By MWAURA KIMANI The EastAfrican
In Summary
Investments in the region are expected to rise
sharply next year, with an increasing demand for consumer goods and the
growing investor appetite for recent oil and gas finds.
A fall in inflation — to single digits in most of the EAC countries — has resulted in improved purchasing power.
Firms are expecting the increase in expenditure to
lure more businesses to the region, but poor infrastructure and
non-tariff barriers are scaring off investors.
Business leaders speaking at the East Africa
Summit in Kigali this week, organised by the Economist, said transport
costs are very high due to barriers to the movement of goods across the
borders.
“We now have the highest transport costs in the
world. We can’t have economic growth until we do something about this,”
said Frank Matsaert, the chief executive officer of Trademark East
Africa.
The EAC partners have, in principle, agreed to
remove non-tariff barriers (NTBs) by December, but in the absence of a
legally binding framework the implementation largely depends on the
willingness of the countries.
“Progress has been made over the years on NTBs.
These things cannot be done in a day,” said Enos Bukuku, EAC’s Deputy
Secretary-General.
Landlocked countries like Rwanda pay a heavy price
for the unnecessary and costly delays caused by weighbridges and ports
in the countries through which their goods must pass.
“The region has the worst transport network in
terms of timeliness of delivery, tracking and tracing, logistics and
competitive pricing. The most significant drag is infrastructure,” said
Charles Okeahalam, the chief executive officer at AGH Capital, a South
African based private equity and investment firm.
There are 36 roadblocks between Mombasa in Kenya
and Kigali in Rwanda, and 30 between Dar es Salaam and Rusumo at the
border with Rwanda.
Uganda has nine roadblocks between Malaba and Katuna border points on its Kenya and Rwanda borders respectively.
Uganda has nine roadblocks between Malaba and Katuna border points on its Kenya and Rwanda borders respectively.
The African Development Bank plans to launch a
pan-African infrastructure bond to raise $22 billion to finance Africa’s
infrastructure development.
“The AfDB fund, while a drop in the ocean in terms
of the total infrastructure that’s needed, is the kind of thinking that
we need,” said Mr Okeahalam.
Experts say long term economic growth in the region is linked to the rise of the middle-class consumer.
“People are coming to Africa attracted by the
population base and a growing middle-class that has spending power. The
biggest opportunity is to participate in the development of
infrastructure,” said Jay Ireland, the president and chief executive
officer of General Electric Africa.
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