How the Kampala Agreement of 1960s foreshadowed a different EAC regional future

This was hinted over the weekend Uganda’s President Yoweri Museveni during a press briefing at State House, Dar es Salaam after he had met his Tanzanian counterpart, Samia Suluhu Hassan.

Though never fully implemented, the Kampala Agreement represented one of the earliest attempts by African states to engineer a balanced regional development through deliberate policy coordination.

Had it succeeded, East Africa’s economic geography, political trust and institutional architecture might look very different today.

Instead, its failure became both a warning and a blueprint, shaping the trajectory of the first East African Community (1967–1977) and leaving lessons that still resonate under the revived EAC.

Independence without equality

At independence, Kenya, Uganda and Tanganyika inherited an unusually integrated economic system. Railways, ports, postal services, currency, customs administration and even income tax systems were shared designed under British rule to serve the region as a single economic space.

Yet this integration was deeply uneven.

Kenya, with Nairobi as the colonial administrative and commercial hub, had accumulated a disproportionate share of manufacturing capacity, financial services and skilled labour.

 Uganda and Tanganyika, by contrast, remained largely primary producers, exporting agricultural commodities while importing manufactured goods, often from Kenya itself.

As historian Colin Leys observed in Underdevelopment in Kenya (1975), the colonial economy had “locked the region into a pattern of internal dependency,” with Kenya at its centre. Independence removed colonial authority but not the structural imbalance.

By the early 1960s, this imbalance was no longer politically tolerable.

The Kampala Agreement: Correcting the market by design

The Kampala Agreement emerged from this tension. Negotiated in the mid-1960s among the three governments, it was designed to rebalance the East African Common Market rather than dismantle it.

According to archival analyses cited in the African Integration and Development Review (AU, Vol. 5, No. 1), the agreement rested on a radical premise for its time: that free trade among unequal partners entrenches inequality unless accompanied by corrective mechanisms.

Its core provisions included:

Planned industrial allocation

Rather than allowing industries to cluster naturally where capital and infrastructure already existed, the agreement proposed allocating specific industries to each country. Tanzania was earmarked for a radio assembly plant, motor vehicle tyres, locomotives whereas Uganda for a bicycle and textile factory, among other examples. The objective was not efficiency alone, but regional equity.

This approach echoed ideas advanced by development economists such as Gunnar Myrdal, who argued that markets without intervention tend to produce cumulative advantages for already-advanced regions.

Quotas and managed trade

The agreement allowed Uganda and Tanzania to impose import quotas on selected Kenyan manufactured goods to protect nascent domestic industries. This was a deliberate softening of orthodox free-trade principles in favour of developmental protection.

As noted by the Africa Law Centre, this marked one of Africa’s earliest experiments with managed regional trade, a concept still debated today in continental integration frameworks.

Transfer taxes

Perhaps most significantly, the Kampala Agreement introduced the logic of transfer taxation, a fiscal mechanism to offset Kenya’s industrial advantage by redistributing some of its trade surplus to its partners. This idea later found partial expression in the 1967 EAC Treaty.

In essence, the agreement sought to institutionalise solidarity as a foundation of integration.

Why it failed

Despite its ambition, the Kampala Agreement never moved beyond paper.

One reason was unilateralism. Tanzania and Uganda, frustrated by slow progress, imposed broader trade restrictions than those envisaged under the agreement. Kenya, in turn, resisted what it viewed as punitive measures against its industries.

More fundamentally, the agreement collided with divergent national visions.

By 1965, Tanzania under Julius Nyerere was moving decisively toward a socialist, planned economy. The withdrawal from the East African Currency Board and the creation of a national currency symbolised a broader desire for economic sovereignty over regional compromise.

As documented in When the Plan for a Single East African Currency Came Crumbling Down in 1965 (Daily Monitor), monetary divergence undermined the fiscal foundations required for the Kampala framework to work.

Kenya, meanwhile, was consolidating a capitalist, export-oriented path and had little incentive to accept binding constraints on its industrial dominance.

Uganda oscillated between the two poles, lacking the political leverage to enforce implementation. Crucially, the agreement lacked binding enforcement mechanisms. It was never fully ratified by Kenya, and no supranational authority existed to compel compliance.

A missed structural transformation

What makes the Kampala Agreement historically significant is not merely that it failed—but what its success might have enabled.

Had its provisions been implemented, East Africa might have developed a more geographically balanced industrial base, reducing the concentration of manufacturing in Nairobi and fostering industrial corridors in Kampala and Dar es Salaam decades earlier.

This, in turn, could have softened later political tensions. Scholars such as Rethinking the Collapse of the First East African Community (1977) argue that economic imbalance fed political mistrust, which eventually poisoned cooperation in shared services and institutions.

In this sense, the Kampala Agreement was an early attempt to address the very contradictions that later destroyed the first EAC.

From Kampala to the 1967 Treaty

Ironically, the failure of the Kampala Agreement strengthened the case for deeper institutionalisation.

Its collapse underscored that technical compromises without legal force were insufficient. This realisation fed directly into negotiations for the 1967 Treaty for East African Cooperation, signed, symbolically, in Kampala.

The treaty formalised shared institutions, including a common market, common services and dispute-resolution mechanisms. Elements of the Kampala Agreement, particularly transfer taxation, were incorporated—albeit imperfectly. Yet the underlying political divergence remained unresolved.

By 1977, amid ideological hostility, mutual suspicion and unresolved economic grievances, the first EAC collapsed.

Lessons for the present

When the East African Community was revived in 1999, its architects were acutely aware of this history.

The new treaty emphasised clear legal frameworks, staged integration and institutional checks. But it largely avoided the politically sensitive question at the heart of the Kampala Agreement: how to manage asymmetric development among partner states.

Today, similar debates have returned.

Kenya remains the region’s industrial heavyweight. Uganda and Tanzania have expanded manufacturing, but disparities persist. New members Rwanda, Burundi, South Sudan, the DRC and Somalia, add further complexity.

The Kampala Agreement’s core question remains unresolved: Can integration survive without deliberate redistribution and coordination of development?

A road not taken

The Kampala Agreement stands as one of East Africa’s great missed opportunities—not because it promised utopia, but because it recognised a hard truth early: markets alone do not integrate unequal economies fairly.

Its failure brings to the surface that regional integration is as much a political project as an economic one. Trust, shared vision and willingness to sacrifice short-term national advantage for long-term collective gain are indispensable.

As East Africa once again speaks of monetary unions, common markets and political federation, the ghosts of Kampala linger.

History suggests that without confronting structural imbalance head-on, integration risks repeating its old cycles—ambition, frustration, and fragmentation.

The Kampala Agreement was not merely an agreement that failed. It was a diagnosis that proved prescient, and a reminder that the future East Africa seeks was once imagined—then deferred.