Somalia will gain less from EAC membership

Hassan S. Elmi

President Hassan Sheikh Mohamud attending the EAC summit in Tanzania with heads of member countries.

President Hassan Sheikh Mohamud’s last week flew to Tanzania to attend a summit for East Africa Community member states. At this stage Somalia has neither the institutional capacities nor the economic wherewithal to benefit from AEC market.

The proposal to join EAC undermined the Horn Africa Economic Integration endorsed by President Mohamud during his recent visit to Eritrea. There is no empirical data to back up the claim that Somalia “will benefit from EAC membership”.

If, to use a hypothetical example, Somali exporters find that exports to Horn of Africa countries is comparatively profitable, participation in any other common market will get diminished. It is unwise to ride two horses simultaneously, as a popular saying goes.

Common markets in third world countries resemble a zero sum game. Benefits each member country derives from the common market do result from its interactions with member countries. A country’s economic and institutional advantages will determine its fortunes.

That Somalia is least prepared to join EAC is no-brainier. Somalia does not have a national economic strategy. Productive sectors remain under exploited due to unresolved political problems such as dispossession and weak government institutions.

Some commentators have alluded to the entrepreneurial zeal of Somalis as a reason to join EAC. It is a socially dangerous stereotype to mislead Somalis into thinking that entrepreneurship is their collective forte. Cartels and monopolies dominate the Somali business landscape at home. Consumers are the victims of this type of business environment. So many businesses ideas are stymied by steep electricity and water bills. Competition is virtually non-existent. Big conglomerates acquire any potential competitor, thereby denying consumers the right to benefit from competition in the marketplace. Only when Somalia devises consumer protection policies, among other policies, can it aspire to benefit from regional markets such as the East African Community.

Hassan S. Elmi is a senior economist who worked for the Somali Chamber of Commerce 1985-1990.