At the 24th Ordinary Summit of the East African Community (EAC) Heads of State on November 30, 2024, leaders focused on two major issues: political integration and the role of remittances in the region’s economic development.
A Shift from Federation to Confederation
Initially, the EAC envisioned a Political Federation to create a more unified region, but member states were reluctant to give up significant sovereignty. This resistance led to a shift toward a Political Confederation, a more flexible model that allows for greater cooperation while preserving national autonomy.
Leaders at the summit directed national consultations on a constitution for the confederation, to be completed by June 2025. The summit also endorsed “variable geometry”, allowing member states to integrate at different paces based on their capabilities, a recognition of the diverse political and economic realities within the region.
Remittances: An Economic Opportunity
Remittances are a vital source of income for East Africa community to execute its programs and projects.
As at November 8th the total outstanding arrears of the community standing at $76.2 million with DRC being the biggest defaulter owing the community $20.7 million followed by Burundi $17 million, South Sudan owes the community $15.6 million, Tanzania $7.1 million, Somalia $7 million, Rwanda $5.2 million, Uganda 3.4 while Kenya has paid all its dues.
Non remittance of funds have hindered the development and execution of EAC projects which is almost 50 percent funded by member states while donors or development partners contribute to another 50 percent.
The summit underscored the need to “eliminate barriers to trade” and “remove restrictions on the movement of persons and services” to enhance economic integration. Leaders also called for “inclusive digital policies and payment solutions” to lower the cost of cross-border transactions, enabling remittances to more effectively fuel local investment and entrepreneurship.
Political Confederation and Economic Integration
As the EAC moves toward a political confederation, there is an opportunity to improve the management of remittances and foster economic growth through regional integration. By harmonizing trade policies and financial systems, the EAC could reduce transaction costs and make remittances a more powerful driver of development.
The EAC’s shift from a Political Federation to a Political Confederation reflects the challenges of deepening political integration, but it also presents an opportunity to enhance economic cooperation. By addressing the barriers to remittance flows and aligning economic policies, the region could unlock greater growth and prosperity.
