Regional news update – EAC Summit to discuss inflation and economic challenges

EAST AFRICAN COMMUNITY SUMMIT DISCUSSES INFLATION CRISIS

The current rise in commodity prices and the cost of fuel made its way on to the agenda of the Head of State Summit of the East African Community, where the presidents will discuss a strategy to combat price rises, and the cost to their national budgets of such an intervention. The entire region is suffering from the sharp increase of global crude oil prices, triggered by the political chaos in several oil producing countries in North Africa and the Middle East, and the fallout has been sharp and swift, as rising transportation cost continues to drive food prices up. Combined with poor harvests as a result of a severe drought in parts of Eastern Africa basic food prices for maize, matooke and other staple foods consumed in the region have skyrocketed and this has led to the populations having to tighten their belts even more, providing a fertile ground for political incitement.

In Uganda opposition (mis)leaders attempted to use the economic hardship scenario to incite the population but with limited success so far, as the ringleaders found themselves swiftly arrested and charged in court over a series of public order offenses committed by them. They are thought to be in league with a section of the media which’ reporting too borders on incitement, but worse, they have apparently also managed to spread their evil gospel to neighbouring countries where security organs are now preparing to deal with demonstrations in very much the same way as the Ugandan police has done in recent days.

Kenya has meanwhile reacted first in lowering excise duties and taxes on fuel to cushion the most recent rise by about 11 cents a litre, against which motorists already protested, while Uganda, Rwanda, Burundi and Tanzania are still mulling over what measure they will take, if any, to head off a further rise in inflation, which has galloped into the double digit figures in much of the region within the last month.

Unions from across the region are said to be in touch with each other to coordinate demonstrations and strike action is planned too, as demands for immediate wage increases have already been voiced by union activists.

The oncoming Easter season has brought plenty of tourists into East Africa, leaving lots of money behind, but with the onset of the low season after the Easter weekend earnings from tourism too are due to drop before business traditionally gets back into gear by July. However, should demonstrations and the almost inevitable violence inflicted alongside by political hooligans and criminal looters make global headlines, the East African destinations may well get into the ‘bad books’ of tour operators, as anti travel advisories – often said to be the bane of the East African travel industry – will quickly spring up and spread their wings.

What is clear is that this global economic phenomenon will need to be dealt quickly and lessons learned during the meltdown of 2007 / 2008 have to be applied, mainly that global cooperation will be needed to get inflation under control, spur food production to eventually lower the prices of these commodities again and bring stability to oil producing countries to end panic buying and market speculation.

The East African Community Summit’s results and declarations due out later this week will give a hint which way governments in the region intend to go and it can only be hoped that the can agree on combined and coordinated responses to deal with these challenges.

Watch this space.

%d bloggers like this: