LAST month I attended the African Leadership Forum in the Tanzanian capital of Dar es Salaam on the theme of Moving Towards an Integrated Africa. The meeting was hosted by former Tanzanian president Benjamin Mkapa’s Uongozi Institute and was attended by former presidents Olusegun Obasanjo (Nigeria), Festus Mogae (Botswana), Jerry Rawlings (Ghana), Bakili Muluzi (Malawi) and Hifikepunye Pohamba (Namibia), as well as civil society actors. Delivering the keynote address was Ugandan President Yoweri Museveni, who has long fancied himself a "Bismarck of East Africa", with dreams of creating a political federation in a subregion consisting of Uganda, Kenya, Tanzania, Burundi and Rwanda. His address pushed for a larger East African market to increase the leverage of the subregion to negotiate more effectively with external actors. Citing the high level of cultural integration in the subregion — reinforced by the common lingua franca of Swahili — he called for a political union, noting that for such efforts to succeed, East African leaders would need to explain to their 140-million citizens how regional integration could enhance their prosperity and security. I had the opportunity, from the audience, to challenge Museveni — who has been in power for 29 years — on the issue of presidential term limits, noting that on assuming office in 1986, he had criticised African leaders for overstaying in power. Museveni deflected the question by arguing that the issue was not about overstaying in power, but rather overstaying "in the resistance" — presumably to "neocolonialism". Contradicting his reputation as...

Kenya’s exports to its key markets dropped in the first half of the year, widening the current account deficit by a further $125 million, to $3.16 billion. Data from the Kenya National Bureau of Statistics (KNBS) shows that the country’s exports to Tanzania, the Netherlands, Egypt, Germany, the US and France dropped significantly compared with the same period last year. On the other hand, the country’s imports from China have grown by 50 per cent to $1.5 billion, from $1 billion over the same period last year. Exports to Tanzania have fallen for the third consecutive year, according to Kenya’s Export Promotion Council. Kenya’s exports to Tanzania include margarine, palm oil and its fractions, flat rolled products of iron, soap, vegetable fats, sugar, confectionery and household items. Kenya had also hoped that the sharp fall in oil prices would reduce its current account deficit in 2015, which had been widened by weak tourism receipts, but that has not proved the case. From the KNBS data, the country has increased its oil imports from Saudi Arabia to $339 million, up from $220.2 million over the first six months of 2014. Mercyline Gatebi, a financial analyst at Genghis Capital, said Kenya had hoped that low energy prices and the rise in economic diversification would help to narrow the shortfall over the medium term. “What we have seen is the country increasing the volumes of its oil imports, and of machinery from China, to service the capital projects that Kenya is engaged in....

East Africa stands to make about $2.6 billion annually from Kenya’s northern transport corridor, new sea ports and other mega infrastructure facilities upon completion, global consulting firm Frost & Sullivan has said. The firm said oil and gas finds will become catalysts for investment in trade logistics facilities. Industries that will benefit from infrastructure developments include hydrocarbons, mining, agriculture and retail sector. The Lamu Port Southern Sudan-Ethiopia Transport (Lapsset) corridor, comprising a crude oil export pipeline, a refined products pipeline, railways and roads linked to Uganda, Ethiopia and South Sudan, will open a new corridor in Kenya that will contribute to reducing the cost of transport. The Lamu and Bagamoyo ports are being built to expand the region’s capacity to handle goods. Bagamoyo port alone will have the capacity to handle 20 million twenty-foot equivalent unit (teu) per year. “Global and local logistics service providers will need to develop flexible end-to-end solutions to service construction and exploration work prompted by new discoveries,” Frost & Sullivan’s research analyst Siphesihle Hlela said. The public sector is investing heavily in major projects such as the $3.8 billion Mombasa-Nairobi standard gauge railway (SGR), which aims to connect Kenya, Uganda, Rwanda and South Sudan. The SGR is expected to raise Kenya’s gross domestic product by 1.5 per cent while enabling landlocked countries to export coffee, tea, agricultural goods and minerals. SGR will also handle imports. Mr Hlela said there is a race among global logistics providers to secure market share either through green investments or...

As Burundi’s President Pierre Nkurunziza begins his controversial third term in office, the whole of East Africa will soon feel the effects of a donor freeze occasioned by his decision to extend his stay in power. The EAC faces a funding crisis that could see many of its projects stall as donors call for the isolation of Burundi. Sources within the EAC Secretariat and the East Africa Legislative Assembly (EALA) in Arusha confirmed to The EastAfrican that GIZ, a leading German global development agency, has asked the bloc to exclude Burundi from all programmes that the agency funds on regional integration. Asked to explain the decision, a representative of GIZ said the organisation “is a not a donor agency but an implementing agency for the German government” and instead referred us to the Ministry of Economic Co-operation and Development in Berlin. The threat to withhold funding may derail regional integration, expose the bloc to a future funding crisis, and put several key infrastructure projects at risk. Western development partners have already announced several measures against Burundi that would lead to the loss of hundreds of millions of dollars annually in aid, over President Pierre Nkurunziza’s controversial re-election. The US has suspended several security co-operation agreements with Burundi, and according to Thomas Greenfield, the Assistant Secretary of State for African Affairs, a decision to remove the country from Agoa will come “sooner rather than later.” European nations led by Belgium, France and The Netherlands have also cut aid to Burundi. And...

EAST African countries have been advised to harmonize grain standards at all border posts to improve on the quality of grains traded in the region. This follows increased interest in grain trade across the border in which farmers are likely to lose out simply because those trading their grains are not following the required standards in grain trade. The findings from a two year study indicate that there are only four officials at the three border points applying the EAC standards for maize and rice in their entirety. This means that the set standards are not being followed as a reference document when goods are being checked even though the officials are aware of the standards. This is according to a report on Farmers Integration into Regional Markets through Structured Trade projects that was implemented by the Eastern Africa Farmers Federation (EAFF), supported by USAID. Stephen Muchiri, the Chief executive Director of EAFF blames this on the low numbers of staff, especially at Busia border post which has only one staff member handling the trade facilitation of all agriculture commodities. "This one staff is responsible for verifying import and export documents, sampling agricultural commodities, working with their counter parts on the Kenyan side in addition to conducting spot checks along the irregular informal trade routes," quotes the report. The findings are further backed by recent findings by the EAC standards committee that visited border areas in November last year, which noted that only 60% of EAC standards had been adopted...

DAR ES SALAAM, Tanzania - The Federal Republic of Germany has given a grant of 70 million euro for development cooperation within the East African Community (EAC). This happened in Dar es Salaam last week. Some 30 million euro about. $33.4 million is committed specifically to the health sector. A joint statement between the Federal republic of Germany and the EAC of which East African Business Week has a copy shows that in total 30 million Euros approximately $ 33.4 (Tsh.68 billion) will be invested in vaccines and health supply chain management. The statement also indicates that earlier in 2015 Germany hosted the record replenishment of the Global Vaccination Alliance (GAVI) as a result an additional 300 million children will receive live-saving vaccines, including in the EAC. “German bilateral cooperation will now provide 20 million euro (Tsh.44 billion) for the procurement of vaccines against different diseases for children in the EAC region,” reads part of the statement. The programme will be implemented in collaboration with GAVI and this new commitment will bring Germany`s contribution to regional immunisations programmes with the EAC region to 60 million Euros (Tsh.132 billion) since 2012. Inappropriate cooling systems result in high volumes of vaccines being wasted before they reach the people that need them and this is why Germany will also support the establishment of the EAC Regional Centre of Excellence for Health Supply Chain Management in Kigali with 10 million Euros (Tsh.22 billion). The Centre will strengthen capacities and foster the dissemination of innovation...

The shilling continues to free fall against the US dollar. Clearly, the recent steps taken by the Central Bank of Kenya (CBK) to curtail liquidity in the system to curb speculation in the market and to raise the cost of money seem not to have yielded the desired results. The fall also proves that the currency is not under pressure because of excess speculation but because of external factors such as a strong dollar and because of fundamental weaknesses of the economy. The only lasting solution for the shilling’s problems is to reduce the current account deficit (CAD) to a sustainable level. To do this, we need structural solutions from the government, not the CBK. We need the government to come up with out-of-the-box-thinking’ solutions rather than leave everything to the apex bank. The CBK has very little policy space or instruments; all it can do in the interim is to stabilise the market volatility and that will come at a cost; high lending rates and low economic growth. It is time we came up with strategies that will help curb forex outflow against a backdrop of a weak currency. The depreciation of the shilling against the US dollar by more than 10 per cent this year has added to Kenya’s economic woes and could push its CAD to unprecedented levels. The government can help contain CAD by embarking on a shilling-centric approach to oil imports. This envisages bringing down the CAD by cutting down on dollar-denominated oil imports, which...

Economists in the region are advocating for innovative thinking as a mechanism to jumpstart African integration, something that has been proving to be elusive for long. Speaking during the plenary session of the building bridges East Africa regional workshop on developing national business communities and regional integration organised by UONGOZI Institute in Dar es Salaam, a World Bank consultant, Mr John Kalisa said that currently the business community was facing many hurdles. "Increasingly due to fluctuations in foreign exchange rates with the US Dollar, the East African business community is losing out a lot because of the exchange rates with doing business and only innovative ways are the answer," he said. Mr Kalisa cited that the cost of doing business in most regions of the continent are very high due to these exchange rates and therefore Rwanda and Kenya are in dialogue such that their business community can use their own currencies in the other country. He said as China continues to be an aggressive investor in the region, a number of countries in the EAC are laying out mechanisms such that they can directly exchange their currencies into the yuan instead of first changing into US dollar. "For regional integration on a continent as diverse as Africa, the way forward is to expand market size through market integration, collaborate in building productive and industrial capacity and develop affordable, effective infrastructure and services to lower the cost of doing business," he cited. A fellow of the London School of Economics...

Mombasa port Thursday received the biggest vessel to ever call at the facility, signalling positive results following the deepening of the harbour to 15 metres and widening of the turning basin to 300 metres. MV Clemens Schulte has a capacity of 5,466TEUs and will discharge 1,710 containers while 3,505 export containers will be loaded. With a length of 255 metres and 37.5 metres wide, the vessel — operated by Maersk shipping line — is twice the length of an international football pitch. Kenya Ports Authority (KPA) managing director Gichiri Ndua said the arrival of the vessel was an indication that shipping lines were exploiting capacity upgrade at the port and that there was growing confidence in the efficiency of the facility. He said that when another large ship, MV Maersk Cairo, called at the port in February last year, they made 834 moves (the number of times a crane picks a container from the vessel and places it on a waiting truck). “This marks an important milestone in our agenda towards becoming a world class sea port of choice. It also signifies the benefits accrued from the port’s completed capacity expansion projects,” he said. Some of the completed projects include dredging of the channel and construction of the 240-metre Berth 19, which increased the length of the port’s quay to 840 metres. This means that the port is able to accommodate three vessels of MV Clemens Schulte’s size. Shipping lines benefit from economies of scale when they operate larger vessels...

The recent state visit by Kenya's President Uhuru Kenyatta served to keep communication lines open between our two nations, which is critical for our mutual economic and development fortunes. While here, he discussed progress on key infrastructure projects such as the oil pipeline and the standard gauge railway that the two countries are committed to developing. The oil pipeline will help both countries evacuate our oil in coming years while the railway line will reduce transportation costs on the key route to the sea for the two countries. By accident of history, our two countries are bound together at the hip and despite past attempts to force a wedge between us, the mutual interests of our peoples mean we have always found a way to resolve our differences. Ever since the British got it in their heads that they needed to control the source of River Nile for strategic purposes, our two countries have become each other's largest trading partner. During the hard 1970s and 80s, many Ugandans sought refuge in our eastern neighbour and recently, after the post-election violence in 2007-08, some Kenyans fled here for safety. A few days ago, Kenyatta, in defending an initiative to import sugar from Uganda, reported that his country exports $700m worth of goods to Uganda while importing goods worth $150m from the same. He argued that he would rather import sugar from Uganda than from Brazil if we (Uganda) have the surplus to bridge their shortfall. At the Uganda National Chamber of...