VENTURES AFRICA – Formed in 1999, the the East African Community (EAC) was established with a vision of being prosperous, competitive, secure, stable and politically united East Africa. Landlocked Burundi is considered as the weakest link of the five countries that make up the bloc, but is ironically one of the biggest gainers in its shared prosperity. However, the current political instability ravaging socio-economic activities within Burundi threatens to plunge the poverty-ridden nation deeper into chaos, and its neighbours will be expected to endure a fair share of the consequences.
The economic growth of countries over the past decade has been impressive at 6.2 percent. The Economic Commission for Africa (ECA) projected that the growth will continue in 2015 at 6.8 percent, driven largely by Uganda and Kenya. However, the crisis in Burundi, instigated by its president’s decision to further his political mission, is undermining the growth of the economic bloc.
The decision of Burundian President Pierre Nkurunziza to run for a third term in office has stoked tension, barely a decade after a historic peace accord ended years of civil war. Wide protests had followed his party’s choice of the former rebel leader for re-election in June. Some locals, however, argue that his candidacy violates the country’s constitution – which mandates a maximum two-terms.
President Nkurunziza remains defiant in his quest to seek another term despite local and international pressure on him to back down from contesting. Rather, the failed attempt by a faction of the military to unseat him, while he was away in Tanzania last week, seems to have strengthened his resolve.
The crisis in Burundi, however, continues, heightening fears in neighbouring countries of a spillover effect. “We are expecting if the situation in Burundi gets worse there could some economic effect on Uganda,” Nebert Rugadya, a business commentator in Kampala, told the BBC.
Burundi is important to the EAC’s regional economic plan which aims to create a single market. Projects worth billions of dollars show how committed the bloc is to develop the region’s economy. But crisis in Burundi, whose capital, Bujumbura is part of the trade routes the EAC wants to develop in the region, signals a setback.
François Conradie from the African economic consultants NKC paints a gloomy picture if the crisis continues. “If matters unravel further in Burundi then the Hutu-Tutsi dynamics which informed its civil war will come to the surface again, and play a role in tensions in the DRC’s Kivu provinces,” he told BBC. The conflict between ethnic Hutus and Tutsis at the time left around 300,000 people dead. President Nkurunziza was during the conflict among the mainly Hutu rebels fighting against the army, which was then dominated by the Tutsi minority. More than 112,000 refugees have already fled Burundi, most of them to Rwanda, Tanzania and the Democratic Republic of Congo as violence and intimidation of protesters continue.
Burundi, Kenya and Uganda, contribute troops to the African Union force fighting al-Shabaab in Somalia. The terrorists have retaliated by carrying out violent attacks in Kenya and Uganda. Nkurunziza said he was with leaders of the EAC to discuss this.
“You know that Burundi is among the countries that is contributing troops in Somalia and that’s why I came here to contact my friends and my fellow presidents in Kenya and Uganda and these countries are being targeted by al-Shabaab,” Nkurunziza said in French.
EAC Average Real Growth Rate (in percent)…Burundi has always lagged
Source: World Economic Outlook, International Monetary Fund
Burundi’s economy has grown annually at over 4 percent since 2012, it remained stable last year at about 4.7 percent, riding on the back of a rebound in coffee production and growth of the construction industry. However, foreign investment in the country remain very low when compared with other countries in the EAC. According to Transparency International, Burundi is among the most corrupt countries in the world, hence the reluctance of donors to invest in the country. Incessant conflict also discourage them from pumping in development funds. An average of $11.20 per inhabitant in FDI goes to members of the EAC, as against Burundi’s $0.04 per inhabitant, Katrin Wittig wrote.
Kermas group was one of the few foreign firms that took a bet on the east African nation, investing in its mining sector. The European firm is building a nickel and iron mine through the Burundi Mining Metallurgy Ltd. where it holds majority stake.
Kermas’s spokesperson Kreso Raguz told the BBC of the company’s sadness about the crisis in Burundi. “Burundi’s economy is something we are very interested in, as well as stability in that country and that is why we can only hope that a peaceful solution of these issues in Burundi will be found soon.”
Sadly, a peaceful solution seems far-fetched as the resolve of Burundians to ensure the president does not run for a third term is evident in their continued protests despite police crackdown. President Nkurunziza remains unperturbed as his only response to the violence in the country so far has been adding a week extension to the parliamentary election date. The presidential election is expected to still hold as scheduled, except the president listens to the advice of his Kenyan counterpart. Uhuru Kenyatta was reported to have advised Nkurunziza to postpone June’s presidential election due to the ongoing crisis. Already, the aid-dependent country has been hit by suspension of support from donors. The EU has withheld €2 million, out of the €8 million designated for elections. Belgium also said it would pull out of a €5 million police cooperation deal it jointly funds with the Netherlands.
According to the Africa Economic Report 2015, deficit in fiscal balances in East Africa is expected to slightly widen to 3.7 percent of GDP, partly caused by Burundi. This will be underpinned by high spending on military and civil servant salaries and public spending on imported goods.
The consequences of events in Burundi may be grave for the nascent economy, but it also poses a major setback to the progress achieved so far by the EAC. Leaders of the economic bloc should put more effort into helping Burundi solve its issues.