Under what conditions are equity- and productivity-enhancing reforms likely to prosper in sectors of the East African economy? How likely is it that these conditions will be present in the next decade? What specific features of the current political-economic situation are most relevant from the perspective of practical organisations committed to supporting progressive changes? What strategies and ways of working are likely to be most effective in contributing to positive outcomes? This report contains the findings of an independent study of these issues addressed to a wide range of organisations and interest groups based in or concerned about the prospects in East Africa.
The study builds on the substantial body of research- and experience-based understanding that now exists on the political economy of East African countries. A political-economy approach is distinguished by the effort to provide a realistic perspective on the relationships between and among economic and political processes. Particular attention is given to the way the interests of powerful political actors are shaped by their economic and social environment, and how these interests in turn lead to policies and behaviours that influence the course of economic development. The specific purpose of the study is to summarise the most relevant dimensions of the political economy of four countries, Kenya, Rwanda, Tanzania and Uganda, and to provide an update on any significant recent changes and the prospects ahead.
- The intermingling of business and politics is not a recent phenomenon in Kenya. It has historical antecedents that reach back to the colonial period. At the same time, cronyism has passed through several distinct periods since independence and it continues to evolve. Success in reviving economic growth, if it comes, will not automatically imply success in addressing the profound structural problems that Kenya faces, which are rooted in land distribution and ethnicity. Nor will it necessarily bring more just and effective governance. The constitution of 2010 promises a new beginning for the country, and a new way of doing things is slowly gaining ground in Kenya. However, it is challenging to implement the letter and the spirit of the constitution given Kenya’s poor record on rule of law and constitutionalism in general. Meanwhile, the country faces significant risks, from elements of the ‘Look East’ policy and from the further intrusion of the conflict in Somalia into domestic politics.
- The prospects do not appear good for broad-based economic growth bringing benefits to large numbers of poor Tanzanians. The policy regime for investment outside large-scale mining, tourism and import-substituting manufacturing and food processing is worse than it could be. The causes include some long-term structural problems in the political economy (the ethnic composition of business) and some medium-term trends, notably Chama cha Mapinduzi (CCM’s) (Party of the Revolution, Tanzania) headlong rush into factional money politics. Analysis of the fate of presidential initiatives in the agricultural sector does not suggest that reforms at the level of particular crops or regions may be counted on as likely winners.
- The limited access order that prevails in Uganda today has two features that set it apart in the East African region. One is a capitalist sector that is small but growing and somewhat mixed in terms of the ethnic background of the largest players. The other is the political dominance of a single political figure, Yoweri Museveni, ever since his military seizure of power in 1986. Conditions are favourable for continued economic growth. Museveni’s rule is broadly pro-business, but policy-making for development is erratic and over-dependent on personal interventions by the president. Both the president and his style of policy delivery are going to be in place for some years yet. One consequence is that national economic growth is unlikely to regain the inclusive, robustly poverty-reducing character it had in the 1990s, thanks largely to the one-off gains from market liberalisation, especially in coffee.
- Rwanda offers a different sort of environment for developmental reform efforts than its neighbours in the East African Community (EAC). Its advantages are grounded in a different type of political settlement. The origins and sustainability of the political settlement owe a great deal to the fact that the dominant political party, the RPF, is a highly institutionalised – rule-governed – organisation, quite different in this respect from its equivalents in Uganda and Tanzania. The settlement seems likely to be a permanent feature. It does not seem likely to be derailed by the issue of the presidential succession.