% GDP growth (2010–16F)

Increased intra-regional trade – Grew by
40% (2005–09)

Key FDI recipient –$14.8 Billion (2009)

Strategically located – Gateway to
Eastern and Central Africa

Strong ties with other RECs (i.e.
COMESA, SADC)

Politically stable region
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“The Partner States undertake to establish among
themselves and in accordance with the provisions of
this Treaty, a Customs Union, a Common Market,
subsequently a Monetary Union and ultimately a
Political Federation in order to strengthen and
regulate the industrial, commercial, infrastructural,
cultural, social, political and other relations of the
Partner States to the end that there shall be
accelerated, harmonious and balanced development
and sustained expansion of economic activities, the
benefit of which shall be equitably shared” – Article
5(2), Treaty for the Establishment of EAC
EAC – What is Different this Time?
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The cooperation between Kenya, Uganda,
and Tanzania that existed since the 1900s
and
multiple
regional
integration
arrangements such as Customs Union
between Kenya and Uganda in 1917
(Tanzania joined in 1927), formed the basis of
the first establishment of the EAC in 1967.
However, due to ideological and economic
differences, the trading union dissolved in
1977. It was in 1984, when the member
states signed a mediation agreement for the
division of assets and liabilities, that the seed
of future cooperation was sewn. Eventually, it
resulted in the signing of the agreement to
establish the Tripartite Commission for East
African Co-operation in 1993 (Figure 3). This
finally led to the re-establishment of the EAC
in 2000.
This re-establishment of EAC after its initial
collapse in 1977 raises an important question:
“Why should the EAC succeed this time?” To
answer this, it is critical to understand the
reasons and factors behind the EAC’s collapse
in 1977, and emphasize the key social,
economic, and political shifts that form the
basis of its reincarnation.
which was brought on by significant FDI
investments and an improved business
environment. As a result, this created a more
equitable environment amongst the members
of the EAC (Figure 4). The example of
Tanzania and Uganda lent confidence to
smaller countries such as Rwanda and
Burundi to join the EAC without the fear of
being swallowed up by larger neighbors.
The EAC was first
established in 1967
but dissolved in
1977 due to
ideological
differences between
capitalist Kenya,
socialist Tanzania
and Uganda which
was under the
dictatorship of Idi
Amin
Increased alignment
of the member’s
political systems
and the more equal
division of the East
African economy
suggests that the
current EAC has a
far more stable
foundation than its
previous union
A) Economically Comparable Members
In 1967, Kenya, being the biggest and mostprosperous nation in the EAC, was set to reap
a disproportionate share of the benefits from
the regional integration. Tanzania and Uganda
had relatively small economies and feared that
their manufacturing and agricultural sectors
would be outcompeted by their Kenyan
equivalents. Since then, Tanzania and Uganda
have witnessed significant GDP growth
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“Uganda and Tanzania are catching up to
Kenya in an economic sense, as there is
more South African investment in Uganda
and Tanzania” – Expert Interview
B) Improved Political Scenario
With the transition of Tanzania and Uganda to
a democratic political system, the member
states are closer than ever in terms of ideology
and values. This common base significantly
increases their ability to come together on
important policy decisions. In addition, it
reduces the number of tradeoffs needed to
reach an agreement and, therefore, improves
the likelihood of policies being adhered to. For
example, this common philosophy made it
easier for the EAC members to agree on the
terms of expansion of the EAC to include
Rwanda and Burundi.
C) Favorable Economic Structures
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During 1967–77, the member states’
economies were predominantly agriculturalbased which made the potential benefits from
regional integration unclear. There was little
scope to add value in terms of products or
operational efficiency from mutual trade and
cooperation between member states. The new
EAC, however, has been formed at a time
when the economic structure is more
favorable due to the emergence of a growing
middle class,
increasing demand for sophisticated products,
freer markets, and transitioning to a more
diverse industry-based economy. As a result,
greater benefits can now be realized from
successful regional integration. These positive
developments as well as a strong commitment
from EAC members indicate a step towards
ensuring deeper regional integration and
sustainable
growth
for
East
African
geographies (Figure 5).
The increasing level
of industrialization
and the decreasing
reliance on
agriculture results in
more benefits to be
gained from
regional cooperation
“Today, with the relative growth of sectors outside of agriculture, coupled with the demands of the middle
class for more sophisticated products and services, the opportunity for efficiency gains are much greater
than at any time in the past….Furthermore, middle class demands are creating new opportunities for each
country to develop its regional niche. To give just one example where this is already happening, Kenya is
emerging as a regional centre of excellence in education, and boasts the largest number of independent
‘prep schools’ of any Commonwealth nation outside Britain!”
– Professor, INSEAD and Centre for Global Development, May 2010
Regional Cooperation through Events and Joint Exercises
A recent development within the EAC is the increasing tendency to hold joint events under the community
banner. These events, such as ‘Invest in East African Community 2011’ and ‘Opportunities East Africa’
held in London in Sept 2011, the ‘Mashariki Holiday Festival’ to be held in Arusha in Dec 2011, and the
‘Ushirikiano Imara’ (an EAC military command post exercise held in Rwanda in Oct 2011), are testament to
the increasing level of cooperation between the member states as well as a drive to create increased
global awareness about the East African Community and the opportunities it presents.
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EAC – What Makes this Market Interesting?
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The ability of African geographies to weather
global financial crisis, along with their
untapped potential, has put Africa on the
global business scene as the next growth
opportunity. A number of businesses who until
recently were avoiding Africa, are now in the
process of developing Africa specific growth
strategies. Compared with other Sub-Saharan
investment destinations (Table 1), the EAC,
with its large population, strong GDP growth,
and relative ease of doing business, serves as
an attractive market for corporations. Factors
responsible for making EAC an attractive
target market are:
With 137 million
people, the EAC is
the second largest
market in Africa by
population
Despite the global
economic crises,
the EAC has grown
at an annual rate of
~8% since 2005
and is forecast to
grow at 9% through
2016
Large Market
In the first decade of its re-establishment, the
EAC has successfully implemented a Common
External Tariff (CET), common customs
procedures, and duty-free trade between
member states. These developments have
assisted in creating a single market of 137
million people (expected to cross 150 million
by 2015), making EAC the second-largest
market in Africa in terms of population, after
Nigeria, and an enticing prospect for
consumer-orientated businesses such as
telecom, retail, and financial services.
Led by Rwanda, the
EAC performs
relatively well in the
Ease of Doing
Business Rankings
compared with other
African
opportunities
Nigeria in which most of the accessible market
is concentrated in their primary city, the EAC
has 6 major urban centers. These centers and
the transport networks connecting them greatly
increase the proportion of the population that
can be accessed and therefore the effective
size of the market that can be targeted.
Strong Economic Growth
Even during the global economic crisis, the
EAC’s members showed resilience, witnessing
an annual GDP growth rate of ~8% since
2005, making it one of the fastest growing
economies in the world. The trend will continue
as the EAC is forecasted to grow at ~9.0% in
the next 5 years. Due to rapid economic
growth and a growing middle class, GDP per
capita and disposable incomes have
increased, broadening the range of products
and services now demanded.
Ease of Doing Business
A large market is one thing but being able to
access it is critical, and this is an area in which
the EAC has an advantage. Unlike Angola and
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During 2006–11, the EAC members made it
easier to do business in their nations – a direct
result of implementation of 54 reforms since
2004. Rwanda took the lead featuring among
the top-10 economies globally that improved
the most on ease of doing business. The steps
taken by Rwanda set an example for not only
the EAC, but also for all Sub-Saharan nations
(Figure 7).
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Though at an overall level, Rwanda is the
most-competitive nation, other member states
are also catching up in terms of ease of doing
business. Sharing of best practices between
the member states could be expected to
improve the competitiveness of the member
states as well as that of the EAC overall. The
Doing Business 2011 report states that the
EAC’s average global rank of 117 can move up
to 18 if these practices were successfully
shared.
The countries
neighboring the
EAC have a
combined
population of 266
million but are
generally more
challenging
environments to
operate in. This
makes the EAC an
attractive base from
which to access this
largely untapped
market
English has been
adopted as the
business language
across the EAC,
which means EAC
based companies
can tap into the
global skills pool
and are able to
transfer staff
between member
states
“In 2005, starting a business in Rwanda
took 9 procedures and cost 223% of income
per capita. In 2010, entrepreneurs could
register a new business within 3 days,
paying official fees amounting to 8.8% of
income per capita. More than 3,000
entrepreneurs took advantage of the
efficient process in 2008, up from 700 in
previous years” – Doing Business 2011,
IFC
ability of firms to treat the EAC as a single
market and allows smooth transfer of human
capital between member states. The choice of
English has helped global firms to tap into the
available skills pool and facilitate better
communication between operations in the EAC
and their other offices across the globe.
Wider Regional Access
The EAC is strategically located in the African
continent and neighbors a number of highly
populated countries such as Ethiopia, South
Sudan, Somalia, DRC, Zambia, Malawi, and
Mozambique (Figure 8). These countries more
than double the potential market reachable
from the EAC; many of them are relatively
more difficult to operate in. Therefore, the
option of using the EAC as a stable base to
gradually
enter
these
markets
has
considerable appeal.
“EAC market has become a centre of attraction
to several multinationals, some of whom have
resolved to set up regional offices to facilitate
their operations. These firms include, Nokia,
IBM, HP, Google, General Electric, soft drinks
maker, Coca-Cola Company and auto-dealers,
Toyota and General Motors” – The Standard,
Kenya, Oct 2011
Diversified Non-oil Based Economy
Unlike oil-based economies, such as Angola
and much of West Africa, the EAC has a
relatively diverse economy with significant
contributions from a number of sectors,
including agriculture, manufacturing, retail,
services, and tourism. A diverse economy has
allowed it to weather shocks in economic
downturn, provide greater opportunities for
entrepreneurship, and create a larger and
growing middle class.
Presence of a Common Language
English was chosen as the official language of
the EAC and it is mandatory for new members
to adopt it as their primary business language.
A common business language improves the
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Access to Untapped Natural Resources
The East African region is endowed with a
variety of natural resources such as gold, oil,
natural gas, copper, cobalt, tin, timber, and
arable land. These resources have attracted
significant investment in the infrastructure
required to extract these resources and
transport them to where they can be
processed. The recent oil finds in Uganda and
the expected quadrupling of the mining
industry’s contribution to Tanzania’s GDP by
2025, indicate a positive outlook for the
resources sector; while recent targeting of
agricultural funds in Tanzania and Uganda
promise growth of agribusiness in the region.
EAC – What Benefits Have Been Achieved so Far?
As a long-term strategy, the EAC has defined
four key stages of development: Customs
Union, Common Market, Monetary Union, and
Political Federation (Figure 9). In 2010, it
entered the second phase, Common Market.
With the implementation of the Customs
Union phase, member states realized
improvements in trade, foreign investment,
and the overall economy of their nations.
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The EAC has
completed the
Customs Union
phase and is now
working on the
Common Market.
The Customs Union
introduced a
common external
tariff, duty free trade
between members
and common
customs procedure.
The Common
Market will
introduce free
movement of
people, labor,
services and capital
as well the right of
establishment and
residence
Increase in Intra-EAC Trade
During 2006–10, Kenya, Uganda, and
Tanzania witnessed significant growth in intraEAC trade (Figure 10). Deeper regional
integration has increased trade volumes as
well trade as a percentage of GDP. In
addition, trade is generally associated with
higher value-added activities and its increase
as a percentage of GDP, thus, tends to spur
growth of income.
Informal Cross-Border Trade (ICBT)
Despite the existence of formal trade in the
EAC region, there exists a large market of
Informal Cross-Border Trade (ICBT). The
informal economy in the EAC largely
corresponds to the micro, small and medium
scale enterprises that are primarily
unorganized and unregulated. To provide
context to the size of this sector: Kenya’s
informal economy employs 7.5 million
people, which is equivalent to 80% of its
employment outside small-scale agriculture.
This informal trade also poses a concern for
the member states as the national available
data does not reflect the true economy. This
can negatively impact the members as EAC
member states base their policies on the
available data.
On the other hand, a significant ICBT market
hints at the overall potential of trade between
the member nations. With ease in trade
regulations and provision of the right
incentives, a portion of this informal trade
could transition into formal trade, which can
further boost economic growth of the region.
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Commodity Trade in the EAC
In the past few years, the intra-EAC exports by Kenya have shown diversification into more
specialized and processed goods such as petroleum products, chemicals, and lubricants, a trend
which is spreading across Uganda and Tanzania (Table 2).
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The period since the
formation of the
EAC has
corresponded with a
significant increase
in FDI and intraregional trade; this
would indicate that
the EAC is
contributing to the
goals for which it
was established
Increase in FDI Flow
The EAC believes that the realization of its
economic potential has contributed to the
increase in FDI in the region. Uganda and
Tanzania remain the preferred investment
destinations (Figure 11) due to Kenya’s
restriction on foreign ownership and weak
investor protection laws. The total inflow of
FDI in the EAC region increased from $1.3
Bn in 2006 to $1.7 Bn in 2009. The upsurge
in total FDI into Kenya in 2007 can be
primarily attributed to the privatization of
‘Telkom Kenya’, entry of mobile operators in
the country, and investment in the railways
sector.
"The growth in trade and investment within the region
has seen several business opportunities spring-up
across the region. Furthermore, many Kenyan
enterprises, big and small, are enjoying the fruits of
the integration process, as opportunities to expand
into the region become more possible” – Expert
Interview
FDI in the EAC region is mainly in
manufacturing and construction in Uganda;
tourism, manufacturing, and transportation in
Tanzania; and tourism, communications,
technology, and manufacturing of retail goods
in Kenya.
“South Africa has not allowed itself to be held back by trade barriers. When you are in Dar-es-Salaam you
can eat in the same Spur restaurant as you would in Johannesburg. You can phone with MTN and take your
money out of a Standard Bank ATM. South African companies have taken the risks and it has paid off” –
Expert Interview
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EAC – What are the Obstacles?
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All EAC members
belong to more than
one Regional
Economic
Community. Whilst
this may enable a
much wider regional
integration, it can
result in clashes
between the
requirements of the
different RECS and
slow the progress of
reform
After ten years, numerous challenges still exist
that are slowing down the progress of the EAC
including: budgetary constraints, variation in
regional and partner state development
planning, and inadequate national-level
capacities to develop regional policies. The
implementation of policies is further slowed
down by a weak legal, regulatory, and disputesettlement mechanism, fragile institutional
infrastructure,
and
poor
enforcement
machinery. Additionally, more challenges were
identified during the course of integration,
which will test the commitment of the EAC
members:
1) Multiple Regional Memberships
All EAC members belong to multiple regional
unions (Table 3). This poses a concern for
regional integration as it slows down the
implementation of trade protocols due to
clashes with those of the other regional
unions. For example, Tanzania, a member of
the EAC and SADC, may face complications
when SADC establishes its own custom union
protocols. Also, multiple memberships mean
that human capital and other resources get
divided between unions, slowing progress.
states are still fragile and a deeper
commitment is required to sustain the
integration process.
3) Non-Tariff Barriers (NTBs)
Non-tariff barriers refer to those restrictions on
the free flow of trade that are not tariff-related
and are levied by a country. The EAC defines
NTBs as quantitative restrictions and specific
limitations that act as obstacles to trade. NTBs
are one of the key challenges that the EAC is
focusing to eliminate in the integration process
as they cause delay and increase costs, which
ultimately results in the hindrance of free
movement of goods.
4) Prioritization
While all members stand to benefit from the
EAC, their priorities are not necessarily
aligned. A top priority for Rwanda, such as rail
access to the coast, is not necessarily
important to Tanzania, through whose territory
most of the railway line would run. In addition,
governments are constrained in terms of
resources and need to prioritize between
regional projects – which are typically large
and long term with indirect benefits, and local
projects that are targeted to satisfy their
electoral constituencies. This lack of
consensus has caused significant delays or
halted key projects such as East African Road
Map Project and the East African Railway
Project.
5) Regional Threats
2) Fragile Relations
Differing priorities
between EAC
members and the
clash between
national and
regional interests
are testing
commitment levels
of member states to
integration
Recently, relations between Kenya and
Uganda were tested when a Chinese
construction company, China Roads and
Bridge Corporation, managed to pull Kenya
out of a bilateral agreement that was signed
with Uganda in Oct 2008. Kenya and Uganda
had jointly planned to build a modern railway
link between the port of Mombasa and
Kampala. These turn of events are indicative
of the fact that relationships between member
“There are still a number of services
sectors that are closed or limited. E.g., in
Kenya FDI in the telecommunications
sector has been limited to 30%; in Uganda
non-citizens are not allowed to trade
outside of large cities; and in Tanzania the
hospitality industry is limited for foreign
participation. Lastly there are still a
significant number of restrictions on the
movement of capital” – Standard Bank,
Sept 2011
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Currently, the EAC faces multiple threats to
peace from regional negative forces,
including piracy in the Indian Ocean, Al
Shabaab militia in neighboring Somalia,
Democratic Forces for the Liberation of
Rwanda (FDLR), the Lord Resistance Army
in the region neighboring Uganda, and the
Front Nationale Pour la Liberation (FNL) in
Burundi. These conflicts create no-go areas
within the region and increase the overall
business
risk,
thereby, reducing
its
attractiveness as a business destination.
EAC – What Benefits are Expected in the Future?
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While there is no denying the fact that several
challenges still exist in realizing the EAC’s
aims; the degree of commitment from political
and economic leaders towards the integration
process presents an optimistic picture.
Continued progress towards integration will
unlock further benefits to the member states
and to firms established within the region.
Free Movement of Resources
A key component of the EAC treaty is to
facilitate free movement of labor between
member states. For companies, this will be
important as the availability of skills varies
across regions and the ability to move staff
between member states will help improve their
ability to replicate business models across the
EAC.
same time, competition between organizations
that were previously separated by trade
barriers is also likely to drive down prices
leading to decreased production costs. This
stronger base will eventually enable the EAC
companies to move up the value chain and
better compete in the global market.
Better Infrastructure
To enhance regional interconnectivity and
improve trade relations, the EACs member
states have announced plans to invest over
$25 Bn in the next decade to build road and
rail networks across the region. Recent
examples include the following:

Increased Competition
Continued progress
towards integration
can be expected to
result in a number
of changes
including: increased
competition, greater
investment in
regional
infrastructure,
expansion to
include additional
countries and more
freedom in terms of
the movement of
resources and labor
Due to deeper regional integration and
positive business outlook, several global
companies are planning to or have already
entered the East African market (Table 4).
Along with more foreign capital, the existence
of competition in firms and products will allow
EAC companies to access an improved
standard of support services such as IT,
banking, and telecommunications.

In Jan 2009, the EAC prepared an East
African Railways Master Plan to improve
rail network between member states,
funded by World Bank and the African
Development Bank (AfDB)
In Oct 2011, the EAC, SADC, and
COMESA signed a $11.2 Bn contract with
Intergovernmental
Authority
on
Development (IGAD) to improve and
develop infrastructure between the
regional communities
Considering the current challenges in terms of
transport infrastructure and the constraint it
places on business in terms of reach and
costs of distribution, these developments
should significantly improve the attractiveness
of the EAC.
Expanding Geography
Having grown to a five member alliance in
2007 with the addition of Burundi and
Rwanda, the EAC recently received
applications for inclusion in the community
from both North and South Sudan. While the
inclusion of North Sudan seems unlikely due
to significant ideological differences and a
poor human rights record, the application of
the South was publically welcomed by the
heads of Rwanda, Uganda and Tanzania. The
DRC has also expressed interest in joining the
EAC while the addition of Ethiopia, Africa’s
second most populous country, would not be
unexpected.
Improved Operational Efficiency
With the opening up of formal trade routes
between the member states, companies will
be able to access resources from across the
region for central processing, allowing for
economies of scale to be realized. Scale
benefits also arise from being able to service a
consumer market that is effectively three times
the size of any of the member countries. At the
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“The completion of the Customs Union and
the emergence of the Common Market
make the EAC a region with unparallel
prospects for investment and trade. No
region compares to EAC in Africa and if
these prospects are utilized fully, can make
the EAC the hub and a major entry point to
access the 1 billion people of Africa”—
President of Tanzania, May 2011
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Conclusion
Since its re-inception in 2000, the EAC has made significant strides in laying the foundation for
regional integration and a common market. Strong political will and a more equal distribution of
benefits between member states have created a more stable and cohesive coalition than its
previous incarnation. There are still several challenges that need to be addressed if the EAC is
to achieve its long-term goals of monetary union and political federation. It is clear, however,
that a critical point has been reached where the fundamental building blocks of cooperation are
in place and the members are beginning to plan in a more integrated manner. While the impact
on business is only starting to be felt, we can expect an increasing pace of integration over the
next 5-10 years and significant strides to be taken to fundamentally change the business
landscape. If you plan to be in East Africa for the long-term then the EAC is something that
cannot be ignored.
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Sources
 The East African Community – Why this time is different’, INSEAD and Centre for
Global Development, May 2010
www.grailresearch.com
 ‘Informal Cross Border Trade in EAC Implications for Regional Integration and
Development’, CUTS International, 2010
 ‘The Non Tariff Barriers in Trading Within the East African Community’, CUTS
International, 2010
 ‘EAC Development Strategy Deepening and Accelerating Integration’, EAC, Aug 2011
 ‘World Population Prospects, the 2010 Revision’, United Nations, Department of
Economic and Social Affairs, Jun 2011
 ‘International Macroeconomic Data Set’, USDA, Dec 2010
 ‘World Economic Outlook Database’, International Monetary Fund, Sep 2011
 ‘The World Fact Book’, Central Intelligence Agency, Oct 2011
 ‘Brief History’, EAC
 ‘The Global Competitiveness Report 2011–12’, World Economic Forum
 ‘Outlook’, Africa Economic Outlook
 ‘Economy Rankings’, Doing Business, Jun 2011
 ‘Trend of Direct Foreign Investment in Kenya Compared to EAC States’, National
Assembly Official Report, May 2011
 ‘Global Financial Crisis Discussion Series Paper 7: Kenya’, Overseas Development
Institute, May 2009
 ‘Kenya: Policies for Prosperity’, Oxford University Press and Central Bank of Kenya,
2010
 Recent News Articles
 Primary Research, expert interviews
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About the Authors
Rahul Sethi is the Senior Vice President, North America and Africa, at Grail Research. Before joining Grail
Research, he was with Monitor Group’s marketing strategy division. His initial role at Monitor was focused on
marketing and brand strategy, in the areas of brand development and implementation, market segmentation and
consumer buying processes. He is responsible for the firm’s revenues for a group of strategic accounts, co-manages
operations of the Africa Practice, and heads Grail’s Quantitative Research Group. Rahul is based in Boston and
holds a bachelor’s degree in economics, a master’s degree in mass communications, and an MBA.
Rahul
Sethi
www.grailresearch.com
Carl
Neville
Marais
Carl Neville Marais is Director of Africa at Grail Research. Before joining Grail, Carl consulted to some of the
world’s top Investment Banks in London, New York, and South Africa on strategic alignment, process optimization,
and risk management. He has travelled extensively within Africa and has visited all the members of the EAC. At
Grail, Carl assists global organizations to exploit the opportunities presented by Africa and African firms to access
new markets both on the continent and internationally. Carl is based in Johannesburg and holds an Honors degree
in Electro-Mechanical Engineering (First Class) from the University of Cape Town and an MBA (with Distinction)
from the Gordon Institute of Business Science.
Dheeraj
Harjai
Dheeraj Harjai is an Engagement Manager at Grail Research’s Johannesburg office. He has extensive experience
in the areas of analytics, brand tracking, market / consumer segmentation, customer buying processes, developing
route-to-market and marketing strategy for clients across geographies and sectors. He is our in-house analytics and
quantitative research expert, with deep experience on analytics tools. In the current role, he is responsible for
managing key clients, leading projects across Africa, and has travelled extensively in the continent. Dheeraj works
out of Johannesburg, South Africa, and holds a bachelor’s degree in Engineering from NSIT, Delhi University. Prior
to joining Grail, he worked with one of the largest IT solutions provider in India.
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