The EAC has put in place sufficient legal framework that has created a conducive legal environment for investments to thrive. This legal framework is enabling EAC Partner States to cooperate in the areas of Investment and Industrial Development to harness the investment potential to promote economic growth and development in the region.
The legal framework is also enabling harmonisation and rationalisation of investment incentives with a view to promoting the EAC as a single investment area. It is also enabling efficiency in production. This EAC legal framework is provided for in: the EAC Treaty Articles, 79-80 and 127-129; The EAC Customs Union Protocol, Article 3 (c) and (d); The EAC Customs Management Act Article 25; The EAC Competition Act; the EAC Common Market Protocol Articles 23 and 29; and The EAC Model Investment Code 2006.
The legal framework of the EAC
Act
Status
Treaty and Protocols
Treaty for the Establishment of the EAC
Signed in 1999, in force since 2000
Protocol on the Establishment of the EAC Customs Union
Signed in November 2004, in force since January 2005
Protocol on the Establishment of the EAC Common Market
Signed in November 2009, in force since July 2010
Protocol for the Establishment of the EAC Monetary Union
Signed in November 2013, in force since 2014
Legislation
The EAC Customs Management Act, 2004
Last amendment in 2012, in force
The EAC Elimination of Non-Tariff Barriers Act, 2017
In force - not ratified
The EAC One Stop Border Posts Act, 2016
In force
The EAC Vehicle Load Control Act, 2013
In force
The EAC Civil Aviation Safety and Security Oversight Agency Act,2009
In force
The EAC Competition Act, 2006
Last amendment in 2009, in force since December 2014
The EAC Trade Negotiations Act, 2008
In force (in the process of being repealed)
The EAC Standardization Quality Assurance Metrology and Testing Act, 2006
In force
EAC Investment Policy 2019-2024
Still in draft form
Source: Trade Policy Review of the EAC by WTO, 2019 and EAC Secretariat
Rationalising investments and the full use of established industries to promote efficiency in production, as well as harmonising trade policies, investment incentives and product standards, with a view to promote the Community as a single investment area.
Providing an enabling environment for the private sector to take full advantage of the Community through the promotion of a continuous dialogue with the private sector to help create an improved business environment and enhancing investor confidence in the region.
The EAC institutional framework is responsible for investment promotion and creating a conducive investment environment for current and future investors.
For the EAC priority investor sectors/ areas, the project profiles are provided in the table below.
EAC Investment Sectors and Project Profiles
S/N
Sector
Project Profiles
1.
Agriculture and agribusiness
Undertaking large-scale commercial farming of crops such as sugarcane, rice, wheat, coffee, tea, sunflower, pulses, floriculture, cotton, sisal, grape, simsim, maize, potatoes, beans, peas, cassava and soya
Development of improved seeds, fertilizer, pesticides, herbicides, crop processing, and farm equipment
Manufacture of grain mill products, starches and starch products and prepared animal feeds
Manufacture of other food products (e.g. bread, sugar, chocolate, pasta, coffee, nuts and spices)
The manufacture of bottled and canned soft drinks, fruit juices, beer, and wines
Sugarcane farming and sugar production
Establishing fish processing plants and modern fishing boat building yards
Food and beverages manufacturing including manufacturing, processing, and preservation of meat, fish, fruit, vegetables, oils and fats
Deep Sea Fishing (snappers, emperors, tuna, sword fish, marlin, king fish and sailfish)
Value addition in fish and other fisheries products, cold chain, manufacturing of fishing gear and accessories
Establishment of commercial fish cage culture in both marine and freshwater areas
Agro-industries and agro-processing to add value to agricultural, livestock, forestry and fisheries products
Establishment of dairy farms and facilities for processing/ manufacturing of dairy products
Establishment of ranches (cattle, sheep and goats) and farms (poultry and piggery) and investment in Livestock farming focusing on Beef, Dairy, Chicken, Hides and Skins
Establishment of modern slaughtering facilities and processing plants
Establishment of breeders’ farms for grand and parent stock
Establishment of animal feeds processing plants
Establishment of commercial layers and broiler farms and establishment of broiler processing plants
Establishment of tanneries, production of footwear and leather goods
2.
Infrastructure
Development of the Dar-es-salaam- Isaka-Kigali railway project, which will connect Kigali (Rwanda) from Isaka to the Tanzanian port of Dar es salaam.
Development of Mombasa–Nairobi-Kampala-South Sudan-Kigali standard gauge railway line
Transport corridors
The Northern Corridor from Mombasa to Bujumbura is part of the Trans-African Highway (Mombasa - Lagos) while the Tunduma - Moyale road is part of the Cape to Cairo Highway
There are two transit corridors that facilitate import and export activities in the region: - The Northern Corridor (1,700 km long) commencing from the port of Mombasa and serves Kenya, Uganda, Rwanda, Burundi and Eastern DRC. - The Central Corridor (1,300 km long) begins at the port of Dar es Salaam and serves Tanzania, Zambia, Rwanda, Burundi, Uganda and Eastern DRC.
The five major transport corridors are: - Mombasa - Malaba - Kigali – Bujumbura - Dar es Salaam - Rusumo with branches to Kigali, Bujumbura and Masaka - Biharamulo - Sirari - Lodwar – Lokichogio - Nyakanazi - Kasulu - Tunduma with a branch to Bujumbura - Tunduma - Dodoma - Namanga - Isiolo – Moyale Roads:
Establishment of communications infrastructure and services
3.
Manufacturing
Establish motor vehicle and motorcycle assembly and manufacturing plants and spare parts production facilities
Establish computer assembly and manufacturing facilities
Establish mobile phone assembly and manufacturing facilities
Establish Textile, Apparel, and Beauty Products Industries
Establish Cosmetics and fragrances industries
Manufacture of electronics
Manufacture of chemicals
Production of Pharmaceuticals
Manufacture of medical appliances and equipment
Manufacture of metals and engineering products
Manufacture of machinery and machine tools
Manufacture solar panels for rural electrification
Production of furniture, construction, and building materials
Manufacture of steel
Manufacture of glass and plastics
Establish lighting industry
Establish glass and plastic products industry
Establish ceramics industry
Establish packaging industry
4.
Energy
Generation of energy from biogas, hyrdocarbons (natural gas, oil, and coal), uranium and renewable resources including eneration of energy from solar and wind
Extraction of biofuels – Ethanol from sugar; Biodiesel from palm oil and jatropha
Geothermal exploration and development
5.
Mining and metals
Processing of minerals
Processing of precious metals and gemstones
Production of iron ore and steel
Extracting and processing of minerals such as nickel and uranium
Investment in minerals smelters
6.
Oil and gas
Production of Liquefied Natural Gas (LPG)
Manufacturing of Liquefied Natural Gas (LPG) cylinders, valves and regulators, installation of filling plants
Establishment of processing plants and industries for the production of refined mineral oil, petroleum jelly and grease, fertilizers; bituminous based water / damp proof building materials e.g. roofing sheets, floor tiles, and tarpaulin
Establishment of chemical industries e.g. distillation units for the production of Naphtha and other special boiling point solvents used in food processing
Development of petrochemicals industries
Large scale production of chemicals and solvents e.g. chlorinated methane, Formaldehyde, Acetylene etc. from natural gas
7.
Tourism
Establishment of resort cities
Branding of premium parks
Construction of new internationally branded hotels in major cities/ towns and game parks
Development of high-quality Meetings, incentives, conventions and exhibitions (MICE)tourist facilities and conference tourism facilities
Provision of air/ground transport
Development of Beach tourism, cultural, historical sites, and eco-tourism facilities
Health tourism
Sports tourism
8.
Education, research and innovation
Establishment of specialised education, research and innovation institutions to address specific regional human capital requirements and research and innovation needs of the region
9.
Health
Establishment of specialised hospitals and diagnostic centres of international standing
Establishment of specialized medical facilities of international standing
The EAC priority investor sectors/ areas include agriculture and agribusiness; infrastructure; manufacturing; energy; mining and metals; oil and gas; tourism; education, research and innovation; and health.
Agriculture and agribusiness:
Agriculture is still the backbone of the EAC economy and is the number one employment sector. The sector also contributes greatly to GDP growth. Agriculture remains central to the industrialization of the EAC as it provides markets for industrial products and raw materials for industries, especially the agro-processing sector. The region has millions of hectares of arable land suitable for agricultural mechanisation and irrigation. The investment opportunities include commercial farming, deep-sea fishing, agro-processing, value addition in agriculture, livestock, fisheries, and forestry products.
Infrastructure:
Infrastructure is one of the most critical enablers of successful regional integration, taking into account its importance in facilitating activities such as trade, agriculture, tourism, and the movement of labour and other resources. Thus, the EAC recognises that regional infrastructure interventions are key to attracting investment into the region, improving competitiveness, and promoting trade. The sector has the following sub-sectors: Roads; Railways; Aviation; Communications and Inland waterways. The infrastructure and support services sub-sector covers roads, railways, civil aviation, maritime transport and ports, multi-modal transport, freight administration and management. The EAC operates 5 modes of transport systems consisting of road, rail, maritime, air transport and oil pipeline. Public-Private Partnership (PPP) opportunities exist in intra-EAC road and railway networks as well in Airports and Port projects
Manufacturing:
Manufacturing is a key sector in EAC’s economic development, both in its contribution to the regional output and exports, and for job creation. Emphasis in the EAC Partner States is on setting key targets and specific goals to steer industrial growth including the development of Special Economic Zones, Export Processing Zones, industrial parks and clusters, and niche products. There are a wide range of direct and joint-investment opportunities in this sector, including agro-processing, garments, the assembly of automotive components and electronics, plastics, paper, chemicals, pharmaceuticals, metals and engineering products for domestic and export markets. Also, the region offers abundant natural resources which provide plenty of raw materials for the manufacturing industries such as cotton for garment and textile industries, sisal for canvassing, iron for steel, as well as various minerals and gemstones.
Energy:
EAC is endowed with diverse energy sources including hydro, biomass, natural gas, coal, geothermal, solar and wind power and uranium, much of which is untapped. Investment opportunities exist in generation of energy from biogas, hydrocarbons (natural gas, oil, and coal), uranium and renewable resources; generation of energy from solar, wind; extraction of biofuels; and geothermal exploration and development.
Mining and metals:
Mining has placed EAC in the higher ranks of African economies in terms of attracting FDIs. EAC is endowed with a variety of industrial minerals and precious metals as well as gemstones.
Oil and Gas:
South Sudan has huge oil deposits and huge quantities of oil were recently discovered in Uganda, Kenya, and Tanzania. Oil exploration is ongoing in the EAC Partner States. In Tanzania, there have been several gas discoveries on the coastal shore of the Indian Ocean at Songo songo, Mnazi bay, and Mkuranga in the Coast Region. These discoveries are catalysts of natural gas developments in Tanzania. The EAC region is becoming an oil and gas hub that is presenting a lot of investment opportunities and attracting a lot of FDIs. Most opportunities are in exploration and extraction.
Tourism:
Tourism is one of EAC’s most important industries and has strong linkages with transport, food production, retail, and entertainment. EAC is still one of the most popular tourist destinations and has many investment opportunities in the tourism sector. The investment opportunities include the establishment of resort cities; branding of premium parks; construction of internationally branded hotels; Development of high-quality Meetings, incentives, conventions and exhibitions (MICE) tourist facilities and conference tourism facilities; and health and sports tourism.
Education, Research, and Innovation:
Higher Education Institutions (HEIs) in the EAC have never been ranked among the top 300 HEIs globally. EAC achieving its social and economic development objectives is largely dependent upon its most valuable resource – its people. Yet the research and innovation output is still low and needs to be improved if the region is to graduate to lower middle income status. The investment opportunities in this sector are in establishment of specialised education, research and innovation institutions to address specific regional human capital requirements and research and innovation needs of the region. Regional innovation ecosystems are grossly lacking and need to be established in partnership with the private sector.
Health:
The EAC Heads of State considered and approved the following health investment priorities in the health sector:
expansion of access to specialized health care and cross border health services;
strengthening the network of medical reference laboratories and the regional rapid response mechanism to protect the region from health security threats including pandemics, bio-terrorism and common agents;
expansion of capacity to produce skilled and professional work force for health in the region based on harmonized regional training and practice standards and guidelines;
increase access to safe, efficacious and affordable medicines, vaccines, and other health technologies focusing on prevalent diseases such as malaria, TB, HIV/Aids, non-communicable diseases (NCDs) and other high burden conditions;
upgrading of health infrastructure and equipment in priority national and sub national health facilities / hospitals;
establishment of strong primary and community health services as a basis for health promotion and diseases prevention and control;
expansion of health insurance coverage and social health protection;
improvement of quality of healthcare, health sector efficiency and health statistics; and
The priority areas for investment in EAC Partner States are provided in the table below. It also provides priority investment areas for EAC consistent with the investment priority areas in the Partner States.
The EAC Investment Priority areas were selected giving priority to those with a high potential for regional value chains.
Priority Areas for Investment in EAC
Burundi
Agriculture including fisheries and livestock
Mining and Energy Sector
Manufacturing/ Processing Industry
Advanced maritime transportation Construction of modern tourism infrastructure
Kenya
Food Security,
Affordable Housing,
Manufacturing
Affordable Health care,
Energy
Financial Services
Information Communication Technology (ICT)
Agriculture
Infrastructure
Rwanda
Manufacturing
Agro-processing
Tourism
Real estate and construction
Information Communication Technology (ICT)
Services
Mining
Infrastructure
Energy
Education
Health services
South Sudan
Agriculture, livestock and fisheries
hard and soft infrastructure
Mining
Agri-business
Energy
Tourism
Uganda
Agriculture and agribusiness
Mineral beneficiation
Tourism
Packaging
ICT
Oil and gas
Renewable energy
Manufacturing
Infrastructure
Services
Tanzania
Manufacturing
Agriculture, Livestock and Fisheries
Mining and Metals
Tourism
Services/ ICT
Economic Zones
Economic Infrastructure
Energy
Real Estate
Oil and Gas
Financial Services
Telecommunication Broadcasting
Zanzibar
Industrial manufacturing or assembling
Up market tourism
Agriculture and fisheries
Real-estate development
Energy
Infrastructure development
Information Communication Technology (ICT)
EAC
Agriculture and agribusiness
Tourism
Infrastructure
Manufacturing
Mining and metals
Energy
Education, research and innovation
Health
Oil and Gas
Source: Investment (Promotional) Code Acts and Investment Promotional Agencies Websites of Partner States.
The priority areas for investment in EAC Partner States are provided in Table 4.1. It also provides priority investment areas for EAC consistent with the investment priority areas in the Partner States.
The EAC priority investor sectors/ areas include agriculture and agribusiness; infrastructure; manufacturing; energy; mining and metals; oil and gas; tourism; education, research and innovation; and health.
The EAC has put in place a focused regional promotion agenda to leverage the region as a single investment destination for investors from Africa and the world. The EAC Investment Guide is one of the tools in the regional investment promotion agenda and aims at promoting the region as a single investment destination. The EAC priority investor sectors/ areas include agriculture and agribusiness; infrastructure; manufacturing; energy; mining and metals; oil and gas; tourism; education, research and innovation; and health.
The EAC Investment Guide provides comprehensive information on why investment in EAC is an ideal investment destination such as: the operating environment, investment climate and incentives, investment opportunities, views and perceptions about doing business in EAC, and the EAC regional framework that includes the legal and institutional framework among others.
This online version of the EAC Investment Guide contains up to date investment information for existing and prospective investors.
The EAC legal framework is enabling EAC Partner States to cooperate in the areas of Investment and Industrial Development to harness the investment potential to promote economic growth and development in the region. This co-operation seeks to, among others, rationalize 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 of promoting the Community as a single investment area. Currently, the National Investment Codes and other related laws of the EAC Partner States provide for varying fiscal and non-fiscal incentives to investors.
In 2007 when M-Pesa came about, financial exclusion was pervasive in Kenya, as was the proliferation of Micro Finance Institutions and Micro-credit savings unions. A significant majority of Kenyans, mainly from lowly penetrated rural areas and low-income earners, were not captured by the incumbent banking institutions. M-Pesa continues to break barriers, in that it is the simplest way to do business in Kenya. As long as you have a Safaricom line you have your future in your hands. With its sister service, M-Shwari, users are now even able to save their money and take loans, all without the much-dreaded waiting hours, charges, vetting and paperwork which for many is the reason they felt left out by traditional banks. It also allows users to pay bills in supermarkets, shops, restaurants and bars as well as utilities such as water and electricity bills at the touch of a button.
Apparel Manufacturing in Kenya:
The African apparel manufacturing sector received a major boost in 2001 when the United States included garments in the list of products eligible for duty-free access to the United States market under AGOA. This provided not only a waiver of US import duties generally in the region of 15-30% ad valorum but also gave African manufacturers a critical advantage over producers located in low-cost countries like China and Bangladesh which faced effective quota constraints and high tariffs on their products when shipped into the United States. Today, the apparel manufacturing sector has demonstrated a measure of resilience and continues to compete in the US market. Leading Sub-Saharan African exporters of apparel are Lesotho, Mauritius, Kenya, Swaziland, Madagascar and Ethiopia.
The Volkswagen Car Assembly Plant:
Europe’s car maker Volkswagen opened an assembly plant in Kigali, Rwanda and East Africans can now drive domestically built cars from the plant.
The ‘first entirely homemade’ smartphone factory in Africa in Rwanda:
The Mara Phone (MaraX and MaraZ) are produced in Rwanda by the Mara Group, a pan-African business headquartered in Dubai.
The development of Liao Shen Industrial Park in Kapeeka:
has contributed significantly to the Uganda’s nation’s industrial development in terms of job creation, government revenue and exports, diversification of the industrial products, attraction of Foreign Direct Investments, and foreign exchange attraction/earning. Newly built factories are skilling Ugandans using sophisticated technology which is being rolled to local manufacturing sector.
BIDCO:
Palm oil growing and processing in Kalangala has transformed the lives of the people in Uganda.
One-Stop Border Posts (OSBPs):
The EAC Treaty under Chapter Fifteen provides for Cooperation in Infrastructure and Services. Lack of coordination among agencies operating at the border posts in EAC was identified as one of the main challenges facing the integration process. The implementation of OSBP is aimed at facilitating cross-border movements through reduction of the time taken in clearance procedures. Along the Kenya borders, Malaba, Busia, Isebania, Namanga, Taveta and Lunga Lunga border posts were selected for this concept. The thirteen (13) OSBPs have been completed and among them Taveta and Namanga, Busia and Malaba are operational. To facilitate the operations of the OSBP, an EAC OSBP Act 2016 was formulated. The Act grants officers from adjourning Partner State right to implement their national laws while operating across the border.
Joint Developments of regional Infrastructure:
The regional infrastructure projects are cross cutting within the EAC integration pillars and the achievements are as follows:
Construction of Athi River – Namanga – Arusha road
Construction of the Voi – Taveta –Arusha road ---still under construction
Design work complete for Malindi – Lunga Lunga – Tanga road
Formulation of the EAC Vehicle Load Control Act 2016.
