1. Political, Economic & Demographic Challenges and Drivers of PSD in East Africa Dar es Salaam, 10 April 2013 South Sudan

2. 3 key issues from a development perspective: E – Economic geography A – Asymmetry of costs/benefits C – Capacity/coordination, Corruption & Commitment

3. Economic geography Population (2005-2030); Real GDP (2000-2010)

4. Economic geography Real GDP in East Africa (2000-2010) But, need to keep in perspective… combined GDP size of Croatia…

5. Economic geography Trade Performance (2000-2010) Fourfold increase in trade 2000-2010 Trade in 2010 worth 47% of East Africa GDP cf 28% in 2000

6. Economic geography

7. Economic geography Top Three Exports (2010) 47% of East African exports from Kenya; 36% Tanzania

8. Economic geography Top Three Imports (2010) 44% of East African imports to Kenya; 29% Tanzania

9. Economic geography Export composition (2010) Relatively diverse export base in Tanzania, Uganda, Kenya

10. Economic geography Intra Regional trade as % of Total Trade (1990-2010) Value ($4.1bn) doubled 2005-2010, but share fell from 13% to 11% NB. only 5% African trade is internal cf 40-60% in EU, NAFTA, Asia.. Discrepancies in published data may indicate increasing informal cross border trade

11. Economic geography Foreign Direct Investment (2000-2010) 152% increase in FDI over 2000-2010 Uganda largest since 2007 ($25 per capita cf $16 in Tanzania; $2- $4 for rest)

12. Economic Geography Economic density map Rapid urbanisation Kampala, Dar, Mombasa, Kigali, Nairobi in top 20 fastest growing cities in world

13. Economic geography Population density in EAC & selected comparators

14. Economic geography Population under age 15: 2005-2039

15. Economic Geography Share of population living below the (national) poverty line Mixed performance Falling number/share in Uganda, Rwanda; Burundi very high…

16. Economic geography And then there’s the gas and oil…..

17. Asymmetry of costs/benefits 40% of E. Africans live in landlocked countries (vs. world average of 1%) Av. transport costs 60-70% higher per km in EA vs USA/EU

18. Asymmetry of costs/benefits

20. Asymmetry of costs/benefits Northern Corridor traffic projection Four fold volume increase on Northern Corridor (doubling by 2015) RVR derailments “only” 20 per month….

21. Asymmetry of costs/benefits Central Corridor traffic projection Seven fold volume increase on Central Corridor CDS cost estimate $4.2bn for both corridors ($1.7bn committed)

22. Asymmetry of costs/benefits Asymmetric impact of integration policies:  Regional public goods do not necessarily benefit all members equally Coupled with…..  lack of clarity on investment priorities;  complex co-financing arrangements across borders;  lack of risk capital for project preparation;  weak capacity to undertake early stage project preparation;  lack of alignment of national policies (eg. harmonising legal/regulatory frameworks, including PPPs);  weak links between required provision of “hard” and “soft” infrastructure (eg. border post infra and integrated border management);  poor coordination between development partners.

23. The four Cs – Corruption, Capacity/Coordination, & Commitment

24. The four Cs… Perceptions of Corruption (2005-2010) Index ranges from 1 (corrupt) to 10 (clean) Significant improvement in Rwanda; Burundi now worst… Importance of continuous political economy analysis

25. The four Cs Capacity/coordination Weaknesses of EAC structure: (Summit: Council of Ministers; Coordination Committee (Permanent Secretaries); Sectoral Committees; The Secretariat; East African Legislative Assembly; East African Court of Justice; Institutions (eg EADB, LVBC, CASSOA….)  Weak power of Secretariat and EACJ in particular  National vs regional tension Weaknesses of donor coordination:  Similar issues !

26. The four Cs Commitment (to regional integration) EAC “Gentleman’s club” both a strength and weakness…. Uncertain impact of (possible) new leadership? –2013: Kibaki (Kenya) –2015: Nkurunziza (Burundi) and Kikwete (Tanzania) –2016: Museveni (Uganda) –2017: Kagame (Rwanda)

27. Ideas for discussion Do we need to encourage more regional initiatives? “Go coastal, think global ?” “EIZ - Economic integration zone(s)” ? (cf. coastal SEZs in China, India) “Education policy – focus on labour mobility” ? Development fund?

28. Thanks !