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Investment Promotion and Private Sector Development

Investment Promotion and Private Sector Development

Investing in East Africa

With the aim of harnessing the investment potential to promote economic growth and development in the region, the five Partner States of the East African Community have agreed to co-operate in the areas of Investment and Industrial Development, as outlined in the EAC Treaty (Chapter 12, Articles 79 and 80).

This co-operation seeks to, among others, rationalise investments and the full use of established industries so as to promote efficiency in production, as well as harmonise and rationalise investment incentives with a view to promoting the Community as a single investment area.

 

EAC Industrialisation Policy and Strategy

In 2011, the EAC Summit of Heads of State adopted the EAC Industrialisation Policy and Strategy, which aims to support the establishment of a competitive and efficient industrial sector.

The Policy and Strategy will promote the transformation of the manufacturing sector through high value addition and product diversification based on comparative and competitive advantages of the region.

 

AGOA Act and EBA Initiative

EAC Partner States also qualify for duty-free access to the US market under the African Growth and Opportunity Act, as well as EU’s Everything But Arms initiative, under which all products from LDCs except arms and ammunitions have preferential access to the EU market.

That should be pure music to the ears of any prospective investor, as should the news of the availability of young, skilled and enterprising labour force. And something more yet; a host of generous incentives are on offer.

 

A Commitment to Reform

Since the 1980s, the EAC countries have undertaken comprehensive economic reforms aimed at reducing direct government intervention in the economy and stimulating the growth of the private sector, recognised as the engine of economic growth.

These reforms, implemented in the form of Structural Adjustment Programmes, have enabled the private sector to thrive. Such reforms have naturally included the liberalisation of the respective financial sectors, meaning all EAC countries boast floating exchange-rate regimes today.

Additionally, in pursuit of improving the EAC investment climate, the EAC Secretariat continues to implement the components of the Cooperation Agreement between EAC and the World Bank on Investment Climate Program, which was signed in March 2012.

 

Privatisation Programmes

All EAC Partner States are engaged in the privatisation of major government corporations. Since 1986, Burundi has adopted a program aimed at opening a new era in prosperity and development. The Inter-ministerial Committee of Privatisation and the Service Charge des Enterprises Publique (Service in Charge of Public Enterprises), are reforming the public sector so as to create a better environment for private investments.

The privatisation programme of the Government of Rwanda was established by Law No.2 on Privatisation and Public Investment, dated 11 March 1996. Privatisation is one of the key elements in the Government’s economic reform and reconstruction efforts and draws on the experience of a number of African countries, recognising the private sector as the engine of growth.

In Kenya, a parastatal reform committee was established in 1991 to implement the privatisation process. The Department of Government Investments and Public Enterprises (DGIPE) has been established within the Ministry of Finance and charged with specific powers and functions which are designed to render it as autonomous as possible.

The DGIPE is responsible for those aspects of the reform programme that are related to parastatals which are to remain in state hands.

Tanzania embarked on the privatisation of its estimated 400 enterprises through the adoption of the Public Corporations Act 1992, which created the Presidential Parastatal Sector Reform Commission (PSRC). The tasks of the PSRC are now vested to Consolidated Holding Corporation, a statutory corporation established by Parliament through enactment of the National Bank of Commerce (Reorganisation and vesting of Assets and Liabilities) Act No 23 of 1997 National Micro-finance Bank Limited.

In Uganda, the Public Enterprise Reform and Divestiture Statute was enacted in 1993 to give effect to the Government’s policy launched in 1991, which aimed at promoting the role of the private sector and improving the performance of the remaining public enterprises.

The Privatisation and Utility Sector Reform Project was established in 2001 as a follow-up project from Enterprise Development Project II which ended in 2000. The project development objective is to improve the quality, coverage and economic efficiency of commercial and utility services, through privatisation, private participation in infrastructure and an improved regulatory framework.

 

East African Community
EAC Close, Afrika Mashariki Road
P.O. Box 1096
Arusha
United Republic of Tanzania

Tel: +255 (0)27 216 2100
Fax: +255 (0)27 216 2190
Email: eac [at] eachq.org