Factors that make regional integration attractive to International capital in-flows, a case study of the east African customs union.

Abstract

The EAC member states have in the present moved ahead to revive the collapsed cooperation and even further to form a customs union in January 2005 expanding its market to approximately 100 million people. With the formation of the union the EAC member states have had an increased labour, market, competition and more available and cheap raw materials which should attract FDI. However, since its inception EAC is yet to realize this goal. This study is aimed identifying those factors that can make EAC as a region to be able to attract foreign investors in to the community and help utilize the abundant resources and available human capital. The study was done as a case study with interviews with the executives and line managers concerned under the ministry of East Africa Cooperation in Kenya. The research identi fied some of the hindrance towards EACCU achieving its main goal of realising capital in-flows to the region by attracting foreign investors as lack of proper infrastructures, no free movement yet of labour and raw materials among partner states. corruption, in adequate power (energy) among others. For East Africa Customs union to realise this very important goal, then there is need for all the members to sustain political goodwill. This could be realized through the Partner States' strict adherence to the provisions of the Treaty. This requires giving up of a certain degree of national sovereignty by Partner States in the spirit of give and take for the higher sovereignty of the Federation. The Partner States and the Community must put in place adequate capacity both financial and human for timely implementation of the Treaty, projects, programmes and policies. The Secretariat must be strengthened to carry out its coordinative function and should effectively involve all the peoples of East Africa as a driving force of the Community. In the course of implementing the Treaty, the Community must meet the expectations of the peoples of East Africa. The Community must further create an enabling environment for the private sector to take advantage of the opportunities created.