East Africa is providing lucrative opportunities for investment bankers, this is according to Paul Mwai of AIB Capital. Investment bankers are financial institutions that assist individuals, corporations, and governments in raising capital by underwriting issuance. Mwai told CNBC Africa that there was need for investment bankers to also start exploring for opportunities in the small to medium enterprise (SME) space. “SMEs are going to be the engine of growth in Africa with some having the potential to become multinationals,” he said. According to Mwai, there were various opportunities for investment bankers such as in debt funding, growth in private equity and advisory across sectors. He also said SMEs were already part of the Africa growth story warning that the big challenge they were facing was access to capital. “They can see the opportunities and they have accesses to these opportunities but access to capital remains as one of their big challenges,” he said. “There is also a knowledge gap and lack of advisory services as it seems they are concentrated on bigger transactions instead of SMEs.” Mwai said with the right capital injection it will only take certain SMEs a few years to become big business conglomerates. “We could look at companies that are growth companies and make investments in those spaces,” he urged investment bankers. Mwai said the stock market was still alien to SMEs as most players in this space think it is preserved for big players only. He added that SME players should explore for opportunities on...

Africa needs foreign investment, and it’s not only up to governments to encourage this. While there is a lot that governments can do, particularly in providing policy and regulatory certainty, the private sector has an important role to play in unlocking Africa’s opportunities. Africa has huge advantages, not least a potential return on investment higher than most other regions. The downside is that it attracts less investment than it should because countries and institutions are often nervous about the risks they see in Africa. This is where the private sector comes in. I call it “demystifying Africa” - demystifying Africa’s economies, demystifying Africa’s markets and demystifying Africa’s risks. Foreign investors don’t have enough visibility about what is happening in Africa. The onus is on African-based companies to deliver that knowledge and vision to the rest of the world. Companies operating successfully in Africa know local conditions and understand local risks. They are in the best position to explain the realities of working here. Financial institutions with international reach and strong African networks are able to bring African clients and institutions closer to international capital. This can be a big enabler of local growth. Demystifying Africa is not so much about correcting misconceptions as it is about using a depth of local experience to bridge the knowledge gap with international clients. African companies in turn need to provide investors with accessibility and transparency on their financials, operations and risks. The role of African governments in promoting the continent to investors is...

Trade patterns in Africa are changing, with new products, new trading partners and new technologies all influencing the way African countries trade with each other and the world. As a result, African trade is growing as it has never grown before. This is benefiting African companies and economies, lifting living standards and providing opportunities for trade to and from the continent and between African countries. Africa is rich in opportunities - now while it is in the midst of transformative change, and in the future when expanding populations will increase the market size and a better educated middle class will increase consumer demand. By 2020 Africa will have a population of 2.1 billion people and a collective GDP of US$2.6 trillion. The continent is a minerals treasure house, has 60% of the world’s uncultivated arable land when world food demand is rising, and offshore gas finds are transforming economies, particularly down Africa’s east coast. Barclays has been involved in Africa for more than a century. Leveraging that experience, we have identified 10 factors which are influencing the rising trend of African trade in a combination that bodes well for the continent playing a larger role in world trade. Rapid and sustained economic growth. Africa’s GDP growth averaged 5% from 2002 to 2012, and is expected to climb above 5.5% from 2012 to 2017. This is higher than any region except Asia and puts Africa above Europe and America. Healthier economies. Together with economic growth has come improved governance, lower inflation,...

The State of Food Insecurity (Sofi) 2014 report stated that the World Food Summit goal of halving the number of undernourished people by 2015 cannot be met. What does that mean for Kenya and East Africa as a whole? Currently, statistics show that the number of undernourished people in the world is falling by an average of six million per year, which is well below the yearly target of 22 million necessary to achieve the World Food Summit goal. However, 63 countries, mostly from the developing world, have reached the hunger target in the first Millennium Development Goal. Sustained political commitment at the highest level, with food security and nutrition as top priorities, is a prerequisite for hunger eradication. Good news in Africa is that eradication of hunger is a top priority of the African Union, evidenced by African Heads of State committing to end hunger on the continent by 2025 in July 2014 at the African Union summit in Malabo, Equatorial Guinea. In Kenya and East Africa, we must continue working with the governments to ensure the right to food for all. We highly appreciate the political commitment towards ensuring appropriate food security policies, programmes and laws at country level are developed and adopted. In addition, we need to engage better with the private sector, improve access to agricultural inputs, land, services, technologies, markets and promote investment in agriculture towards increasing the agricultural productivity in Kenya. Last but not least, we need to continue promoting rural development and nutrition...

NAIROBI, Kenya – Sitting in truck laden with parts of an oil rig, driver Opira Robinson, 45, rests his head on the steering wheel patiently waiting for customs clearing at Lungalunga, a Kenya-Tanzania border post in Kwale, about 101 kilometres south of Mombasa on the East African coast. He is moving the big rig from Pakwach in Northern Uganda heading for Tanzania’s coast. “I can’t wait to get out of here,” Opira says. “It took me a few hours to cross Malaba, but now I have been here two days already and it might take me two more weeks,” Opira said. At least 50 trucks cross through daily, according to Patrick Omare, the Kenya Customs station officer. The main commodities are Kenyan fruits and wheat exports – timber and maize imports from Tanzania. There is also Malawian tea headed for the Mombasa Tea Auction and some Zambian copper also going through the crossing. It is among 35 One-Stop-Border- Posts (OSBPs) that are under construction across the East African Community. The intention is to reduce delays and ensure faster cargo movement across the region. Money is being provided by the World Bank, African Development Bank and the Japan International Co-operation Agency. According to trade facilitation agency, Trademark East Africa (TMA) which is overseeing the posts. “They are aimed at reducing delays by allowing struck carrying goods to stop once, not twice,” said Frank Matsaert, the TMA Chief Executive Officer in an e-mail response to questions said. “Officials will share facilities on...

More women in developing countries will own phones, thanks to the availability of cheap phones and features that appeal to them. According to mobile companies in the region, the mobile money platforms have encouraged women with low incomes to own a phone because of the need to receive and send money. Safaricom, Bharti Airtel, Vodacom and MTN all have mobile money platforms. “M-Pesa provides financial security for women as it gives them an independent place to store and manage their funds,” said Nzioka Waita, Safaricom corporate affairs manager. Orange Kenya is launching one of the cheapest phones in the market that will appeal to low-income earners. “We are launching the Kaduda handset, which will retail at Ksh999 ($11) and will have dual SIM capability, a 1.3MP camera, Bluetooth, a micro SD slot and data capability,” said the operator in a statement. A new study by Groupe Speciale Mobile Association (GSMA) titled Women and Mobile: Still an Untapped Opportunity, shows that more women would be willing to own a phone if the handsets are cheap and have features and services that appeal to their gender. The study shows that the top five barriers to women owning and using mobile phones from a customer perspective are cost, network quality and coverage, security and harassment, operator/agent trust, and technical literacy and confidence. The study released last week was carried out in 11 countries including Kenya, Egypt and Niger. Others were India, Colombia, Jordan, Indonesia, Mexico, China and Turkey. “It is important to recognise...

The high cost of credit that has seen most businesses pay up to 20 per cent interest rates to banks, is weighing down on the private sector in Rwanda. Despite credit to the sector expanding by 19.6 per cent last year, the government now faces a daunting task of crafting new measures to rein in runaway business expenses. The loan rejection rate has climbed to 17.4 per cent against 13.2 per cent and 8.8 per cent recorded in 2013 and 2012 respectively. This has been blamed on poor loan repayment due to lack of profitability, lack of collateral, outstanding loans in various banks and bad credit histories. All this, compounded by limited access to finance, particularly for investors in the mining and agriculture sectors, has resulted in a loan rejection rate of 68 per cent and 58 per cent respectively last year, according to data released by the National Bank of Rwanda. Small market “Banks charge high interest rates, which make it impossible to grow business in a small market like Rwanda. High interest leaves no room for profitability because the cost of doing business is high yet the purchasing power is still low. You simply end up making money for the bank,” a businessman who runs a restaurant and a guest house in Kigali said. “Businesses are forced to close shop while almost every month banks are advertising and auctioning people’s property because they have failed to repay a loan,” he added. Industry lending rates declined marginally from 17.3...

The vision of free cross-border movement within the 19-member Comesa bloc has drawn closer to reality after three more states scrapped the visa requirement for travellers. Mauritius, Rwanda and Seychelles have scrapped visas on nationals of Comesa member states while Zambia has issued a circular waiving visas for the region’s citizens who travel for official business only. The decisions are part of efforts to implement the bloc’s Protocol on Free Movement of Persons, Services, Labour and Rights of Establishment and Residence in the region. “Although, we have not recorded new signatures and ratifications, a number of member states have showed strong commitment and promised to speed-up the process of signing and ratifying the protocol. The government of the Republic of Zambia has sent an official letter which states that the Protocol will soon be signed,” Mr Houssein Guedi Absieh, the Immigration Officer at Comesa, said. So far four countries; Burundi, Kenya, Rwanda and Zimbabwe have signed the protocol on free movement of persons. Only Burundi has fully ratified it. Kenya and Rwanda are, however, already fully complying with most of the provisions of the protocol before it is fully implemented by the bloc. The two countries have promised to ratify the protocol soon. The ease of movement within the 19-member Comesa bloc is set to be received positively in Kenya which has made the bloc its single-most important destination for export. Official data indicates that the region accounted for 33 per cent of the Sh502 billion worth of exports that...

Kigali and Dar seem determined to bury the hatchet and embark on regional integration initiatives together after almost two years of diplomatic tensions between the two countries which broke out in May 2013. Tanzanian President Jakaya Kikwete was among the regional leaders who attended the 9th Northern Corridor Integration Projects summit in Kigali on Saturday during which the heads of states pledged to fast track different projects to link their countries to enhance trade and free movement of people. Anxiety gripped the East African Community following President Kikwete taking over the chairmanship from Kenya’s President Uhuru Kenyatta, particularly regarding how the Tanzanian leader would handle matters given the tensions between Dar and Kigali. However Rwanda and Tanzania seem to have put their differences aside in the interest of region integration, with President Kikwete particularly thanking President Paul Kagame for the invitation and ‘wonderful hospitality’. During the meeting, Kagame also emphasised the importance of Kikwete’s presence and what it means for the fast tracking of different integration projects, raising hopes that EAC partner states are finally putting aside their differences to move together. “Let me particularly thank President Kikwete, the chair of the East African Community, for finding time to be here with us,” President Kagame said amid applause from a seemingly relieved audience. “Let me quickly add that this raises prospects for many projects along different corridors of the East African geographical space to materialise with the speed that the East Africans want to see,” the Rwandan leader said. Kigali...

East Africa is edging closer towards a single taxation regime in its bid to attract more capital from investors who have been putting their money in tax havens like Mauritius. Kenya has joined Rwanda in ratifying the EAC double taxation agreement (DTA) that promises investors taxation in the country of incorporation rather than the country of operation within the bloc. A double taxation agreement means that an income that has already attracted any form of taxation in the signatory country cannot be subjected to another levy by any of the countries involved. This means that investors operating in two or more EAC countries will only pay in one jurisdiction. A typical scenario is where a multinational company like Bidco Oil Refineries, Kenya Commercial Bank or Uchumi Supermarkets, which transacts business in Kenya and other East African countries, finds the profits or gains thus accruing are subject to tax in Kenya and the other regional country it is operating in. “With the agreement in place, governments will formulate regulations on how to tax such companies’ income only once — either in the country of origin or in the company it is operating in. This will see companies save up to 50 per cent of their income tax,” said Andrew Luzze, executive director of the East African Business Council. However, Mr Luzze added, the EAC governments are resisting the idea of signing the DTA for fear that they may lose revenues, with some countries pushing to renegotiate contracts that they feel are...