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BW Businessworld

Business That Binds

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Decades after politics divided countries, economics is bringing them together. Like Pakistan and India, former British colonies in East Africa are working hard at economic integration. The last few months saw a transformative change in India and Pakistan's economic relations. After the British left, the two countries were left squabbling and warring. Now they plan to make money together.

A similar change is sweeping through eastern Africa. Uganda, Kenya and Tanzania emerged from British rule in the early '60s. Tanzania became independent in 1961, Uganda in 1962 and Kenya in 1963. Under the British control, these countries operated as East Africa and had deep economic ties fostered by imperial powers. So much so that the East African Currency Board managed a common currency. It was linked to the British currency.

For about a decade after independence, the three countries maintained the economic integration of East Africa. But the unity of the east African countries began to disintegrate from the '70s. After Idi Amin came to power in Uganda in 1971, the relations between the three countries deteriorated.

Over the next few years, the three countries developed into three difference economies. Uganda became a dictatorship with all business decided by one leader. Amin threw out the Asian trading community  that was integral to the economy.  Tanzania turned towards socialism as the influence of USSR grew. Only Kenya remained an open market economy.

After decades of decline and slow growth, Uganda and Tanzania are back on the path of economic transformation.

East Africa is stronger, bigger and better organised. The East African Community was formed in 2000 and later Rwanda and Burundi also became members.

The integration of the region into a strong economic entity has picked up a strong momentum now. Uganda is celebrating 50 years of freedom next week and all debates are about growth and job creation. A strong and vocal civil society is forcing anti-corruption measures.

More than divisive politics, it is inclusive economics that is driving change. "Economic integration of east Africa is inevitable," Cris Rwakasiisi, Senior Presidential Advisor, tells me in Kampala. "This region has a history of working as an single economic entity. And now the leaders realise that there is a future too in economic integration."

India has a great role to play in the economic integration. The Chinese are busy offering easy credit to access the mineral resources of East Africa. India can make its presence felt by sharing knowledge and investing in skill creation.

Indian traders and artisans have been coming to East Africa for over a century. Those linkages can be developed further to boost the economic growth of the region.

After all, India is also re-discovering the pleasures of doing business with neighbours.

(Pranjal Sharma is a senior business writer. He can be contacted at [email protected])