African Continental Integration: Lessons from East Africa

By Lucy Luo

The African Continental Free Trade Area (AfCFTA), which came into force in January 2021, is the world's largest new free trade area since the establishment of the World Trade Organization in 1994. It is expected to facilitate intra-African trade and improve the competitiveness of African industry and enterprises. While there is great momentum behind the agreement, its successful implementation still depends on thoughtful policy choices. In this blog post, we explore what lessons can be drawn from previous regional economic integration experiences.

Economic integration is not new to the African continent. There have been various regional trade blocs, some with overlapping memberships, including the East African Community (EAC), Arab Maghreb Union (AMU), Economic Community of Central African States (ECCAS), Inter-Governmental Authority on Development (IGAD), Economic Community of West African States (ECOWAS), Community of the Sahel-Saharan States (CEN-SAD), Common Market of Eastern and Southern Africa (COMESA), and the Southern African Development Community (SADC). The EAC is one of the oldest customs unions and has been ranked the most integrated regional economic community. Kenya, Tanganyika, and Uganda had a customs union as far back as 1927 under British colonial rule. The EAC was relaunched by the three newly independent states in 1967, has since collapsed in 1977, and was reestablished again in 2000. Today, the EAC consists of seven partner states: The Democratic Republic of the Congo, the Republics of Burundi, Kenya, Rwanda, South Sudan, Uganda, and the United Republic of Tanzania (Exhibit 1).

Given the region's almost hundred years’ history of integration and disintegration, what lessons can we learn from East Africa that can inform the successful implementation of the AfCFTA?

Exhibit 1: East African Community (EAC) Partner States, 2022

Source: EAC

Lesson 1: Alignment of political will is essential

It should not be a surprise that a successful trade bloc requires genuine political will from all member states. EAC's collapse in 1977 came after a multi-year deadlock in its highest governing body, the East African Authority, consisting of the presidents of the three founding countries: Kenya, Uganda, and Tanzania. Starting in 1971, the Authority never convened, mainly because of the deteriorating relationship between President Julius Nyerere (TZA) and President Idi Amin (UGA) after Amin installed a coup to overthrow President Milton Obote, who had close ties with Nyerere. The conflict eventually culminated in the Uganda-Tanzania War in 1978.

More than personal clashes, ideological divergence was significant in the region, especially in the context of the Cold War. Tanzania had set a socialist and self-reliant policy agenda since 1967 and received aid and technical assistance from Beijing, while Kenya emphasized private, largely foreign, investments (from Europe and the US). The EAC, however, assumed that advantages of integration would come from free trade, with economic activities conducted by private enterprises and sufficient financial liquidity. The clash of ideologies affected foreign policy and relations, leading to Tanzania eventually closing its border with Kenya in 1977.

This is not to say that states and their leaders must share the same policy agenda or ideology. Rather, for a trade bloc to succeed, states at minimum need to maintain peaceful and stable relations while agreeing on the advantages of integration and the principles of free trade. Moreover, when divergence of views or interpretations arises, there should be mechanisms in place for dialogues that facilitate problem-solving and conflict resolution. These factors were lacking in the first iteration of the EAC.

Lesson 2: Imbalanced trade and distribution can threaten integration

The lack of political alignment was not the only obstacle to East African integration. Economically, not all member states benefited from the EAC equally. Tanzania and Uganda's trade deficits increased during the first EAC, almost entirely attributable to the growing net importation of manufactured goods from Kenya. In fact, Ugandan exports in absolute value declined continuously after 1970. By contrast, Kenya's trade share in the EAC increased continuously. Kenya's exports were divided almost evenly between Tanzania and Uganda, whereas both Tanzania and Uganda traded mostly with Kenya as their economies were heavily dependent on importing manufactures. This demonstrates that free trade did not substantially change patterns of production between the three countries, as a tariff was not the binding constraint for specialization in production. Tanzania and Uganda still produced a similar range of primary products over time.

Such distributional effects are not entirely surprising. What is important for a trade bloc to sustain is to compensate for the unequal benefit distributions. The first EAC intended to build in mechanisms "to correct the imbalance in industrial development." The East African Development Bank (EADB) charter stipulated 38.75% of EADB investments should be made to Tanzania and Uganda and only 22.5% to Kenya. However, compliance only went so far as loan approvals and not actual disbursements. Tanzania ended up with 39.2% of the loans, followed by Kenya with 34.5% and Uganda with 26.3%. These imbalances likely contributed to the collapse of the first EAC.

When we look at the product mix that are traded between the three countries today, similar dynamics persist, in which Tanzania and Uganda export mainly primary products to Kenya (Exhibit 2).

Exhibit 2: Tanzania and Uganda's export product mix to Kenya, 2019

Tree maps depicting Tanzania and Uganda exportsSource: The Atlas of Economic Complexity, Harvard's Growth Lab

The second iteration of the EAC also did not seem to have structurally reoriented trade towards more intraregional trade, either (Exhibit 3). Why, then, does integration make sense for countries other than Kenya?

Exhibit 3: Intra-regional trade growth was part of a general increase, not a structural reorientation

Graph depicting Intra-regional trade growth from 2000 to 2010

Source: ECDPM Discussion Paper No.186

There has been literature suggesting that welfare gains from integration are mostly from a reduced common external tariff rather than more intraregional trade. This is confirmed by empirical evidence from the European Union (EU), where extra-regional trade had more impact on growth than intra-regional trade. As a trade bloc, all members benefit from having more negotiating power against external trading partners or unions. Therefore, states and their leaders need to consider not only intraregional trade but also interregional dynamics to fully assess the benefits of integration.

In sum, even though regional integration may have imbalanced distributional consequences, the consideration of trade and negotiations with external actors may outweigh the disadvantages brought by the former. In addition, a trade bloc can build in mechanisms that compensate for the unequal distributional effects. However, it is important to have checks and balances within the governance structure to ensure that these mechanisms are properly implemented.

Lesson 3: Monitor non-tariff barriers

Even within a well-established trade bloc where tariffs are eliminated, non-tariff barriers (NTBs) can be significant. Within the EAC, while various customs and trade facilitation measures1, as well as tax-like measures2, have been resolved, many still persist. Additional NTBs include quality and safety standards and import bans (Exhibit 4).

Exhibit 4: Resolved and unresolved non-tariff barriers within the EAC, 2016

Graph depicting Resolved and unresolved non-tariff barriers within the EAC, 2016

Source: ODI, 2016

When there is a lack of political will for integration, the benefits of eliminating tariffs may well be offset by the introduction of NTBs. Calo-Blanco and Naya (2006) found that governments of economically integrated countries tend to replace tariffs with NTBs when their priority is to protect the nation's firms.

NTBs are at least three times more restrictive than regular customs duties, as the United Nations Conference on Trade and Development (UNCTAD) estimates. Various empirical studies have found reducing NTBs, such as improving infrastructure and institutions, potentially has far larger gains than lowering tariff barriers. An UNCTAD report suggests that African countries could gain US$ 20 billion in GDP growth by tackling such NTBs at the continental level.

Therefore, it is important to monitor and establish mechanisms for resolving NTBs for a trade bloc to be truly welfare-enhancing. The EAC recognizes this and has taken important steps to eliminate existing and avoid new NTBs. In 2009, the EAC agreed to establish a Monitoring Mechanism of NTBs, and the Secretariat was tasked with maintaining a regularly updated inventory list of resolved and unresolved NTBs. The EAC subsequently enacted the EAC Elimination of Non-Tariff Barriers Act of 2017 to provide a legal framework for monitoring and addressing NTBs in the region. While there has been progress in eliminating NTBs, the Committee on Trade Remedies, which determines compensation for NTB-related losses, is not yet operational due to political stalemate. This again highlights the importance of political will as a prerequisite for integration.

As the AfCFTA came into effect, it has also created an online mechanism for reporting, monitoring and eliminating NTBs, which has been operational since 13 January 2020. NTB complaints submitted online are sent to formally nominated government officials (National Focal Points) who monitor and eliminate the barriers. However, the EAC experience tells us that having a monitoring mechanism alone may not ensure execution. Transparency and awareness will help, but there needs to be sufficient political will among the governments to ultimately resolve NTBs.

Drawing from these three lessons from EAC's experience, I would recommend the following key considerations for AfCFTA to have a higher chance of success:

  • Build in mechanisms to facilitate problem-solving and conflict resolution to avoid political stalemate between states.
  • Individual states should consider not only trade within the region but also the trade bloc's external dynamics before deciding how willing they are to cooperate with each other.
  • Continue building in mechanisms to compensate for the unequal distributional effects of a trade bloc, such as via the African Development Bank. More importantly, build in checks and balances within the governance structure to ensure that these mechanisms are properly implemented.
  • Continue monitoring and publicizing non-tariff barriers and tracking the progress for their elimination.
  • Provide a legal framework to address NTBs and ensure that it can be operational (use the abovementioned conflict resolution mechanism if necessary).


1 Cost-increasing measures incurred as a result of the monitoring and enforcement of trade facilitation and customs rules (excluding the enforcement and monitoring of standards and quality and safety measures).

2 Measures that impose monetary costs on imports (including non-application of preferential tax arrangements).

See also: Africa, Interns