Resurgence in agriculture, infrastructure and manufacturing is expected to lift East Africa’s economic performance in 2018, an outlook by the African Development Bank (AfDB) shows. East Africa remains the fastest-growing sub region in Africa, with estimated growth of 5.6 per cent in 2017, up from 4.9 per cent in 2016. Growth is expected to remain buoyant, reaching 5.9 per cent in 2018 and firming further to 6.1 per cent in 2019. “Strong growth is widespread in the sub region, with many countries including Djibouti, Ethiopia, Kenya, Rwanda, Tanzania and Uganda growing five per cent or more” the bank says in its Africa Economic Outlook 2018. Agriculture will rebound after poor harvests last year on improved rainfall, the bank said noting that inflation spiked to nearly 10 per cent in the region, fuelled by a rise in food prices especially in Kenya, where the effects of the early 2017 drought reduced the maize harvest, causing chronic shortages of the staple. Median inflation “Median inflation is projected to fall sharply in East Africa, partly as a result of an improved harvest” the report notes. Consumerism and mega infrastructure projects are s also expected to bolster growth this year. “Private consumption is the most important driver of growth in Comoros and Kenya while public investment in infrastructure has been instrumental in Djibouti and Ethiopia. Construction will remain strong. In a few countries, continued expansion of services, including information and communications technology, will be key,” the report says. “Manufacturing may increase the share of...

Cost and time overruns are the major reasons infrastructure projects are abandoned in Kenya. This is according to a new report by Deloitte East Africa which reports that 48 percent of projects were over budget and 87 percent of projects have a time overrun. Deloitte Africa Infrastructure & Capital Projects Leader Jean-Pierre Labuschagne noted that the project overruns in Kenya were due to procurement delays – either upfront or during the construction period which results in significant cost escalations. The Deloitte Construction 2017 report finds that where projects are contracted irregularly, procurement challenges can be a major factor leading to project delays and cost overruns. “Approximately only 20 percent of projects (from inception) in Africa reach financial closure and are able to move to execution,” he added. Labuschagne says governments have a major role to play through project management, oversight, use of independent engineers, cost and delivery assurance as well as the use of technology to monitor delivery of projects. However, despite the hurdles, the number of projects in Africa increased by 5.9 percent in 2017 to 303, with the Southern Africa region contributing the lion’s share with 93 projects. East Africa registered the highest jump in the number of projects in 2017, defying a general downward trend across most African economies. East Africa, which includes Burundi, Comoros, Djibouti, Eritrea, Ethiopia, Kenya, Rwanda, Seychelles, Somalia, Tanzania and Uganda had 71 projects, a 65 percent jump. Southern Africa had a 9 percent growth while North, Central and West Africa declined by 48...

Kenya's Ambassador to Ethiopia Catherine Mwangi called on both governments to use the long and peaceful relations that exists between the countries to exploit economic opportunities. While talking to The Ethiopian Herald, Ambassador Mwangi stated that both countries need to enhance their economic engagement via the construction of infrastructures, such as roads, railways and cross-border trade corridors, as well as power transmission lines. Despite the two countries sharing longer border and having exemplary diplomatic and political ties, their economic relations have not yet reached at the desired level. With this in mind, the Ambassador pointed out that Ethiopia and Kenya need to maintain the ongoing extensive infrastructural development activities and invest in mutually-benefiting projects to replicate the strong diplomatic and political ties in the economic sphere. Ethiopia and Kenya are working on the completion and operationalization of the Ethio-Moyale asphalt road and the power transmission line that would further boost intra-trade. According to the Ambassador, the strong partnership between Ethiopia and Kenya would be the centerpiece in enhancing the economic integration of IGAD member States. She said: "Given the relatively peaceful condition of both Ethiopia and Kenya; their robust economic cooperation would have a pivotal role in pacifying the volatile East Africa and bringing prosperity to the region." She remarked that the two countries' collaboration would also contribute hugely to AU's vision of economic integration, and intensify trade and people-to-people relations in the IGAD region. Ethiopia and Kenya have waged war on poverty and are improving the living standard of...

‘America first does not mean America alone,” President Trump declared last month at the World Economic Forum in Davos, Switzerland. This sudden burst of pragmatism from an avowed nationalist showed what a difference a year can make. Denouncing the “false song of globalism” during his presidential campaign, Trump, on his third full day in office, canceled the Trans-Pacific Partnership, a regional trade deal with Japan and 10 other countries. He then denounced Canada, Germany and South Korea for exporting more to the United States than they import. He promised to renegotiate trade pacts with Europe, Canada and Mexico and get a better deal for American workers. In Davos, however, he reached out with conciliatory words to the very free-trading and globalizing elites he has consistently maligned. Clearly, Trump’s views on trade and globalization have evolved since his insurgent campaign. This may well be because of the rapid gains in the past year of a country he did not mention by name. In fact, Trump chose in Davos to affirm that “America is open for business” because it was in these same Alpine heights, three days before Trump was inaugurated as president, that China seized the opportunity to claim leadership of the global economy. With the United States seemingly in a protectionist crouch, China had become, despite all its problems, indispensable. “In a world marked by great uncertainty and volatility, the international community is looking to China,” Klaus Schwab, the founder of the World Economic Forum, said last year while introducing...

East Africa remains the fastest-growing sub-region in Africa, with estimated growth of 5.6 percent in 2017, up from 4.9 percent in 2016. This is according to the recently launched 2018 African Economic Outlook. The report notes that Africa’s growth is expected to remain buoyant, reaching 5.9 percent in 2018 and 6.1 percent in 2019. Strong growth is widespread in East Africa, with many countries including Djibouti, Ethiopia, Kenya, Rwanda, Tanzania and Uganda growing 5% or more. The report also attributes the accelerated growth particularly in Kenya and Comoros toprivate consumption while also pointing out that public investment in infrastructure has been instrumental in Djibouti and Ethiopia. It also indicates that construction activity will remain strong. In a few countries, continued expansion of services, including information and communications technology, will be imperative. Manufacturing activity may increase the share of industry, particularly in Kenya and Tanzania. From here at Optiven, we believe that this positive outlook, especially on construction activity in Africa, and in Kenya by extension, is a positive thing for the real estate industry. “We are extremely excited to be part of the key drivers who will help accelerate Kenya and Africa towards more economic prosperity. We envisage an Africa that will have addressed housing conditions for the millions of Africans who still have no place to call home,” says Mr. George Wachiuri, CEO, Optiven Group. African economies have been resilient and gaining momentum. Real output growth is estimated to have increased 3.6 percent in 2017 and to accelerate to...

London-based oil explorer Tullow on Wednesday said it had pumped additional $2.9 billion (Sh293 billion) into the operation targeting full-scale export of Kenya’s oil to begin in four years’ time. Tullow, which has already spent more than $1 billion (Sh101 billion) in exploration activities over the past six years, said in a trading update that it plans to invest the additional amount in the development of the oil fields and the building a pipeline linking Turkana to Lamu. “After over six years of hard work, we can now move forward to commercialising these low-cost resources through a phased development of the basin involving a central processing facility and an export pipeline to the Kenyan coast,” Tullow’s executive vice president for East Africa, Mark MacFarlane, said in a statement. Tullow says the gross capital expenditure is estimated at $2.9 billion (Sh293 billion) comprising a $1.8 billion (Sh182 billion) upstream investment and $1.1 billion (Sh111 billion) for the 750-kilometre pipeline. The multinational’s full-blown commercial operations will build on the government’s early oil pilot scheme, which is expected to see the country begin small-scale exports later this year. Tullow’s massive capital expenditure is a signal of the oil revenues that will be eaten up by the capital-intensive business since the company is entitled to recover its expenses over the years. The government has moved to hire an independent firm to audit Tullow’s expenses. The move to full commercial operations is expected to give a significant revenue boost to State coffers, especially if the...

The International Air Transport Association (IATA) has urged governments to urgently address the infrastructure challenges airlines face to secure the industry’s future. Alexandre de Juniac, IATA’s director general and CEO, said there are worrying infrastructure gaps, which are increasing operational costs and, thus affecting the profitability of the sector. The official also advised governments against privatisation of airport infrastructure, saying such a move would “eat into” the sector’s profitability. “We have not found the correct regulatory framework to balance the interests of investors to get profits with the public interest for the airport to be a catalyst for economic growth,” he said. In a statement, De Juniac highlighted the need to build infrastructure “robust enough to meet the high standards of airline operations and passenger convenience”. This comes at a time when government of Rwanda is seeking to establish new regulations governing civil aviation in the country to help make it more efficient. Minister of State for Transport Eng Jean de Dieu Uwihanganye told Parliament on Monday that the new regulations will improve the way Rwanda investigates aircraft incidents and accidents. Uwihanganye said the proposed regulations will also enable the national carrier, RwandAir, to enter new markets in Europe and America “with ease because the new aviation rules are in line with standards requirements in Europe and the US. The draft law empowers the Minister for Infrastructure to conduct aircraft accident investigations, among other things, and also outlines how Rwanda will work with other organisations and governments to investigate the...

Last week, Tanzania’s industry, trade and investment permanent secretary Elisante Ole Gabriel was in Kenya again for what is becoming a periodic bilateral ritual. Prof Gabriel and Kenya’s trade Principal secretary Chris Kiptoo signed a deal to eliminate non-tariff barriers (NTBs). A keen observer should by now have lost the count of how many times the two countries have signed such pacts in recent months. Perhaps the only new thing this time round was the choice of Mombasa as venue. Otherwise, they have been reached before at the levels of trade lobby groups, PSs, ministers and even between President Uhuru Kenyatta and Tanzania’s John Magufuli. A hint of the official inertia can be gleaned from the same list of pending disputes. They include multiple levies, inspection fees, failure to grant preferential treatment, slow customs procedures and slow implementation of the East African Community (EAC) directives. Trade has always been based on a country’s comparative advantage.  A country is supposed to concentrate on what it can produce efficiently for export. In East Africa where countries produce identical primary goods and rely on same manufacturing technology, it is the NTBs and not the usual competition parameters like price and quality that determine survival. Secondly, people will always buy what they cannot produce. That explains why Kenyans will always import more from South Africa with whom we share no common market. In short, NBS are here to stay. Back to list of disputes brought before Dr Kiptoo and Prof Gabriel. The failure by...

Last week, a Cabinet secretary appeared to find nothing awkward in importing tilapia as long as there was a shortage and that import taxes were paid. This, I thought, was an unfortunate statement coming at a time the government was launching the four-pillar development plan that includes food security. The CS’s opinion was also insensitive to the fish sub-sector stakeholders who appear convinced that these imports, mainly from China, are significantly threatening their enterprises. A lot of convincing is needed that indeed our lakes, the Indian Ocean economic zone, and fish-farming cannot meet local demand for fish. However, if indeed there is a genuine shortage of fish, then we have a serious problem with the promotion and husbandry of the fisheries sub-sector. The CS should have explained the steps, if any, that the government is taking to ensure that local demand for fish is met while also planning to produce surpluses for exports through value adding processing. The tilapia case study is a perfect example of how unrestricted imports can make it difficult for the government to achieve food security and agro-industries goals. Tough and resolute decisions on protection of local production from imports will have to be made if we are to deliver food security, value adding processing and jobs. In this respect let us not shy away from borrowing from the US President Trump’s recent expedient trade actions to restrict imports which he believes are impairing US local production and jobs creation. If we do not restrict imports...

China is funding a quarter of large-scale construction projects in eastern Africa, cementing Beijing’s ascendancy in the region’s economic diplomacy at the expense of traditional allies like the United States and the European Union. The latest Deloitte Africa Construction Trends Report 2017 shows China is bankrolling 25.4 per cent of the mega projects in the region. The Asian tiger is followed by international development finance institutions like the World Bank, which comes in second at 19.7 per cent. African development finance institutions like the African Development Bank (AfDB) are ranked third at 15.5 per cent while funds from private domestic sources stand at 4.2 per cent. The EU accounts for 8.5 per cent while single countries contribute seven per cent, with the US trailing at a paltry 2.8 per cent. “China is the most prolific funder of large-scale construction projections in East Africa financing one in four projects in the region,” says the report released in Nairobi on Tuesday. Deloitte Africa infrastructure and capital projects leader Jean-Pierre Labuschagne linked the rise of Beijing in the region to a cocktail of geo-politics as more EAC nations look east and abandon their traditional partners in the search for new markets by the resource-hungry Asian behemoth. “You have a Chinese economy that is booming, possibly flattening a little bit because of the world economy and so they are looking to export those services and expertise,” Mr Labuschagne told the Business Daily. “I do think there is also an element of a political statement behind...