Tension, all eyes on EAC Summit tomorrow to resolve Burundi crisis

The situation in Burundi is tense as all the worrying factions in the country look up to the EAC summit due to take place in Dar es Salaam tomorrow to provide a meaningful solution to the month long conflict in which scores have been killed and hundreds of thousands exiled.

The United Nations-sponsored talks between Burundi’s government, the opposition and civil society groups have also been suspended to await further direction from the East African Community Heads of State Summit scheduled for Sunday in Dar es Salaam.

The emergence meeting which was convened by Tanzanian President and chairperson of the East African Community Heads of State, Jakaya Mrisho Kikwete is a follow-up to the 13th Extraordinary Summit of the EAC held on 13 May 2015 which was also held in Dar es Salaam.

The emergency summit is being preceded by a meeting of ministers/cabinet secretaries of the EAC partner states today.

Other dignitaries also expected to attend the summit are; the chairperson of the African Union Commission, Nkosazana Dlamini Zuma, President Jacob Zuma of South Africa, President Eduardo dos Santos of Angola, who is the current chairperson of the International Conference on the Great Lakes Region (ICLGR), and Said Djinnit, the UN special envoy on the Great Lakes Region who shall be representing the UN Secretary General, Ban Ki-Moon.

Whether or not President Nkurunziza will leave the country to attend the summit is still questionable, as the last time he left to attend an earlier EAC summit resulted in a foiled coup at home.

Peace and stability in Burundi is very key for the East African region as a whole, as it won’t only hurt the region’s development plans if it escalates, but will also downgrade the region’s overall risk rating and investor confidence.

International retail giant makes entry into Kenyan market

South African retailer Massmart finally made its entry into the Kenyan market yesterday, ending a 10-year wait. It opened its first store at the grand new Garden City Mall along the Thika Superhighway, where giant local retailer Nakumatt also launched its 53rd outlet in East Africa.

Massmart will trade as Game stores, a discount shop that sells fast-moving consumer goods. The South African retailer entered Ugandan and Tanzanian markets as Game Stores eight and seven years ago respectively, and is looking to consolidate its position in the East African market by opening in Kenya.

The retailer said it sees Kenya as its most competitive market outside South Africa regionally.

Kenya’s retail market is highly competitive and undergoing fast growth with four local players – Nakumatt, Tuskys, Uchumi, and Naivas – dominating the scene. Nakumatt has the biggest market share, although Tuskys has a larger number of branches.

Stores of these companies are also very prevalent in other East African countries, especially Uganda, and they are looking to expand further in the region, especially in countries where their presence is still relatively limited such as Tanzania, Rwanda, and South Sudan.

Massmart opted to set up its own stores in Kenya after failure to acquire a majority stake in Naivas Supermarkets, which was derailed by a family feud.

“We have been trying to get to Kenya probably eight to 10 years now through a partner but we never found one. We looked at Naivas doing a deal but that just never worked out and we thought springing our brand here was another option,” said Mark Turner, Massmart’s Marketing and Customers Director.

Massmart is a South African company that owns brands such as Game, Makro, Builder’s Warehouse and CBW. It is the second-largest distributor of consumer goods in Africa, the largest retailer of general merchandise, liquor and home improvement equipment and wholesaler of basic foods. The company is owned 52.4% by Walmart, an American multinational retail corporation.

Walmart is the world’s largest company by revenue, according to the Fortune Global 500 list in 2014, as well as the biggest private employer in the world with 2.2 million employees.

Rwanda’s Claver Gatete named “Finance Minister of the year”, as Nigeria’s Akinwumi Adesina takes top AfDB job

Rwanda’s Minister of Finance and Economic Planning, Claver Gatete was today recognized as the Finance Minister of the Year at the African Bankers Awards 2015 held in Abidjan, Ivory Coast on the sidelines of the ongoing African Development Bank Annual Meetings.

The Finance Minister of the Year award goes to the African Finance Minister who has carried out prudent macroeconomic policies and, through reforms of his actions, has shown skills and dexterity to create the conditions of an appealing investment climate.

This award comes a day after an African Development Bank report named Rwanda as the fastest growing economy in the East African region at a rate of 7.5%, and pinpointed the need to end the crisis in Burundi before it hurts the region’s economies.

During the same event, Bank of Kigali was also recognized as “the Best Regional Bank in East Africa for the year”. This award goes to a Bank that has excelled in the banking industry in its region by reaching out to new customers, offering new services, adopting inclusiveness by bringing the unbanked into the banking space, making use of new technologies and contributing to a stronger financial sector.

In related news, Akinwumi Adesina of Nigeria will be the eighth President of the Africa Development Bank (AfDB), after beating Cape Verde’s Cristina Duarte, and Chad’s Kordje Bedoumra in a heavily contested race today afternoon. He will take over from Rwanda’s Dr. Donald Kaberuka on September 1, 2015 who has held the office since 2005.

East Africa registers tremendous growth, Political Crises in South Sudan and Burundi dampen Outlook

According to the latest Economic Outlook Report 2015, released by the African Development Bank (AfDB) on Monday, May 25, 2015, the East African region achieved impressive growth of more than 7% in 2014, from below 5% the year before. The region was led by Rwanda with 7.5%, followed by Tanzania at 7.4%, Kenya at 6.5%, Uganda at 6.3%, and lastly troubled Burundi at 4.7%.

This tremendous growth was largely driven by the strong growth in the region’s service and construction sectors. Lower global oil prices also supported the East African Community (EAC) economies, which are net oil importers, as they lowered production costs, boosted consumer demand and mitigated inflationary pressures.

In an interview with The EastAfrican newspaper, Donald Kaberuka, the outgoing president of AfDB noted that East Africa has been the most dynamic part of Africa without oil and gas. This growth is expected to spiral even more with the extraction of large oil deposits discovered in Uganda and Kenya.

However, this positive outlook is overshadowed by the political crises in South Sudan and Burundi which are expected to weigh down the other East African economies – with overall regional average growth expected to dip to 5.6% in 2015, down from 7.1% registered in 2014. The instability in these countries might also raise the region’s overall risk profile.

A concerted joint effort by the regional leaders to restore peace in South Sudan, and stop the crisis in Burundi from escalating is needed, lest the crises will dampen the region’s growth prospects.

As Khartoum takes on the lead role to mediate in the South Sudan crisis, the East African Community Heads of State are this week expected to hold yet another Summit to discuss the Burundi crisis.

Business Sweden explores opportunities in East Africa’s Airports sector

A recent aviation report for the past ten years shows that air capacity within and from Eastern Africa has risen from 15,273,418 available seats in 2005 to 24,771,883 available seats in 2014, which represents a growth of 62.2% across the period, and an average annual increase of 6.9%.

Bole International Airport in Addis Ababa, a regional gateway for Star Alliance, and Nairobi’s Jomo Kenyatta International Airport, a regional gateway for SkyTeam, accounted for more than a third of the total annual departures from East Africa in 2014. Bole International had a 19.6% share and Jomo Kenyatta International a 19.5%.

Looking at a 5 year period, however, Kigali International Airport was the fastest growing airport within and from Eastern Africa between 2010 and 2014. Departure seats more than doubled from 417,111 in 2010 to 908,176 in 2014 which saw Kigali International Airport rise from being the 12th largest airport in the region to seventh largest by capacity during the period.

This increased capacity calls for more investments in the airport sector in the East African region, and as a result most East African countries plan to undertake major infrastructure projects to build new international and regional airports, as well as expand or upgrade the capacity of the existing airports. Business Sweden has explored the business opportunities that exist in this sector for Swedish companies.

The Trade Commissioner for Business Sweden to Kenya, Mr. Robin Pettersson will be presenting the airport projects in further detail, as well as the activities Business Sweden has planned to assist Swedish companies in becoming a part of these projects during a breakfast meeting in Stockholm on June 2, 2015.

Last year, a delegation was organized by Business Sweden to Kenya, Rwanda and Uganda allowing close interaction with the key stakeholders in the airports sector, which led to concrete business opportunities for several of the participating Swedish companies. CEO of Aviation Capacity Resources AB, Mr. Wilhelm Wohlfahrt who was one of the participants in the delegation will also be sharing his experiences at the Breakfast meeting. A similar delegation is planned to visit Ethiopia, Kenya and Tanzania in November 2015 to build on last year’s achievements.

Business Sweden which was formed in January 2013, as a merger between the Swedish Trade Council and Invest Sweden, facilitates and promotes the growth of Swedish companies abroad and investment opportunities for foreign companies in Sweden. The organization also supports Swedish companies in reaching export markets, and creates business opportunities for Swedish Small and Medium-Sized Enterprises to grow internationally.

In East Africa, the Business Sweden team supports Swedish companies with the services they need to succeed in the region with a focus on ICT, energy and infrastructure sectors, though increasing opportunities have been recognized in healthcare, sourcing and consumer products. The team covers the countries of Kenya, Ethiopia, Rwanda, Tanzania, Uganda, Somalia, South Sudan, Burundi and DR Congo.

Uganda to hold first Private Equity and Venture Capital Conference next month in a bid to support SMEs

Uganda will host the first Private Equity and Venture Capital Conference from 24 – 25 June 2015. The Conference will focus on providing alternative sources and financing for Small and Medium Enterprises (SMEs) in the country and the East African region at large.

The conference which seeks to build linkages between all market stakeholders by linking SMEs and providers of capital will be attended by entrepreneurs, family business owners, accountants, lawyers, investors (individual and institutional), academics as well as students from the entire East African region.

Increasing access to finance and technical assistance to SMEs is viewed as an economic development priority in Uganda, East Africa, and world over. SMEs contribute significantly to employment and GDP growth, and play an important role in fostering linkages between large and micro businesses throughout economic value chains.

Despite their importance to private sector development, SMEs in East Africa lack affordable and appropriate finance for investment, so as to grow and expand their businesses. Commercial banks have traditionally preferred to earn high yields by investing in government securities and lending to large corporations, while microfinance institutions have focused on serving very small, easier-to-analyze micro-enterprises. This situation calls for alternative funding solutions which are more appropriate and more affordable than the traditional ones.

The upcoming Kampala Private Equity and Venture Capitalist Conference 2015 therefore comes at an opportune moment as it will link thousands of SMEs in need of venture and growth capital with a multitude of venture capitalists and private equity investor from all over the world looking for suitable businesses to invest in.

Kenya falters behind its EAC Counterparts in race for Foreign Direct Investments

Kenya is attracting Foreign Direct Investments (FDI) well below that of its East African Community neighbours, a recent report from the International Monetary Fund has shown.

According to the report, Kenya attracted only 1.1% of its GDP as investment last year and is forecast to increase to 1.7% this year, trailing behind its neighbours Uganda, Tanzania, Rwanda and Burundi which attracted 4.5%, 4.3%, 2% and 2.3% respectively.

Kenya’s poor performance was attributed to incidents of terrorism from the Somali based Al Shabab militant group which reduced investors’ and business leaders’ confidence in the economy.

FDI flows to Kenya were also hurt by a fall in the country’s GDP growth rate which declined to 5.3% in 2014 down from 5.7% the year before, beat by Tanzania and Rwanda which achieved growth rates of 7.2% and 7% respectively. Kenya only managed to beat Uganda, which was facing a donor backlash over a controversial Anti-homosexuality law, whose GDP growth stood at 4.9% and strife-prone Burundi that recorded 4.7%.

Global Entrepreneurship Summit due in July expected to increase FDI to East Africa

The 6th Global Entrepreneurship Summit due to take place in Nairobi Kenya is expected to open doors for East African entrepreneurs and boost trade and investment in the country and the entire East African region. The summit which will take place from 25-26 July this year is expected to bring together thousands of business leaders and high level government officials from all over the world, including US president Barack Obama. This will be the first time that the conference is taking place in Sub-Saharan Africa, and is expected to increase Foreign Direct Investment (FDI) to the region.

According to a recent study, external financial flows to Sub-Saharan Africa have increased significantly over the past 20 years to about $120 billion in 2012—from $20 billion in 1990. The composition of these flows has also changed, with most of the increase attributed to increase in private capital flows, which are now higher than Oversees Development Assistance (ODA). The share of ODA fell from 62 percent of total external flows in 1990 to 22 percent in 2012.

East African parliament approves EAC Budget for FY 2015/2016

The East African parliament yesterday approved the EAC Budget for the Financial Year 2015/2016 to the tune of USD 110m down from USD 126m the last financial year; to be jointly financed by member states and development partners.

The Budget prioritizes the operationalization of the Single Customs Territory, enhanced implementation of the EAC Common Market Protocol with particular focus on implementation of the EAC e-Passport and development of the EAC trading, payments and settlements systems.

Other key priorities in the next financial year include; commencement of the constitution making process for the EAC Political Federation, development of cross-border infrastructure, and implementation of the EAC Industrialization Policy with a special focus on improving SME competitiveness, and strengthening the collection and compilation of industrial statistics.

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EAC, COMESA, SADC to form tripatite Free Trade Area

African countries will next month launch a framework to create a 26-nation free trade area by integrating three existing African trade blocs to boost regional trade and investment.

With a combined gross domestic product of $1 trillion, the tripartite trade area will include the East African Community (EAC), the Common Market for Eastern and Southern Africa (COMESA), and the Southern African Development Community (SADC) in a single free market.

The tripartite free trade area is expected to boost inter-regional and intra-regional trade in Sub-Saharan Africa, as well as help solve the problem of overlapping membership within various countries belonging to more than one of the trade bloc.