Should Somalia fast-track its membership to the EAC?

By Mohamed Sheikh Nor

Posted on Thursday, 16 February 2023 17:21
Somalia's President Hassan Sheikh Mohamud in Mogadishu on January 12, 2023.(Photo by Hassan Ali Elmi / AFP)

Somalia’s geographical location and its citizen’s inherent entrepreneurial spirit to explore new markets have contributed to the country’s desire to join the EAC. Efforts to join the regional block started years back but stalled after the fall of the central government in 1991. Is Somalia any closer to being granted membership and if so, should it really pursue it?

The current renewed interest to join the EAC was initiated after the election of Hassan Sheikh Mohamud in May 2022. The bid for Somalia’s membership received a boost on 25 January 2023, after a verification team comprising experts from EAC partner states visited Mogadishu to assess its readiness to join the community. The team met with different government institutions and private organisations.

Currently, the EAC states are DRC, Burundi, Rwanda, Uganda, Kenya, Tanzania, and South Sudan. Somalia would be the eighth partner state should its membership be ratified.

The team will present a report to the ordinary summit of EAC Heads of State, by the end of February, who will sanction Somalia’s admission.

Coastlines and population

Somalia’s special envoy to the EAC, Abdisalaan Haajji Hadliye, who played host to the verification team observed that given five members of the EAC are landlocked, Somalia’s extensive coastline offers vast opportunities for shipping and the blue economy.

Hadliye said Somalis would benefit from the increased movement of people, goods, and services, including access to a large trading bloc with an estimated population of more than 312 million.

Ahmed Khadar, an economic scholar also agrees. “It is likely that Somalia will benefit greatly from joining EAC, especially in three main areas,” he tells The Africa Report.

“First, free movement of capital and people, which gives Somalia access to a market of 300 million. Secondly, Somalia has the longest coastline in the bloc and might be the gateway connecting EAC to the world. Thirdly, Somalia is competitive in the fisheries sector and can supply the EAC population.”

Fishing industry

Despite its vast marine resources, fish consumption in Somalia is relatively low and the country can turn this into an advantage by exporting fish to the EAC market. A Mogadishu-based fishing company, Prestige Fisher, which supports local fishermen to market their catch globally, believes that joining the bloc will lead to a boom in Somalia’s fishing industry, as fish exportation will grow resulting in an increase in Somalia’s economic prosperity.

Prestige Fisher Company CEO, Osman Yusuf Oscar, says Somalia barely had a functional fishing industry for more than three decades, but by joining the EAC, Somalia could tap into its fishing industry as more local companies would invest in it. This would also boost employment opportunities and the country’s economic output.

“Somalia has not had a fishing industry for over three decades, and joining the EAC would allow Somalia to revive its fishing industry to boost employment and economic output,” Osman tells The Africa Report.

Regional influence

Somalia’s membership in a regional body will increase its influence and position as an important player in the region, says Omar Mahmooud, a senior analyst with the International Crisis Group (ICG).

“Somalia is already part of other regional organisations like IGAD and the Arab League, so joining the EAC will add to its status as regional crossroads, and place it in a unique position,” Mahmood tells The Africa Report.

Similarly, Selam Tadesse Demissie, a researcher for the Horn of Africa Security Analysis Programme at the Institute for Security Studies, explains how Somalia’s membership in the EAC is a natural next step.

“Somalia is already a member of the Arab League, the Red Sea Council, International Conference on the Great Lakes Region… therefore Somalia’s new membership in EAC is normal and generally may not mean much for IGAD. Of course, IGAD may face the usual challenge emerging from overlapping membership. Somalia [may] not be able to fulfil different obligations that eventually contribute to meeting the objective of IGAD due to splitting of resources.”

He adds that Somalia’s inclusion into the EAC would prove a boon for businesses. “If managed well, this [would] allow [a] smooth business transaction between Somalia and the EAC member countries, increasing its trade capabilities,” he says.

As Somalia and Kenya share a disputed maritime space, membership in the EAC will enable a quick resolution of the dispute. “This can present an opportunity where the two countries resolve their differences over the shared resource and prioritise joint economic gains,” Demissie added.

Improved relations

Omar Mahmood, Senior Analyst at ICG points to the many Somalis in the diaspora already residing within the EAC. Full membership in the EAC would help provide diplomatic support for Somalia should tensions arise.

“This is of course not a guarantee, but important given unresolved fundamental issues in the Kenya-Somalia relationship for example,” Mahmood added. There are a number of EAC countries with a military presence in Somalia and becoming a key member of this group would enable these relationships to expand beyond a security framework.

However, Mohmood says, “EAC members would also have to be cautious about insecurity being exported from Somalia to their countries.”

Hidden shortfalls

Yahye Amir, an economist, says Somalia could encounter hidden shortfalls regarding its membership in the bloc if the country does not thoroughly examine some aspects of being a member. The taxation of imports is one major issue that has become an important source of revenue for the government in the absence of significant Somali exports.

Additionally, Yahye remains pessimistic about Somalia’s future tax revenues from import commodities, as its membership in the EAC will exempt certain items from taxation. He believes this will not only affect small factories but can even cause a total collapse of the economy.

The Mogadishu-based economist warns that further scrutiny of the agreement is warranted particularly when it comes to production. Given that Somalia currently collects revenues from all commodities docking at its ports and airports, should the agreement be signed, it would no longer collect revenue from these items if they are produced by a non-EAC citizen or non-EAC-owned factories.

“The fact that the product is made in Kenya but the factories making it belong to Chinese or British nationals means Somalia will suffer the loss and that is one of the reasons Somalia has always avoided joining this market,” Amir says.

He points to Chinese, Indian, or British-owned firms in Kenya, but can label their products as made in Kenya, making it impossible for member states to collect taxes as per details of the EAC agreement.

Bashir Ahmed, a civil society activist, is also not optimistic about the EAC. “Somalia should not rush into joining the EAC because there must be the same underlying reasons why Somalia failed to do so when it had a strong government.”

He adds: “This would have a ripple effect and may be detrimental to the economy of our country in the short and long term”.

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