Uganda is one of the founding members and a signatory to the East African Community (EAC) treaty. EAC is a regional intergovernmental organisation of six Partner States namely: the Republics of Burundi, Kenya, Rwanda, South Sudan, the United Republic of Tanzania, and the Republic of Uganda. The work of the EAC is guided by its Treaty which established the Community. It was signed on 30 November 1999 and entered into force on 7 July 2000 following its ratification by the original three Partner States - Kenya, Tanzania and Uganda. The Republic of Rwanda and the Republic of Burundi acceded to the EAC Treaty on 18 June 2007 and became full Members of the Community with effect from 1 July 2007. The Republic of South Sudan acceded to the Treaty on 15 April 2016 and become a full Member on 15 August 2016. The EAC is home to 150 million citizens, with a land area of 1.82 million square kilometres and a combined Gross Domestic Product of US$ 146 billion.
The EAC operationalizes the Treaty through medium-term development strategies. The 1st Development Strategy covered the period 1997 -2000 and focused on the re-launching of the EAC, a period usually referred to as the confidence building phase. The 2nd Development Strategy covered the period 2001 -2005 and mainly focused on the establishment of the EAC Customs Union and laying the groundwork for the Common Market. The 3rd Development Strategy (2006 – 2010) prioritized the establishment of the EAC Common Market and while the 4th Development Strategy covering the period July 2011 to June 2016 mainly focused on the implementation of the EAC Common Market and the establishment of the EAC Monetary Union. EAC is currently implementing its fifth development strategy (2016/17 - 2020/21) which aims to “build a firm foundation for transforming the East African Community into a stable, competitive and sustainable lower middle income region by 2021”
The Customs Union
This is first regional integration milestone, and became fully fledged in 2010. Under this pillar, EAC Partner States agreed to establish free trade (or zero duty imposed) on goods and services amongst themselves and agreed on a Common External Tariff (CET), whereby imports from countries outside the EAC zone are subjected to the same tariff when sold to any EAC Partner State. Goods moving freely within the EAC however are expected to comply with the EAC Rules of Origin and with certain provisions of the Protocol for the Establishment of the East African Community Customs Union.
EAC African Community inked a Joint Action Plan with India in readiness for Mutual Recognition Agreement to facilitate faster clearance times for accredited traders in August 2021. The signing of a Joint Action Plan between the EAC and the Government of India will seek to benefit traders from the EAC region in terms of faster clearance of their goods and lower costs of running their business. The Joint Action Plan will pave the way for a full Mutual Recognition Agreement (MRA) between the two parties. Once realised, the MRA will benefit companies under the Authorised Economic Operators (AEO) Programme run by the EAC Partner States under the coordination of the EAC Secretariat since 2008.
The Common Market
The second regional integration milestone, came into force in 2010. It requires EAC Partner States to maintain a liberal stance towards the five Freedoms of movement for all the factors of production and two Rights between themselves. These Freedoms and Rights include:
- Free Movement of Goods
- Free Movement of Persons
- Free Movement of Labour / Workers
- Right of Establishment
- Right of Residence
- Free Movement of Services
- Free Movement of Capital
EAC Partner States have kept momentum in facilitating free movement of goods, services, labour and capital.
The East African Monetary Union
This is the third regional integration milestone, which came into force in November 2013. It lays groundwork for a monetary union within 10 years and allows the EAC Partner States to progressively converge their currencies into a single currency in the Community. In the run-up to achieving a single currency, the EAC Partner States aim to harmonise monetary and fiscal policies; harmonise financial, payment and settlement systems; harmonise financial accounting and reporting practices; harmonise policies and standards on statistical information; and, establish an East African Central Bank. So far, significant progress has been recorded in terms of Partner States currencies convertibility; harmonization of banking rules and regulations, fiscal and monetary policies, and trading practices and regulations in the Stock Exchanges.
In November 2021, the Sectoral Council on Finance and Economic Affairs (SCFEA) agreed on the Hybrid Model of Financing the EAC Budget. The new model demands EAC Partner States to contribute equally 65% of the budget while the remaining 35% of the total budget will be contributed based on the assessment of Partner States’ average nominal GDP per capita for the previous five years as assessed by the World Bank. The agreement on the new model came after the findings of a study on the required reforms to align the EAC structure, programmes and activities with the financial resources available from EAC Partner States in order to ensure sustainability of the Community while addressing the dependency syndrome.