The Political Economy of the IGAD

(Mehari Taddele Maru (Dr. iur.)*

This piece is on the Intergovernmental Authority on Drought and Development (IGAD) and the IGAD region which is also known as the Horn of Africa. It provides a brief overview of the status of the integration of IGAD’s institutional structures, main challenges and future plans as well as a brief assessment of the requirements for success of the IGAD integration agenda.

I. Introduction

IGAD is a Regional Economic Community (REC) in Eastern Africa and one of the eight building blocks of the African Economic Community (AEC) of the African Union (AU). IGAD was launched during the 5th IGAD Summit held in Djibouti on 25-26 November 1996, replacing the Intergovernmental Authority on Drought and Development (IGADD) founded in 1986 by Djibouti, Ethiopia, Kenya, Somalia, Sudan and Uganda. Eritrea and South Sudan joined IGAD (then IGADD) in 1993 and 2011 as the seventh and eighth Member States respectively.

The IGAD region covers an area of 5.2 million km2. The region has about 6960 Km of coastline bordering on the Indian Ocean, Gulf of Aden, Gulf of Toudjoura and the Red Sea. Also, the IGAD region has a total of 6910 Km of international borders with Egypt, Libya, Chad, Central African Republic, Democratic Republic of Congo, Rwanda and Tanzania. The IGAD community is strategically located in the Horn of Africa and blessed with a good climate, rich hinterland, a long coastline with deep natural ports and situated in the major geopolitical and geo-economical location of the Red Sea and Suez Canal, with busy traffic routes for tourism and commodity markets in Africa, the Far East, Middle East, and Europe.

The IGAD region shares the Red Sea with the Middle Eastern countries, and belongs to the same economic, religious, historical, migratory, trade and security zone with the Middle East. The IGAD region is endowed with substantial natural resources such as oil and gas reserves, wildlife, high historical and natural tourism potential, diverse ecosystems, alternative energy resources (hydroelectric, solar and geothermal), marine, water and livestock resources.

IGAD is an agrarian region in which agriculture, including both crop and livestock production, remains the backbone of the economy. Employing an overwhelming majority of the population, and contributing almost half of the overall GDP, exports of agricultural (primary) commodities still constitute more than 60 percent of export earnings. The opportunity for the expansion of agricultural products and livestock remains untapped. With an estimated livestock population of hundreds of millions, the IGAD region has not made adequate use of its resources.

The Security nexus of water security, food security and energy security will increasingly be pronounced in the arid and semi-arid lands (ASALs) of IGAD as the demand for fresh water exceeds that available for people and livestock. This problem has been compounded by weak support from government and competition for resources amongst water users, which creates the potential for armed conflict. Most water-related interventions are short term and target a single problem, rather than the entire complex set of problems that communities face.

Looking at the individual performance of the import and export trade regimes in Member States, the export sector reflects significant growth. Nevertheless, the diversifications of export items as well as their export destinations have not increased. Due to poor manufacturing sector performance, the balance of trade remains negative and may continue as such for the near to medium future. Agri-processing and non-traditional commodities such as horticultural crops (including flowers) and meat products have increased in recent years, but the share of these commodities in terms of total export earnings is quite low.

About 80 percent of the IGAD region is classified as Arid and Semi-Arid lands (ASALS), which receive less than 600 mm of rainfall annually. Thus, about 40 percent of the total landmass is considered agriculturally unproductive. Socio-economically, most of the IGAD Member States belong to the world’s Least Developed Countries (LDCs). With a total population of well over 226 million people, nationals of IGAD MSs earn USD 1000 less than their African brothers and sisters in the remaining Sub-Saharan countries where earnings average about USD 1624.

The IGAD region (particularly Somalia, Ethiopia, South Sudan) is one of the highest recipients of international aid. IGAD’s gravest challenge to peace and prosperity comes not only from a lack of hard security, but also and mainly from a lack of soft security. Soft security relates to human vulnerabilities, extreme poverty, social injustice and discrimination, unjust inequality as well as socio-economic and political shocks. With severe climatic changes and environmental degradation and heavy dependence on agriculture and livestock, the region is very prone to persistent extremes of severe droughts and flooding.

Due to protracted conflicts and unresponsive governance, the populations in the IGAD region regularly experience droughts and disasters that easily fester into grave food insecurity and famine. In the arid borderlands of IGAD, droughts are frequent and often devastating and can cause communal clashes over scarce pastures and water resources. Drought in 2011 and 2016 affected more than 22 million people in the IGAD region that caused many deaths and massive displacement, often in resources-scarce border areas. As a result, in terms of the UNDP’s Human Development Index, all IGAD MSs are listed as exhibiting low human development. Half of the population lives below the poverty line of one US Dollar (USD) per day. Resource scarcity, displaced communities, poverty and underdevelopment in the border areas are exacerbating both communal conflict and civil wars.

II. IGAD: Mandate, Vision, Mission and Normative Framework

With more media coverage of its peace and security work, IGAD is becoming more known as an interventionist REC, than as a regional integrationist economic bloc of the AU. Indeed, this reflects the instability of the region. The IGAD region’s historical legacy in mediation and peace support operations takes pride of place in the region’s past and current engagement and regional diplomatic efforts. Under the Intergovernmental Authority on Drought and Development (IGADD), the forerunner to IGAD, the IGAD region initiated the launching of a peace initiative in Sudan [leading to the Comprehensive Peace Agreement (CPA)] and robustly supported the AU-High-level Implementation Panel (AUHIP).

For all practical purposes, AMISOM is effectively ‘IGADSOM’ as Member States are the major sources of the troops and doctrine. IGAD also runs the peace process in Somalia. Recently, IGAD-led mediation resulted in the signing of a compromise agreement for a transitional government of national unity (TGoNU). IGAD plays an important role in the Joint Monitoring and Evaluation Commission (JMEC), and chairs the Ceasefire and Transitional Security Arrangement Monitoring Mechanism (CTSAMM).

Since April 1995, the original twin mandate of “IGADD” on countering Desertification and Drought, was replaced by six priority areas: Agriculture, Livestock and Fisheries Development (ALFS); Natural Resources and Environment Protection (NREP); Social Development (SD); Regional Economic Cooperation and Integration (RECI); Peace and Security (PS); and Gender Affairs (GA). IGAD’s over-arching objective of regional integration is to create an open, unified, regional economic space for private operators – a single market open to competitive entry and well integrated into the global economy. This requires both regional infrastructure as well as the gradual harmonization of policies for the removal of physical and non-physical barriers to inter-state transport and communications.

IGAD has successfully developed more than 32 policy related documents dealing with integration, economic development and peace and development. Nonetheless, the region has lagged behind in seizing integrative opportunities except in regard to infrastructural development. Furthermore, the various continental role players, mainly the AU’s major blue print documents such as Agenda 2063, the Constitutive Act, the Minimum Integration Plan, and PIDA, among others, inform IGAD’s work.

III. Current Status of Integration

However, IGAD is as an infrastructural-led REC. In the past ten years, IGAD has shown significant achievements in building economically critical multifaceted infrastructures. If maintained at the current rate of growth, these achievements would make IGAD one of the leading RECs, if not the leading REC, in Africa. Infrastructural development anchors integration in sound economic fundamentals. Once built, they are more sustainable, avoiding too much dependence on top-down initiatives, and could have a positive impact on local communities along infrastructural lines. People, skills and capital follow in the wake of easy and less costly transportation and communication infrastructure. Fast mobility of people, goods and services expand opportunities for more sustainable integration.

a. Efforts of Integration

The IGAD region has invested quite heavily in building transportation corridors. IGAD has unveiled a very ambitious infrastructural project in the name of LAPSSET (Lamu Port to South Sudan and Ethiopia). Billed as the largest investment opportunity in Africa to date, with an estimated current budget of US$30 billion, which is expected to rise still further, the project will no doubt need to attract substantial foreign investments. There were great hopes at the outset that reliance on such outside funding would be constrained by cost-sharing among the three countries, Ethiopia, Kenya and South Sudan.

Kenya pledged to fund twenty five percent of the budgets or devote approximately six per cent of its annual Gross Domestic Product to the project during the first five years of construction, and then subsequently three or four per cent of annual GDP. The expectation was that Ethiopia and South Sudan would also cover the costs for their shares of the project. According to one formula proposed by the governments, capital investment was to be shared by their three countries on a pro-rata basis according to the respective freight volume shares (Kenya 21%, Ethiopia 33% and Sudan 46%). South Sudan and Ethiopia were expected to seek donor assistance to secure the necessary finance.

These transport corridors are instrumental for promoting economic efficiency, as they link several economic centres through various modes of transport. Among the road, air, marine and rail transportation sectors the road sector has been the most dominant. There are more than thirteen transportation corridors that link the IGAD region, passing through Ethiopia, Kenya, Somaliland, Sudan, South Sudan, and Djibouti. In a bid to speed up integration in the IGAD region, the IGAD Horn of Africa Initiatives aim to construct 7,000km of road, rail links and pipeline links between IGAD Member States in the next five years.

The lion’s share of the region’s public expenditure on current regional transformation is devoted to the transportation sector. This includes 4,000km of road construction of which 1,500 km have been completed in Ethiopia. Located at the geographic centre of IGAD, Ethiopia, for its part, has already completed road construction within its borders. Currently, Ethiopia is connected with Kenya, Sudan and Djibouti through road networks and additionally with Djibouti by railway. The Ethiopian part of the road to South Sudan is also complete. The 505 km link from Isiolo to Moyale (Ethiopia) has been under construction, with funding from by the African Development Bank, European Union and the Government of Kenya. The design for 1,256 kms of road to the South Sudan border (Lamu – Isiolo – Lokichar – Lodwar-Nadapal) is complete, but actual construction has not progressed.

With Ethiopia’s goal of becoming a hub of multi-infrastructural regional integration among IGAD countries in supporting integrative infrastructural developments, particularly hydroelectric power and road infrastructure, such ambitions could in a very limited way be affected by the continuing crisis in South Sudan. Aiming to expand the current hydropower production by 2000 percent, with the support of the African Development Bank (AfDB), Ethiopia plans to invest USD 12 billion in the next 25 years to increase its overall hydropower to 40,000 MW.

The power export plan is limited to Sudan, Kenya and later on to the East African power grid that will connect Kenya, Rwanda, Uganda, Burundi and DRC. Therefore, the crisis in South Sudan, unless it triggers a regional war between Sudan and Uganda that also involves Ethiopia, will not cause these infrastructure and power projects to be directly affected by sanctions. More importantly, the planned construction of an oil refinery project in a region of Ethiopia bordering South Sudan and Sudan could be postponed until the crisis is resolved.

Despite being in its infancy, the railway corridors are growing and are expected to continue growing in the next decade. For example, covering 4,744 kms, railway construction between Djibouti and Ethiopia was completed in 2015 and became partially operational this year.

The airline carriers in the IGAD region, such as Ethiopian Airlines and Kenyan Airways, have linked major centres in the region by air. These two carriers are well known and Ethiopian airlines have expanded their capacity in aviation training, cargo services and pass4nger and flight volumes. The maritime sector enjoys similar importance. Over the years, its capacity has grown considerably, while piracy and illegal activities have seriously undermined the sector. With more regional stability, the economic contributions of the Blue Economy, associated with marine transportation, will increase, and enhance IGAD’s integration with island states.

b. Main Challenges: Barriers for Integration

1. History of Distrust: Mutually Assured Destabilisation

The first barrier has to do with the longstanding animosity and historical mistrust among the Member States of IGAD. As a result, Member States lack the will and the determination and urgency to tackle the many existing barriers. This historical legacy partially explains the absence of commitment by the IGAD leadership on long-term investments on integrative infrastructure. For example, LAPSSET and pipeline construction will also prove immensely difficult under conditions of armed conflict. In the light of the current conflict in South Sudan, plans for the pipeline and refinery may well have to be scrapped altogether.

The economic viability of the 2100km pipeline was premised on South Sudan increasing its oil production over time. Exploration activities, however, are likely to come to a halt for some time to come, and present levels many even decline further if the fighting continues. While most road and railway construction in terms of the IGAD Horn of Africa Initiative are on schedule, those related to South Sudan have already been suspended due to the South Sudan crisis. There are also parallel initiatives by dual Members of IGAD and the EAC.

2. Poor Infrastructure: disconnected economies and landlocked countries

IGAD has a low level of infrastructure development in the region. The level of intra-state trade remains low and markets are neither inter-dependent nor inter-linked. Among the impediments to development within the region is the poor transportation infrastructure. The secession of Eritrea and South Sudan also increased the number of land-locked countries such as Ethiopia, South Sudan and Uganda.

Competitiveness of the region through trade expansion is hampered by the poor and inefficient road and rail network systems that in turn raise transport costs and lead to burdensome trade logistics. The road and railway missing links entail that the existing networks are not being optimally utilized, and that opportunities are being lost due to the lack of economies of scale necessary to attract and sustain private investments in these networks.

3. Poor Regional Leadership: More interventionist, less integrationist

Nevertheless, the majority of LAPSSET exists only on paper. A better proof for the implications of a lack of determination, commitment and finance, as well as an absence of integration, countries like Uganda was consulting with Tanzania separately excluding Kenya on alternative pipelines. There have been talks between South Sudan and Ethiopia about building a pipeline to Djibouti rather than to Lamu. This was of great interest to Ethiopia who reportedly was interested in building a giant refinery absorbing about 100,000 barrels of oil per day to meet the needs of its large population, and it may have contributed to the speed with which Ethiopia completed its end of the Juba-Djibouti highway. The LAPSSET pipeline remains on paper lacking a strong commitment and leadership by IGAD.

4. Fundamentals of Economies: Primary Goods, Non-complementarity and economy of scale

The economic mainstay of the region is agriculture, both livestock and crop production, which provides the basis for food supplies and export earnings, as well as employment for over 80 percent of the population. The contribution of industries to the respective national economies of the IGAD Member States is about 15-20 percent on average. Since they produce similar commodities, there is no complementarity between the economies of the Member States of IGAD.

5. Financial Constraints

So far, construction of the port, railway line, oil pipeline, and refinery has stalled due to the failure to secure project finance. What is more, it is difficult to see who would pay the bill. Not Juba, which faces a fiscal crisis, and not the previous prospective Asian and Gulf countries. Finally, the assumption that alternative pipeline routes will continue to be an overriding aim for Juba no longer seems to hold, at least not for the duration of the conflict because continuing distrust between Juba and Khartoum is likely to continue. An alternative pipeline route, would deprive Khartoum of crucial oil transit revenue, and would certainly lead to strong retaliatory action from Khartoum that Juba can ill-afford at the present time. The imperatives of the civil war are likely to trump the desire for alternative pipeline routes.

IV. Conclusion

In past decade or so, major indicators in the economic, social and political realms of the IGAD region show significant improvements. The IGAD region includes countries that are among the top economic performers in the world such as, for example, Ethiopia. The overall proportion of the region’s population living below the poverty line has declined.

The transformation of the economy of the IGAD region is unthinkable without also transforming the agricultural sector. Poverty eradication and overall food security could not be achieved without higher productivity in agriculture. Increased productivity in agriculture would directly improve the livelihood of 80 percent of the inhabitants of the IGAD region.

While the ultimate destination of the economic transformation relies on industrialization and the manufacturing of rich country goods, the means to reach these goals will depend on agriculture. More importantly, the main inputs for transforming the IGAD region’s economy are agricultural products that feed into the industrial sector. The various policies and strategic frameworks of IGAD and MSs also recognize and help to underpin this vital role of the agricultural sector.

Despite recent growth, and given its potential to contribute to economic development, the tourism sector is not contributing as expected. Similarly, in spite of its recent massive expansion of the quantity of services, the ICT sector suffers from infrastructure and quality related challenges, a lack of skilled manpower and a deficiency of regulatory frameworks.

By 2050, the population of IGAD will be 400 million; a substantial increase from today’s 226 million. More than 55 per cent of this population will then be at a relatively young age (below 20 years). With the current promising economic development and overall improvement in governance, there will be an increase of income, and an emerging middle class. A population of this size and vast expanses of territory will collectively provide a sizeable market, which has the potential to attract both domestic and foreign investors.

Moreover, ethnic groups of the region straddle the borders of IGAD countries, which could provide a good opportunity for regional integration, if appropriately utilised. There is a major trend for urbanisation in the IGAD region with large numbers of people from the rural areas migrating into the big urban centres in search of employment and better incomes. The average rate of urbanisation in the region is estimated at 4.1 percent. The capital cities of Addis Ababa, Nairobi and Khartoum have populations of well over three million each.

The population growth of the region will become an asset or liability depending on the transformation of the region in terms of inclusive development, governance, and food, energy and water security. Socio-economic and environmental problems in the ever-growing urban centres are on-going challenges, and present very real threats to peace and stability in some countries of the IGAD region. If effectively governed and serviced, these mega cities could also offer opportunities for the development of an integrated regional economic system. Peace and security within countries and at the regional level will be a vital ingredient of such regional integration.

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[*] With more than 15 or so years of professional working experience in the African Union (AU) and related programmes on peace and security, governance, humanitarian and migration issues, Dr Mehari Taddele is currently a member of the AU High Level Advisory Group on Humanitarian Affairs and Adjunct Assistant Professor at Addis Ababa University, the NATO Defense College (NDC), Nigerian Armed Forces Command and Staff College, the Ethiopian Peace Support Training Center, the UN Institute for Economic Development and Planning (Senegal), and the African Center for Strategic Studies (USA). A graduate of world class universities Harvard, Oxford and a former fellow of very prestigious academic programmes (such as Edward George Mason, Max Planck, Shell, Partnership for Peace) at Harvard and Oxford Universities, the Max Planck Institute and the Defense College in Italy, Dr Mehari holds a Doctorate of Legal Sciences (DSL) from JL Giessen University, Germany, an MPA from Harvard and an MSc from the University of Oxford, as well as an LLB from Addis Ababa University.

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