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THE STATE OF EAST AFRICA REPORT SERIES

The State of East Africa Executive Report-2013

The State 10 of East Africa 2013
harsh reality experienced by many citizens in their dealing with law enforcement institutions in the region. When confronted with corrupt practices, few citizens in the region bother to make official complaints: In Kenya, only five per cent indicated that they reported incidents of bribery to the authorities. The figure in the other EAC member states was eight per cent in Uganda, 10 per cent in Burundi, 11 per cent in Tanzania and 15 per cent in Rwanda.There is a pervasive feeling that the economic conditions have worsened in the past five years.

In the 2012 Tanzania Afrobarometer Survey, 40 per cent of adults felt that current economic conditions in Tanzania were very bad, compared to 25 per cent in 2008. In 2012, 62 per cent of Ugandans felt that their living conditions were at least fairly bad compared to 42 per cent just two years earlier. In Kenya, 84 per cent of adults described the current economic conditions as either ‘very bad’ or ‘fairly bad’ in 2011, a 30-point jump from 54 per cent in 2005.

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 The Future of Inequality in East Africa