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Zawya
02-04-2025
- Business
- Zawya
Tanzania leads as top source of FDI into Kenya in East Africa
Tanzania is the largest source of foreign direct investment (FDI) to Kenya among member states of the East African community (EAC). Investors from Dodoma have pumped in a total of $72.45 million in Nairobi in the last six years highlighting the growing appeal of the Kenyan economy to regional and foreign investors despite continuous trade dispute with Tanzania over non-tariff barriers (NTBs). Latest data by the EAC Secretariat shows that Dodoma has been the top most investor in Kenya in the period running from 2018 to 2023 with a total of $72.45 million invested in 19 projects, followed by Uganda and Rwanda which invested $36.91 million and $3.69 million respectively. According to the data that is contained in the EAC trade and investment report (2023) Burundi and the Democratic Republic of Congo (DRC) invested $2.01 million and $250,000 in Kenya respectively during the period under review while South Sudan invested $190,000. Read: Moderna, Taifa Gas deals lift Kenya's FDIThe major investors in Kenya however came from the rest of the world putting a massive $3.75 billion into the Kenyan economy during the period. Investors are mainly interested in putting money in key sectors including manufacturing, transport, communication and storage, finance and insurance. Other sectors were real estate and business services, agriculture, fishing, forestry and hunting, wholesale, retail trade and tourism and construction. Overall intra EAC planned investments declined by 5.6 percent to $567.17 million in 2023 from $600.78 million in 2022 with the number of projects also decreasing to 72 from 76 in the same period, according to the report. Uganda attracted the most intra-EAC investments worth $280.74 million though it was a drop from $391 million in 2022, followed by Burundi ($155.18 million). Burundi intra-EAC investments projects increased from two to four while their value rose from $1.9 million in 2022 to $155.18 million in 2023. Rwanda's intra-EAC Investment inflows jumped to $55.16 million from $46.78 million and the number of projects rose to 18 from 15. The report shows that Kenya's intra-EAC investment fell to $1.32 million in 2023 from $22.6 million in 2022 while that of Tanzania declined to $74.77 million from $138.5 million in the same period. Despite growing interest of Tanzanian investors in the Kenyan economy the two countries are still embroiled in on-and-off trade disputes over non-tariff barriers (NTBs) that are stifling business between them. Last year (2024) the two countries resolved to address at least 14 NTBs following a, meeting between President William Ruto and his Tanzanian counterpart Samia Suluhu in 2023. The meeting considered 14 issues six from Tanzania and eight from Kenya and provided direction for their resolution. However of the 14 only three were fully resolved. Tanzania continues to deny Kenya import permit for poultry and poultry products including day-old chicks, hatching eggs and meat. Last week Dodoma hit Nairobi with fresh protectionist levies on eggs, dairy and meat as well as confectionery such as biscuits upsetting the EAC customs unions rule and cutting export earnings. The fresh tariff war threatens to reopen another round of on-and-off frosty trade ties between the two countries. The Kenya Association of Manufacturers (KAM) said Dodoma has slapped a 25 percent excise duty on exports of hatching eggs to Kenya contrary to the spirit of the EAC Customs union. Kenya and Tanzania have largely been involved in persistent trade wars over tariff and non- tariff barriers to trade prompting intervention by respective ministries and sometimes Heads of State. Despite tiffs over trade barriers data shows Tanzanian investors still consider Nairobi a worthwhile destination. Read: Ruto launches building of $130.5m LPG plant in MombasaSeveral business tycoons from Dodoma have made massive investments in Kenya, some through acquisitions of Kenyan companies. Among notable Tanzanian investors in Kenya include Rostam Aziz who through his Taifa Gas is building a multimillion dollar 30,000 tonne cooking gas plant and storage facilities in Mombasa worth Ksh16.9 billion ($131 million) and Ally Awadh who is also building a similar but smaller facility at 10,000 tonnes. Mr Awadh is the founder of Tanzania's Lake Oil that acquired the Petroleum retail division of Kenya's Hashi Energy for undisclosed fee in 2017. The family of Tanzanian business tycoon Abdallah Nahdi through Amsons Group has also successfully acquired Bamburi cement at deal estimated at $180 million. In 2017, Tanzanian investors Aunali and Sajjad Rajabali bought 30.2 million shares equivalent to a 2.06 percent stake in oil marketer Kenokobil rising to the list of the oil marketers top shareholders. In 2016 Tanzanian Bank M became the first lender from the neighbouring country to take over a Kenyan institution when it acquired a 51 percent stake in Oriental commercial bank. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (
Zawya
28-03-2025
- Business
- Zawya
Dealing with Africa's diverse regulatory landscape - the example from India
Pan-African banking groups face a unique set of challenges. Op- erating across multiple countries means dealing with diverse reg- ulatory landscapes, fragmented technology ecosystems, and a lack of harmonisation that can stifle in- novation. In countries like Mozambique and An- gola, outdated regulations and restrictive policies further complicate the picture, slowing down the digital transformation process and limiting financial inclusion. India offers a compelling example of how strategic regulatory support can drive digital transformation. The success of the Unified Payments Interface (UPI) has transformed India's financial landscape, with a volume of over 100bn digital trans- actions recorded in 2023 alone. This revolution was not just a prod- uct of technological innovation but was also fuelled by the Reserve Bank of India's (RBI's) proactive regulatory framework, which ensured security, interoperability, and zero-cost transactions for consumers. So, what can African regulators learn from this? • Harmonise regulations across bor- ders: Just as UPI unified payments across India, African regulators can work together to create a harmonised regulatory framework that facilitates seamless cross-border transactions. This would significantly reduce the friction that currently exists in intra- African payments and open up new opportunities for trade and com- merce. • Embrace modern KYC and cloud solu- tions: Simplifying know-your-customer (KYC) requirements and embracing cloud infrastructure can accelerate onboarding processes and reduce costs. This is crucial for extending financial services to the unbanked population, many of whom face bar- riers like a lack of documentation or access to physical bank branches. • Encourage bank-fintech partner- ships: Fintechs are often at the cut- ting edge of innovation. By encour- aging partnerships between banks and fintechs, regulators can foster an environment where innovation thrives, and customers benefit from better services. In India, fintechs played a key role in developing user-friendly, secure platforms that were accessible to all. Navigating regulatory challenges While there are success stories, some Afri- can countries are taking a more cautious approach, which can inadvertently stifle innovation. In Mozambique, for example, restrictions on cloud infrastructure are in- tended to protect local data but have the unintended consequence of slowing down digital transformation. Similarly, Angola's outdated regulatory framework makes it difficult for banks to onboard customers quickly and efficiently. These cases highlight the need for a balanced approach – one that protects consumers and fosters innovation without compromising on security or control. For African regulators and banks to fully harness the potential of digital banking, a few key steps are essential: • Develop regulatory sandboxes: These controlled environments allow banks and fintechs to test new products and services without the full burden of regulation. This not only accelerates innovation but also helps regulators understand the implications of new technologies in a low-risk setting. • Promote cross-border collaboration: Regulators need to work together to create a unified digital banking frame- work across the continent. This would reduce the regulatory friction that cur-rently hinders cross-border transactions and enable a more integrated African financial market. • Leverage technology for compliance: For banks operating in multiple coun- tries, having a platform that can adapt to different regulatory requirements is crucial. Modular solutions, like those offered by Backbase, can help banks scale while maintaining compliance, allowing them to focus on innovation and customer engagement rather than regulatory complexities. Conclusion: A path to inclusive growth Africa is on the cusp of a digital banking revolution, but to unlock its full potential, regulators and banks must work hand- in-hand. By taking cues from successful models like India's UPI and creating a supportive regulatory environment, African countries can drive financial inclusion, foster innova- tion, and build a thriving digital economy. It's time for African regulators to step up and create frameworks that not only protect but also propel the continent into a new era of financial prosperity. After all, the future of banking in Africa depends on it. Heidi Custers (inset left) is the Digital Transformation Director at Backbase, a global leader in banking technology, helping financial institutions deliver seamless, customer-first experiences through its Engagement Banking Platform. By taking cues from models like India's Unified Payments Interface and creating a supportive regulatory environment, African countries can drive inclusion, innovation and build a thriving digital economy.
