Public debt in most sub-Sahara Africa will continue to balloon as governments borrow to finance infrastructure projects unless private sector investments increase, experts have warned. In East Africa, governments are on a borrowing spree to finance key infrastructure projects in transport, energy, water and sanitation. But a new report by the World Bank says that only increased participation by private investors in these projects will help countries close the infrastructure financing deficit. Estimates by the World Bank show that sub-Sahara Africa requires about $100 billion annually to invest in infrastructure projects in order to accelerate economic growth by as much as 2.6 percentage points per year. But the continent is only able to mobilise half of this financing through borrowing, bilateral agreements, domestic revenues, development financial institutions and public-private partnerships, leaving a massive deficit. However, governments can close this gap by creating an environment that allows for private investors to pump resources into projects. Financing complexities Currently, private participation in infrastructure projects in Africa is extremely low, largely due to limited public sector capability, insufficient political will, policy uncertainty and a weak regulatory environment. Private investors have also shunned the continent due to financing complexities attributable to narrow financial markets, higher actual and provisional risks, longer project durations, significant cost overruns and currency mismatches. While countries like Brazil and Turkey have managed to attract $433 billion and $124 billion in private capital respectively, sub-Sahara has only managed to mobilise $77 billion over the past decade. “Many transformational projects have enormous...

East Africa’s stock exchanges are finding it difficult to convince small and medium-sized companies to sell their shares to the public, as many of them are family-owned and not ready for the strict regulations and public scrutiny. Nairobi Securities Exchange and Dar es Salaam Stock Exchange have listed just five companies each since the launch of the SME trading platforms five years ago, while Rwanda Securities Exchange and Ugandan Securities Exchange have not attracted any listings to their SME segments. Executive director of the Rwanda Capital Markets Authority Robert Mathu said family-owned businesses are reluctant to undergo scrutiny. “In as much as the requirements for SME listing are lighter, we expect some very basic fundamental things to be put in place including a minimum of three directors of which 30 per cent (one director) must be independent,” Mr Mathu told The EastAfrican. “We have been talking to the SMEs. The biggest challenge is change of behaviour, but this is inevitable because we are a capital market. They need to open up to people who want to give them money,” he added. Challenges Ugandan Securities Exchange launched its Growth Enterprise Market Segment (Gems) in 2013. Charles Nsamba, the communications manager at the Uganda Capital Markets Authority, said the challenge has been the informal nature of the SMEs and the requirement for proper corporate governance structures and book keeping standards. “We have come to the realisation that this needs to be addressed, and in the 10-year master plan that is to be...

China has said it is ready to finance the construction of the standard gauge railway from Kisumu in Kenya to Uganda and Rwanda as long as the three countries agree to handle the project jointly. According to Beijing, such an agreement among the three countries would minimise political risks and plug missing links. There have been fears that the viability of the SGR within Kenya and beyond could be undermined by failing to link landlocked countries to the Mombasa port because of financial or other considerations. Chinese Prime Minister Li Keqiang told Kenyan President Uhuru Kenyatta at the China Africa Summit in Beijing two weeks ago to discuss the extension of the railway line from Kisumu to Kampala and then Kigali with Presidents Yoweri Museveni and Paul Kagame. Kenya State House spokesman Manoah Esipisu said Mr Li was clear that China would fund those sections as a regional project. “The president already spoke with the leaders of Uganda and Rwanda on the possibility of sending a joint team to negotiate for financing of the remaining portion,” said Mr Esipisu. He said Kenya was now waiting for Kampala and Kigali’s response before planning an SGR beyond Kisumu. “The viability of the (Nairobi to Kisumu) the line is okay. One feature of the SGR investment to Kisumu is the building of a modern port there. Kisumu to Malaba is viable with Uganda and Rwanda on board,” Mr Esipisu said. Difficult terrain On May 31, President Uhuru Kenyatta launched the operations of the first...

The European Union has signed two Financing Agreements for a total amount of 68 million Euros to finance implementation of two programmes in the COMESA region. These are; Trade Facilitation programme (53 million Euros) and Small Scale Cross-Border Trade programme (15 million Euros). The Ambassador of the European Union to Zambia and Representative to COMESA, H.E. Alessandro Mariani, and COMESA Secretary General, Sindiso Ngwenya, signed the two agreements. The funds are part of the COMESA specific envelope of 85 million euros provided by the European Union under the 11th European Development Fund (EDF) Regional Indicative Programme for the East African, Southern African and Indian Ocean (EA-SA-IO) region signed in June 2015 for the period 2014 – 2020. The trade facilitation programme is meant to reduce the cost of doing business and moving goods in the COMESA region. The programme has identified five key priority areas for support, namely; monitoring and resolution of Non-Tariff Barriers (NTBs); implementation of the World Trade Organization – Trade Facilitation Agreement; coordinated border management and trade and transport facilitation along selected corridors and border posts. Others are the implementation of harmonized, science based Sanitary and Phyto-sanitary (SPS) and Technical Standards and support to trade negotiations/promotion covering trade in services, free movement of persons and trade negotiations. The beneficiaries of the programme will primarily be the Member States of COMESA and the private sector/traders in the COMESA/Tripartite region, with the COMESA Secretariat playing a coordination and facilitation role. The programme on small-scale cross-border trade aims at increasing...

The EALA members passed the resolution after receiving and debating a report on sensitisation activities in partner states, themed: ‘EAC Integration Agenda: Accessing the Gains. ” Under Speaker Dan Kidega, members from the five countries adopted, with few amendments, the general recommendations put before them by the team that issued the joint report after each country had compiled its anecdote. The members of the report compilation team are Tanzania’s Nderakindo Kessy, Kenya’s Judith Pareno, Ugandan Chris Opaka-Okumu and Ms Patricia Hajabakiga of Rwanda. Moving the motion in the House, Ms Hajabakiga argued that a conclusion was needed on the report annex regarding the harmonisation and mutual recognition of academic and professional qualifications. The EALA called for the synchronisation of immigration laws in all partner states in terms of work permits and free movement of persons. “There is need to provide similar Certificate of Origin at all EAC custom border posts to ease trade and avoid forgeries. Let the Summit of Heads of State upgrade Kiswahili as one of the EAC official languages,” she said. The MP further underscored the need to address fear of loss of employment through deliberate measures like facilitation of skilful nationals in Kiswahili, English and French languages to take up teaching positions in the needy partner states and develop specific programmes for unskilled labour and small and medium entrepreneurs. “We have to develop an EAC strategy for development of skills and competitiveness to boost productivity through vocational training, science and technology as well as expedite harmonisation...

What is the role of the East Africa Business Council in driving industrialisation in the region? EABC has a primary role of ensuring the creation of enabling policies that not only support the business sector to increase its competitiveness, but which are also conducive to enhancing opportunity for attractive returns to investment. However, there are still challenges toward the full realisation of potential benefits and advantages presented by the EAC integration. It is these challenges that have seen the manufacturing sector developing at slow pace besides contributing minimally to regional GDP. Several industries set up in the region operate at below capacity and one of the prevailing factors is the high cost of doing business in the bloc coupled with several barriers to accessing the wider regional market. We can do better as a region, but we (government, private sector and other stakeholders) need to take deliberate steps to improve the business environment. How do you rate manufacturing sector in terms of contribution to regional GDP? While the EAC region has been registering significant economic growth averaging over 6 per cent for years, the performance of the manufacturing sector is discouraging. Apart from modest growth of the regional manufacturing sector of 4.7 per cent, its contribution to the regional GDP has continued to shrink to less than 10 per cent. Between 2000 and 2017, the contribution of manufacturing sector to GDP of individual EAC partner states, has been shrinking, except in Tanzania. Some experts attribute the low industrialisation process in...

Djibouti has formally inaugurated its 690-hectare Doraleh Multipurpose Port, heightening competition with Kenya for regional maritime business. Djibouti port is the main point of entry for goods from Asia, and also serves landlocked Ethiopia which recently opened the Chinese funded 752 kilometre-Addis Ababa-Djibouti railway. Kenya had in 2012 signed a joint pact with Ethiopia and South Sudan to build a corridor linking their economies to the 32-berth port being built at Lamu. Djibouti’s Doraleh port opened on May 24 and features a container terminal with yard capacity of 200,000 TEUs, a break bulk terminal with six million tonnes per year capacity, and a bulk terminal capable of handling two million tonnes per year, among other facilities. It cost $590 million (Sh61 billion) venture has capacity to accommodate 100,000 deadweight tonnage vessels. “With this new world class infrastructure, Djibouti confirms its position as a major trading hub for the continent. We are proud to show the world our capacity to deliver major infrastructure projects — some of the most technologically advanced on the continent,” Djibouti Ports and Free Zones Authority ( DPFZA) chairman Aboubaker Omar Hadi said in a statement. Mombasa port and Tanzania’s Dar es Salaam port are traditional competitors but the Kenyan government plans a huge new port at Lamu, while Tanzania is developing Bagamoyo port. Tanzanian authorities expect Bagamoyo port to handle 20 million containers a year, 25 times more than Dar es Salaam port. Kenya’s planned Lamu port is expected to be just as big. Apart from serving their own...

A fall in import tax collections in the last nine months has raised eyebrows in East Africa, pushing national revenue agencies to the overdrive as they seek to seal leakage loopholes and increase efficiency. All the East African Community (EAC) states have missed their import duty collection targets in the nine months to March with Kenya, the biggest of the economies, recording Sh65.8 billion against an expectation of Sh70 billion. Official data shows that both the dry and wet cargo import volumes fell in the nine months, causing a cumulative effect even on consumption taxes. Following a meeting in Burundi last week, tax bosses from Kenya, Uganda, Rwanda, Tanzania, Burundi and South Sudan have agreed to implement a uniform system for valuing imports. This means that the customs authorities in the EAC would use the same formula in determining the value of goods coming into the bloc and by extension impose similar duties. “… the [commissioner generals] directed the establishment of a common valuation approach in order to ensure maximisation of revenue mobilisation opportunities through sealing loopholes that permit cargo undervaluation,” said a communiqué released after the meeting. Common valuation is a requirement of effective operation of a Customs Union. However, despite the existence of a Common External Tariff, member states are yet to implement it. This means the EAC members are currently playing into the hands of tax evaders by levying different absolute amounts. The countries also agreed to harmonise cargo scanning mechanisms to align them with the Kenyan...

The 2nd East African Manufacturing Business Summit was held in Kigali, Rwanda at Kigali, Serena Hotel on 23-25 May 2017. The Business summit was officially opened by Rt. Hon Anastase Murekezi Prime Minister of the Republic of Rwanda.  The Summit was attended by Rt. Hon. Dr. Ali M. Kirunda Kivejinja, Second Deputy Prime Minister and Minister for EAC Affairs, Republic of Uganda who is also Chairperson of the East African Community Council of Ministers; H.E. Dr. Mukhisa Kituyi, UNCTAD Secretary General; Amb. Liberat Mfumukeko, Secretary General of the EAC; Hon François Kanimba, Minister of Trade, Industry and EAC Affairs, Republic of Rwanda; Mr. Patrick Nduati Mwangi, representing Cabinet Secretary for Industrialization and Enterprise Development, Republic of Kenya; Mrs. Edith Mwanje, Permanent Secretary, Ministry of East African Community Affairs, Republic of Uganda; Amb. Dr. Aziz Ponary Mlima, Permanent Secretary Ministry of Foreign Affairs and East African Cooperation, the United Republic of Tanzania; Ms. Betty Maina, EBS, Principal Secretary, Ministry of East African Community (EAC), Labour and Social Protection, Republic of Kenya; Ms. Rosemary Mbabazi, Permanent Secretary, Ministry of Trade, Industry and EAC Affairs, Republic of Rwanda; Hon. Jesca Eriyo, Deputy Secretary General, in charge of Finance and Administration, East African Community; Hon. Christophe Bazivamo, Deputy Secretary General, in charge of Productive and Social Sectors, East African Community; Mr. Denis Karera, EABC Vice Chairman; Ms. Lilian Awinja, Executive Director of the East African Business Council; private sector foundations; manufacturers from across East Africa and beyond; EAC Institutions; Development Partners; Regional Economic Communities...

Experts attending the second high-level East African Manufacturing Business Summit and Exhibition (EAMBS) held in Rwanda’s capital city Kigali said Wednesday that innovation is key for the East Africa manufacturing sector to compete globally. “We have to understand that our industries are operating in a global context, in an open globalized market place, and that is not going to change. We have to be innovative and work on our efficiencies. We should be able to produce high quality products that are competitive at international markets,” said Ali Mafuruki, board chair of Trade Mark East Africa. He added that regional economies should strategically position themselves in the global business environment through producing locally made products that are price competitive. Rwanda hosts the forum from May 23 to 25, 2017 dubbed “harnessing the Manufacturing Potential for Sustainable Economic Growth”. The three-day meeting includes an exhibition where investors, enterprises, researchers and academia will collectively showcase new products and services as well as exhibit the latest advances in manufacturing technology and innovation, particularly those with relevance to Small Medium Enterprises. Lilian Awinja, executive director of East African Business Council (EABC), called for innovative strategies that will raise competitiveness levels and expand the region’s manufacturing and export base. “Innovations are now shaping the business environment. We need to add value to products produced in EAC. Our regional industries can now begin to raise manufacturing output and increase its share of global trade and production,” she added. Mukhisa Kituyi, secretary-general of United Nations Conference on Trade...