Investment Climate

Posted in Investment Guide

The EAC region has a conducive environment to attract and promote investment. In recent years, there have been concerted efforts by national governments to improve the investment climate in the region.

The Rand Merchant Bank (RMB)’s “Where to Invest in Africa” report that assesses the attractiveness of Fifty-three (53) African countries, in terms of being attractive for investments on the African continent showcases EAC Partner States as being attractive investment destinations.

The RMB attractive index assesses the most appealing investment destination based on four aspects: doing business index; global competitiveness index; corruption perception; and economic freedom index. RMB ranked three of the EAC Partner States (i.e. Kenya, Rwanda and Tanzania) in the top 7 in its 2019 report. Tanzania ranked 7^th in both 2018 and 2017, Rwanda ranked 6^th from 8^th, and Kenya 5^th from 6^th in 2017. Uganda ranked 14^th from 11^th in 2017. The various investment reforms undertaken by the Partner States have led to an increase in the attractiveness of the EAC region.

Covering 140 economies, The Global Competiveness Index 4.0 measures national competitiveness–defined as a set of institutions, policies and factors that determine the level of productivity. The Global Competitiveness index 4.0 captures the determinants of long-term growth and provides novel and more nuanced insights on the factors that will grow in significance as the 4IR gathers pace: human capital, innovation, resilience and agility. These qualities are captured through a number of new, critically important concepts (e.g. entrepreneurial culture, companies embracing disruptive ideas, multi stakeholder collaboration, critical thinking, meritocracy, social trust) complementing more traditional components (e.g. ICT and physical infrastructure, macro-economic stability, property rights, years of schooling). Table 3.1. provides Global Competitiveness Index for EAC Partner States that were ranked among the 140.

The Global Competitiveness Index 4.0 2018 Rankings for EAC Partner States

^{Source: The global competitiveness Report 2018, World Economic Forum}

East Africa, is the third largest region in Africa, outpacing West Africa due to its consistent strong growth exceeding 5% GDP growth for all the KURT countries (Kenya, Uganda, Rwanda and Tanzania). As a collective hub, these four countries enjoy an economy worth US$185 billion. Kenya (US$88 billion), Tanzania (US$58 billion), Uganda (US$29 billion) and Rwanda (US$10 billion). The population of these KURT countries is more than 150 million. _{(Source: FDI Intelligence, EY analysis, 2019).}

Further on the ease of Doing Business, the Doing Business Report 2020 ranked Burundi 166^th in 2019 from 168^th in 2018, Kenya 56^th in 2019 from 61^st in 2018, Rwanda 38^th in 2019 from 29^th in 2018, South Sudan 185^th which maintained the same ranking as in 2018, Tanzania 141^st in 2019 from 144^th in 2018 and Uganda 116^th in 2019 from 127^th in 2018 out of 190 economies and selected cities at the subnational and regional level.