Energy shortfalls should ordinarily be a challenge. But in a region seeking partners to develop solutions, it turns out they are an opportunity for investment.
The energy sector in the EAC countries is being restructured to encourage private investors. The EAC Partner States have developed an East Africa Power Master Plan. Every two years, the Partner States organise a petroleum conference to showcase investment opportunities in the sub-sector.
Natural forests, with their indigenous fauna and flora, offer great potential for the development of:
Opportunities also exist for the provision of services for the certification of organic honey production.
Already accounting for about 36% of GDP in the EAC economy, the agriculture sector still retains a lot of untapped potential, specifically for commercial farming.
Agriculture is a sector that is central to the EAC economy, contributing between 24 and 44% of GDP in the five Partner States, while also accounting for the livelihood of about 80% of the region’s population.
The key to sector growth, however, lies in a shift from subsistence to commercial farming. Opportunities for large-scale commercial farming exist in the region for a wide variety of food and cash crops.
The key investment opportunities in the sector are listed below. Follow links for detailed information on prospects in the various sub-sectors.
The Community offers numerous investment opportunities covering a wide range of sectors. Following the adoption in 2011 of the EAC Industrialisation Policy and Strategy, the Community has identified six strategic regional industries in which the region has potential comparative advantage, namely:
Opportunities, however, abound in various other sectors. Investors are requested to contact Investment Promotion Agencies in Partner States for detailed information and updates on new developments. Follow links below for information on sectors listed:
Regional trade integration is a cornerstone of EAC Partner States’ trade policies. This involves strengthening of public institutions and private sector organisations involved in export promotion.
The internal EAC market has about 146 million consumers, while the Common Market for Eastern and Southern Africa (COMESA) comprises 20 member states with a population of over 460 million. Rwanda, Kenya, Uganda and Burundi are all members of COMESA.
The Southern African Development Community (SADC), established in 1992, and is now composed of 15 member states among which is Tanzania - the only EAC state that also belongs to the SADC bloc.
Burundi, Rwanda, Tanzania and Uganda are covered by the EU’s Everything But Arms initiative, under which all products from Least Developed Countries except arms and ammunitions have preferential access to the EU market. Together with other sub-Saharan African countries, the EAC Partner States also qualify for duty-free access to the US market under the African Growth and Opportunity Act, with the exception of Burundi whose eligibility has been revoked with effect from 01 January 2016.
Products from EAC countries can access various markets in the developed world through the Generalised System of Preferences (GSP), which offers preferential treatment to a wide range of products originating from developing countries.
Membership in the African, Caribbean and Pacific States and the GSP enables products from Partner States to qualify for preferential tariffs on exports to member countries. Burundi is also a member of the Economic Community of Central African States, which aims at establishing a Central African Common Market.
A number of measures have been taken at the Community level to enhance trade, and these include the following:
Signed in March 2004, the protocol came into force upon ratification by the then three EAC member countries and became effective on 1 January 2005.
The objectives of the Customs Union include furthering the liberalisation of intra-regional trade in goods; promoting production efficiency in the Community; enhancing domestic, cross-border and foreign investment; and promoting economic development and industrial diversification.
EAC Partner States signed the Protocol in November 2009, and it came into force on 1 July 2010. The Common Market is the first of its kind in Africa.
The EAC seeks to progressively transform into a single market that allows for free movement of goods, persons, services, labour and capital while guaranteeing rights to residence and establishment. Reviews of the relevant laws to ensure the smooth operation of the EAC Common Market are ongoing in all the Partner States.
The EAC in 2011 signed framework agreements with the USA and China with the aim of boosting / promoting commodity trade, exchange visits by business people and co-operation in investment among others.
The Partner States have agreed to co-operate in simplifying, standardising and harmonising trade information and documentation so as to facilitate trade in goods.
The Community has developed anti-dumping regulations, as elaborately highlighted in the EAC Customs Union Protocol.
The EAC already has in place EAC Competition Policy and Law currently being implemented by the Partner States with an aim to deter any practice that adversely affects free trade within the Community.
Re-exports are to be exempted from the payment of import or export duties.
Under Article 13 of the Customs Union Protocol, the EAC Partner States have agreed to remove all existing non-tariff barriers to trade and not to impose any new ones.
Under Article 81 of the Treaty establishing the East African Community, the EAC Partner States recognised the importance of standardisation, quality assurance, metrology and testing for the promotion of trade and investment, and consumer protection among other things.
Fifteen good reasons why you should choose East Africa as your investment destination:
The EAC in 2011 signed framework agreements with the USA and China with the aim of boosting / promoting commodity trade, exchange visits by business people and co-operation in investment among others.
Each of Partner State has developed a Private Sector Development Strategy. At the regional level, there is a Consultative Dialogue Framework for engagement of the private sector in the integration process. Secretary-General’s CEOs Forum is a result of the dialogue framework. It is a platform that allows business people from the region to interact with the Secretary-General on issues hindering trade and business in the region. In addition, the EAC has allied itself with key private sector organisations that seek to address concerns of the business community. These include the following:
At the Community level, the East African Business Council (EABC) is the formal apex business body. It was established in 1997 to represent the interests of the region’s private sector in the EAC Regional Integration process.
EABC’s more specific objectives include the promotion and maintenance of a single market and investment area in East Africa and the maintenance of an institutionalised interaction with the EAC and its Partner States. EABC has a large membership in the region in various sectors including manufacturing, ICT, tourism, banking and media among others. Currently, it has an observer status in the EAC. www.eabc.info
The East African Chamber of Commerce, Industry and Agriculture is an organisation formed and owned by the three national Chambers, namely: the Kenya National Chamber of Commerce and Industry, the Uganda National Chamber of Commerce and Industry and Tanzania Chamber of Commerce, Industry and Agriculture. Its main objective is to lobby for the creation of a conducive environment for cross-border trade and investment within the context of the East African Customs Union. www.eastafricanchamber.org
The Eastern Africa Association was established in 1964 to facilitate foreign investors’ participation in the economic development of Eastern Africa. It is headquartered in London and acts as a channel of communication between foreign investors and Eastern African Governments. It interprets the policies and objectives of Governments to its members and, in turn, explains the views and needs of investors, prospective investors and foreign businesses, generally to Governments. www.eaa-lon.co.uk
At the national level, a number of private sector associations have been established. These include; Chambre de Commerce et D’Industrie du Burundi, the Kenya Private Sector Alliance, the Rwanda Private Sector Federation, the Tanzania Private Sector Foundation and the Private Sector Foundation of Uganda. These associations include addressing cross-cutting sectoral concerns and facilitating dialogue with their Governments.
A number of sector-specific associations have also been set up mainly to collect and disseminate information to members, provide training and marketing services, and lobby the Government on behalf of their members. Among the most influential of these associations are the Kenya Association of Manufacturers, the Confederation of Tanzania Industries and the Uganda Manufacturers Association.
The trade promotion bodies from Kenya, Tanzania and Uganda maintain a web portal (www.eacexport.com) facilitated by the Centre for the Promotion of Imports from Developing Countries from The Netherlands.
Find below additional information on national export promotion bodies. Detailed information is available on the websites provided.
The Export Promotion Council (EPC) is Kenya’s premier institution in the development and promotion of export trade. Established in 1992, EPC’s primary objective was to address bottlenecks that were facing exporters and producers of export goods and services, with a view to increasing the performance of the export sector. www.epckenya.org
The Board of External Trade (BET) of Tanzania is dedicated to establishing global business partnership through organising and managing international and specialised trade fairs, solo exhibitions, product and market research, prospect development, trade missions, buyer-seller meetings and contact marketing programmes. BET gives out regular trade information and offers consultancy services to producers, exporters and importers to enable them to effectively participate in the global market place. www.bet.co.tz
The Uganda Exports Promotions Board (UEPB) is a public trade promotion organisation which operates under the Ministry of Tourism, Trade and Industry. UEPB’s mission is to facilitate the development, diversification, promotion and co-ordination of all export related activities that lead to export growth on a sustainable basis. www.ugandaexportsonline.com
To promote investment in the region, the Community has, through the EAC Development Strategy, set out the priority programmes for the region focusing on macroeconomic cooperation; trade liberalisation and development; cooperation in infrastructure; the development of human resources, sciences and technology; and cooperation in legal and judicial as well as political affairs.
The Government of Burundi set up the Economic and Social Council, a consultative and advisory body with competence in all areas related to economic and social development. Burundi’s Poverty Reduction Strategy Paper launched in 2006 sets out bold poverty reduction objectives consistent with the government’s 2005-2010 priority program and the Millennium Development Goals (MDGs).
In Kenya, the Government formed the National Economic and Social Council in 2004, as an advisory body mandated to provide timely, accurate and independent economic and social advice with a view to improving the management of the economy.
The Kenya Vision 2030 is anchored on three pillars:
The Republic of Rwanda development roadmap, Vision 2020, identifies six ‘pillars’ on growth expectations namely: the reconstruction of the nation; an efficient State that unites and mobilises the people; human resource development; the development of basic infrastructure; the development of entrepreneurship and the private sector; and, the modernisation of agriculture and animal husbandry.
Tanzania, under its Development Vision 2025, has identified the key objectives as achieving macroeconomic stability, attaining high levels of domestic saving and investment, broad-based human-resource development, and sustainable economic growth. It is also implementing its Poverty Reduction Strategy, which is aligned with the MDGs of the United Nations.
Private sector concerns are also addressed through the Tanzania National Business Council.
According to the Uganda Poverty Eradication Action Plan (PEAP) of 2000, the highest priorities for medium term expenditure are security, roads, agricultural research and extension, primary education, primary health, and water and sanitation. A Presidential Investor’s Roundtable chaired by the country’s president is in place to ensure that government policies keep the private sector at the centre.
The EAC developed Private Sector Development Strategy (PSDS) in 2006 which is still operational but is in the process of reviewing the PSDS. Avenues for increased private sector participation have been integrated in all sectors of the economy and private sector enterprises are investing in the communities through Corporate Social Responsibility. As a result, investments to the EAC region have improved significantly. EAC attracted Foreign Direct Investments inflow of US$ 7.09 billion in 2014, up from US$ 6.2 billion in 2013.
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.
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.
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.
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.
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.