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THE STATE OF EAST AFRICA REPORT SERIES

THE FUTURE OF INCLUSIVENESS AND EQUITY

The future

Two powerful driving forces are shaping the future of inclusiveness and equity in East Africa. One is the inclusiveness of growth – a measure of how much the poorest East Africans are participating in generating economic growth. The second driving force is the degree of equity, which describes how the benefits of economic growth are shared among the region’s citizens, and particularly the share of income and wealth that accrues to the poorest East Africans.

The Winner Takes All outlook describes a future in which the poorest are excluded from participating in East Africa’s growth process. In an economy based on the extraction and export of oil, gas, unprocessed precious metals and agricultural commodities, there are few opportunities for them. Furthermore, not only is the regions’ physical and financial wealth concentrated among the rich few, but the disparity widens dramatically over time as the poor get a shrinking share of the expanding income. As a result the majority of East Africans exist in conditions of deprivation and desperation, while a select few enjoy a lavish but fear-filled lifestyle.

The Social Bribery outlook outlines a possible future in which much is promised to the region’s poorest, and on the face of it, delivered. But it actually does little to improve their welfare. It is about the illusion of growing personal prosperity based on expanding debt-fuelled consumption of modern conveniences. The people’s participation in the economy is rewarded with wages that are suppressed just enough to protect profit margins, but not enough to kill their purchasing power.The poorest consume a little more, but never catch up with the richest of their compatriots.Indeed, the wealth gap continues to widen gradually but inexorably.

The Transformation outlook highlights a future in which the region’s underlying economic strategy changes its outward orientation following a youth-led protest that chokes the regional economy at its most vulnerable points. The resolution of the crisis turns the economic policy inwards to nurture domestic demand, supporting an ecosystem of local value-chains to meet the growing demand and upgrading the skills of ordinary East Africans. At its core is a deliberate effort to directly tackle inequality head-on, and it is led by a re-purposed and revitalized East African leadership.

It must be concluded that in order for the regional integration process to meet its fundamental objective of improving the quality of life for East Africans, increased trade, investment,competitiveness and value addition can only be one side of the story. Addressing the social dimensions of improved welfare by achieving a greater degree of equity-enhancing inclusiveness must be the second and equally important side of East Africa’s regional integration narrative.

The way in which the current East African regional integration outlook, strategy and execution addresses the challenges of structural economic change, food security for children and the quality of their education, will shape how inequality evolves well into the future. ‘Business as usual’ will leave the uncomfortable status quo firmly in place. Emphasizing and accelerating the growth agenda will damage even further the fragile social fabric that holds East Africans together. Only a deliberate and determined strategy to truly forge One People from three groups of East Africans -the richest 10 per cent, the poorest 40 per cent and the middle majority – stands a good chance of leading to the One Destiny that is the destination to which all are travelling.