Latest news with #intra-EAC
Zawya
30-04-2025
- Business
- Zawya
How AfCFTA can insulate Africa against trade wars?
In the current era of unpredictable global trade, marked by escalating tariffs and trade wars – particularly between the US and China – Africa is at a crucial juncture. These major economic powers are implementing policies that create uncertainty in international markets, forcing countries to re-evaluate their trade strategies. Amidst this uncertainty, the African Continental Free Trade Area (AfCFTA) emerges as a potential solution, aiming to counter external pressures and bolster trade within Africa. However, it is essential to approach this potential game-changer with cautious optimism, considering the historical and structural challenges that persist. A significant challenge lies in the stark contrast in intra-regional trade. Africa's intra-continental trade stands at a meager 14 percent, significantly lower than the European Union's 70 percent, ASEAN's 57 percent, and NAFTA's 44 percent. This highlights a historical inefficiency that has hindered the continent's economies. Progress has been slow even within established regional frameworks like the East African Community (EAC). Despite having a Common Customs Union for 24 years, intra-EAC trade remains at a mere 18 percent. Additionally, external players such as China, India, and the UAE dominate markets in Africa, collectively controlling over 60 percent of trade in the EAC, often without preferential trade agreements. This situation not only reveals systemic inefficiencies but also reflects a concerning reality: Africa's exports lack diversification, consisting mainly of primary agricultural commodities and minerals like gold, copper, and uranium, among many others. The absence of technological infrastructure and expertise prevents value addition, hindering countries from fully benefiting from their natural resources. The challenges extend beyond macroeconomic concerns. Logistics and trade facilitation pose significant hurdles. Read: AfCFTA gains momentum as 48 African countries ratify agreementCurrently, a container shipped from Mombasa, Kenya, to Apapa Port in Nigeria or Tema Port in Ghana or Port Matadi in DRC often takes a detour to European ports, resulting in a journey of up to five months. In contrast, transporting a container of basic commodities from Europe to the same markets in West and central Africa takes only 14 days. These inefficiencies severely impact trade fluidity across the continent. The AfCFTA's Guided Trade Initiative in 2022, where goods took 72 days to traverse this route, further exemplifies the logistical bottlenecks that need to be addressed. Therefore, it's not surprising that the Eastern Africa grade A black tea has to be blended with Grade C/D tea in Europe and sold in West and Central Africa as European tea. The basic consumer goods in some of these markets are from Europe and Asia. To overcome these challenges, innovative solutions that go beyond traditional trade agreements are necessary. Inadequate connectivity, a historical challenge, can be addressed through strategic initiatives. One crucial step would be establishing intra-African shipping lines to promote direct maritime connectivity. In the past, air travel within Africa was often routed through international hubs in Europe or Asia. However, the emergence of airlines like Kenya Airways and Ethiopian Airlines has streamlined air travel across the continent, demonstrating the potential of homegrown solutions. Similar efforts are now required in the shipping sector, by constructing ships and developing fleets dedicated to intra-African routes. Indeed, the Kenya Navy has built MV Uhuru and MV Uhuru II that are plying Lake Victoria waters. It is not inconceivable to have an MV Africa operating between East African Coast and West Africa Coast via the Cape. This shift towards intra-Africa shipping represents a fundamental change in the approach to continental trade. By enhancing routes and reducing reliance on external shipping pathways, African nations can strengthen their economies and improve the accessibility of goods across borders. Read: The AU is in dire need of new directionThis restructuring aligns with the AfCFTA's goals and empowers member states to leverage the collective bargaining power and resources within the continent. While the AfCFTA is a crucial step towards intra-African economic integration, it should not be viewed as the sole solution to the complex challenges faced by the continent. Its potential should not overshadow the realities of trade inefficiencies and structural barriers that continue to impede progress. As Africa navigates the turbulent global trade landscape, a cautiously optimistic approach is necessary. By investing in systemic changes, particularly a robust intra-Africa shipping infrastructure, Africa can position itself not merely as a participant in global trade but as a leader driving its economic renaissance. Furthermore, it is important to recognise that the success of the AfCFTA will depend on the political will and commitment of African leaders. Addressing issues such as corruption, protectionism, and non-tariff barriers will be crucial for creating a conducive environment for intra-African trade. Additionally, investing in human capital development and technological advancement will be essential for enhancing Africa's competitiveness in the global market. The AfCFTA presents a unique opportunity for Africa to take control of its economic destiny. However, realising its full potential will require a concerted effort from all stakeholders, including governments, businesses, and civil society. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (
Zawya
02-04-2025
- Business
- Zawya
East African economy projected to register marginal growth in 2025
The economic growth of the East African region is projected to rise to 5.7 percent in 2025, increasing from 5.1 percent in 2024, a sluggish climb owing to reduced international aid and conflict. The report, which was jointly presented by the East African Business Council and RSM Eastern Africa consulting firm, attributed it to the growth in public infrastructure investments and in the services sector. The RSM Eastern Africa & East African Business Council (EABC) Outlook 2025 report reveals that in 2024, agriculture, manufacturing and infrastructure investments performed well across the East African Community (EAC) partner states. The report reveals that the economies of Kenya, Tanzania, Uganda, Rwanda and Burundi showed resilience despite global challenges, high inflation rates, the war in Ukraine, the 2024 floods, Israel Hamas conflict, and Donald Trump's re-election among other negative factors. The report was unveiled on Tuesday during the 'CEO Roundtable Meeting on East African Integration and Economic Outlook 2025' organised by the EABC in partnership with Kenya Private Sector Alliance (Kepsa), and the Kenya Association of Manufacturers (KAM).'The East Africa's economic growth has been driven by public infrastructure investments. Globalisation is declining as countries turn inward and aid flows decrease. Governments need to provide necessary incentives and an enabling environment for the private sector to lead economic growth,' said Ashif Kassam, executive chairman, RSM Eastern Africa Consulting Ltd.'Infrastructure investments of $44 million in 2024 boosted intra-EAC trade by 13.4 percent to $74.03 billion. Investments are set to rise further in 2025.'The report analysed the performance of each EAC partner state based on a number of sectors including agriculture, infrastructure investments, manufacturing, agro-processing, services and tourism, among others. The report reveals that in 2024, Kenya's agriculture grew by 3.0 percent, contributing 22.4 percent to the Gross Domestic Product (GDP) and employing 40 percent of the population. Read: Kenya's special economic zones to attract more FDIsIn 2025, it is projected to grow by 3.5 percent, with GDP contribution at 21 percent and employment at 41 percent. Manufacturing grew by 3.2percent in 2024, contributing 9.2 percent to GDP and 456,000 jobs. In 2025, it is expected to grow by 3.5 percent, with GDP at 9.5 percent and jobs at 500,000.'Kenya's economy showed resilience in 2024, with a GDP growth rate of 4.6 percent despite facing several challenges. This growth was driven by strong performances in agriculture, services and the tourism sector,' said Mr Kassam.'Kenya's real GDP growth is projected to remain strong at 5.2 percent. Kenya's share of tax to GDP is at 11.5percent, inflation is expected to go down to 6.5 percent and saving to GDP at 13.5percent.'Various projects in East Africa are poised to transform the region's economic landscape. Tanzania's Bagamoyo Deepwater Port is expected to become a major hub for maritime trade, facilitating greater connectivity and economic growth. Tanzania's agriculture sector grew by 4.2 percent in 2024 contributing 28 percent to the GDP and employing 65 percent of the population. Projections for 2025 indicate a growth of 4.5 percent with the sector's contribution to GDP expected to rise to 29 percent and employment to 66 percent. In Uganda, the agriculture sector contributed 24.1 percent to the GDP in 2024. However, growth in the sector remains steady at three percent due to government support in irrigations, mechanisation and agro-processing. Exports of coffee, fish, tea and maize remain strong. In Burundi, agriculture remains the backbone contributing around 40 percent of the GDP. The sector is dominated by smallholder farming, with coffee and tea making up the largest exports. Despite the growth, the private sector members drawn from all the eight EAC members, by 50 business leaders, raised concerns over high cost of doing business sustainability - particularly electricity and transport. They also raised issues of climate change to access the European Union market, intellectual property rights to scale-up digital tech businesses, consolidating laws and enforcement agencies to reduce regulatory compliance burdens.'Tax budget proposals and consultations should involve and be harmonised with a wider range of private sector stakeholders at sectoral, national, and regional levels and combating illicit trade, including counterfeits and substandard goods,' said Mr Kassam. On the global scene the return of Trump poses both risks and gains.'The return of Trump to the White House in 2024 has disrupted economic alliances. For Eastern Africa, with all its rich untapped valuable resources, this is the time to reinvent itself rather than retreat,' said Mr Kassim.'As the world grapples with the implications of America's inward turn, Eastern Africa must make sense of this uncertainty. It is a make or break for the region,' he said."For businesses and investors, the path forward demands a proactive and informed approach of the region's shifting dynamics.''For the record, East Africa countries did well in the last two years, 2023 and 2024. But the economic indicators for this year paint a different picture. The war in DRC and also South Sudan is on and off because of the political turmoil facing the country now, we can't project the growth,' said Akol. Read: Kenya posts slowest Q3 economic growth since Covid pandemicMr. Akol also called for the liberalisation of air transport services, finalization of trade in services liberalization, and full implementation of EAC commitments by new Partner States.'Intra-EAC exports have grown from 17 percent of total exports in 2017 to 21 percent in 2023, reaching $6.3 billion in 2023, but the share of intra-EAC trade to total trade continues to stagnate at 15percent,' said Mr Adrian Njau, Ag EABC executive director.'Governments of EAC Partner States should fully implement commitments of the Common Market and Customs Union. The EAC's trade has a potential of $1.9 billion under the AfCFTA market.'Ms. Miriam Bomett, head of policy, regulatory advocacy & legal operations at the Kenya Association of Manufacturers (KAM), called for the implementation of the CET, the reduction of production costs for manufacturing, and the enhancement of cross-border trade through regulatory reforms and efficiency improvements. Ms Rita Kavashe, managing director of ISUZU East Africa, stated that sourcing inputs from across the region has facilitated the development of an integrated East African motor vehicle industry, fostering regional integration. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (
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
10-03-2025
- Business
- Zawya
How M23 war has disrupted East Africa trade with Congo?
The M23 rebel group's offensive in eastern Democratic Republic of Congo may be causing one of the region's worst humanitarian crises. But businesses are also feeling the effects of the war, with closed banks, diverted goods and confusing customs decisions. Since January, more than 3,000 people have died and another 600,000 uprooted from their homes, fleeing the violence that broke out between M23 and the Congolese army. In cities M23 controls, the economies have been severely disrupted and the banking system has ground to a halt. In Goma, North Kivu Province, the provincial branch of the Congolese central bank and all lenders shut doors due to insecurity and the state authority has relocated services to a safer town. Business leaders in the DRC are now complain of serious liquidity crisis, especially since Kinshasa controls banking operations, while the flow of goods from Kenya, Rwanda, Uganda, Burundi into Congo has slowed or been diverted.'Here in Bukavu and Goma, there is almost no business going on. Banks have closed as well as Goma airport affecting the importation of goods from Uganda, Kenya, Rwanda Tanzania and other places,' said Mapendo Bienv, DRC's member of the East African Business Council, who is based in Bukavu, the capital of South Kivu Province. And the general situation in North Kivu is currently that of bedlam. M23 has set up a parallel administration in Goma, installing a governor, two vice governors, a mayor and a number of burgomasters (mayors). But the parts of the province still in the hands of the Congolese army also have a governor, Major General Evariste Somo Kakule. He has vowed to reorganise the province, in anticipation of a possible assault to recover the territories lost to M23.'They [the M23] are targeting minerals in addition to government posts, the army, police, and state enterprises,' says Amadee Fikirini, Life Peace's Country Director for Congo, based in Bukavu. Rubaya produces 1,000 tonnes of coltan annually—half the DRC's output. Other areas of M23 control are rich in cobalt and lithium, which are critical to electric vehicle batteries. The region is also rich in gold, which is reportedly the key source of revenue for the M23. Customs clearanceThe M23 control of the territory around Goma has also affected the intra-EAC trade. In Goma, the governor installed by the M23 imposed a new trade policy, including loosening of restrictions on closing hours of the border with Rwanda, allowing more time for business. Previously, Congolese traded with Rwandans only during the day at their common land border after Kinshasa authorities ordered, in 2022, that the border with Rwanda should close at 3pm. The new M23 administration extended the business hours to 10pm. The effect, however, is beyond Congo's borders. This week, Uganda said it was closing operations at several border crossings into eastern DRC to zones now controlled by M23 rebels, potentially locking out not only its exports but those from Kenya and South Sudan, whose exports transit through Uganda. On Tuesday, Uganda stopped clearing goods destined for Bukavu via its Katuna border and those destined for Goma via Cyanika, a move that has seen cargo destined for DR Congo pile up at the borders and remain in several warehouses in Uganda. Since 2022, Uganda had, in fact, taken precautions in areas controlled by the rebel outfit. Other closed borders this week include Ishasha River, Busanza, Kyeshero and Bunagana. These points cannot clear goods destined for eastern DR Congo. Trade routesThe closures affect not only Uganda but most of the East African Community (EAC) member states whose goods have been transiting via Uganda. These countries can now only export via Rwanda, where the goods can then be re-exported to Goma and Bukavu, but this is a longer distance. Kenneth Ayebare, chairman of the Uganda Cargo Consolidators Association, said trucks going to Gisenyi in Rwanda near Goma, now have to go through Kigali, which is a longer and more expensive route. But it is the only option.'The Cyanika border is nearer to Goma,' said Mr Ayebare explaining that since 2022, the Uganda side of the border has been active, but the DR Congo side has been closed since M23 captured the Bunagana post. It is about 92 kilometres from Cyanika to Goma. The distance from Katuna to Goma via Kigali is about 240 kilometres. Asadu Kigozi Kisitu, the Uganda Revenue Authority (URA) the acting Commissioner for Customs, told The EastAfrican on March 3, 2024 that it's now internationally recognised that Goma, a final destination to the Cyanika border, and Bukavu, a final destination of Katuna, are no longer under the control of the DR Congo central government.'There is no recognised government in areas controlled by the M23 rebels. We deal with governments. As a result, DR Congo Customs informed us that the lack of control has led to significant revenue losses of goods destined for Goma and Bukavu,' he said. Exports to DRCEastern DRC is a lucrative market for nearly all EAC member states, including Rwanda even though it has existing tensions with the Congolese government. Uganda trades more with DRC than any other neighbour, with two-way businesses reaching $2 billion in 2024. Over the past three years from 2022, the Bank of Uganda data shows that Kampala's export earnings to DR Congo have been steadily growing, from $176.63 million in 2022, reaching $180.78 million in 2023, before settling at an all-time high of $197.29 million in the 12 months to December 24, 2024. Kenya's export earnings in trade with DR Congo, in the past 33 months to September 2024, reached $459.1 million in September 2024, with Nairobi being one of the key sources of petroleum products for eastern DRC.'Eighty percent of the trucks on the Goli-Bunia route are fuel truckers,' said Joseph Omwasa, a Kenyan truck driver, who had spent over a week at Goli. He told The EastAfrican that he feared attacks by armed militia. Uganda had, since June 2022, when M23 rebels took control of the Congolese side of the Bunagana border, slowed clearing goods destined for DR Congo via the crossing. It's estimated that Uganda used to collect over Ush500 million ($136,000) in revenue from the Bunagana border annually. The rebel takeover of Bunagana has also affected business at the Ishasha border post in Kanungu district of western Uganda.'DR Congo is a huge market not only for Uganda and the whole East African Community,' says Julius Byaruhanga, Director of Policy and Business Development Private Sector Foundation Uganda, a Kampala-based business lobby. Rwanda's export earnings to DR Congo hit $489.3 million from January 2022 to September 2024, National Institute of Statistics Rwanda trade data shows, despite the political tension between the two countries. Agencies' confusionFor the Congolese government, the confusion emanating from its agencies has not helped the uncertainty. On Wednesday, it backtracked on a move to impose import duty on goods from regions controlled by M23, the result of an overnight public outcry. The Congolese General Directorate of Customs and Excise (DGDA) of North Kivu said on Wednesday that it had reversed the decision that would have considered all goods coming from Goma, Bunagana and Ishasha, areas occupied by the M23 rebels, as new imports subject to tax. Jean-Louis Bauna, Deputy Director General of the Customs Department, described the letter from his department in northwest Kivu as 'a forgery.'He argued the 'customs legislation applies in full throughout the national territory.'Read: DRC rescinds tax directive on M23 zones after backlashThe backtracking, however, came after intense social media commentary concerning the move, which had been communicated to neighbouring countries of Uganda and Tanzania. Some critics argued the country risked getting divided into two if the directive is implemented. Congolese authorities under Kinshasa, administering North Kivu Province, have been based in Beni since the capital Goma was taken over by the M23, backed by the Rwandan army. The M23 have operated the Congo River Alliance (AFC) led by Corneille Nangaa, a former President of the Independent National Electoral Commission. Nangaa is calling for the overthrow of the government of President Felix Tshisekedi, unless he agrees to dialogue about their grievances. Paul Kayembe, director of the North Kivu DGDA, denied the decision had even been contemplated to tax the M23 zone. Instead, he blamed it on 'the work of ill-intentioned people trying to discredit him' and pointed a finger at 'Rwandan' manipulation. What we learnt, however, was that the government, in attempting to rescue revenues lost to border points in M23 zone had tried to re-tax the goods. It backtracked following the controversy it generated. A number of people including prominent Congolese personalities had protested against the decision to impose a customs duty inside the country's territory, thus creating a virtual border. Sources within the DGDA confirmed to The EastAfrican that the new tax memo was indeed genuine. A DGDA technician explained on condition of anonymity that 'customs posts in rebel-occupied areas have already been suspended from the computerised customs system, which enables automated management of customs procedures.'Since the M23 took Goma, the Congolese government has been taking economic measures to corner the parallel administration set up by the rebels.'We have placed our main hope on the EAC-SADC mediation process; maybe it could help unlock the current impasse,' said Mr Bienv, DRC member of the East African Business Council, in an interview with The EastAfrican.'The EAC/SADC council of ministers is expected to meet in a fortnight and deliberate over the crisis in eastern Congo as per the directive of the joint Heads of state summit,' said Rebecca Kadaga, Uganda's Minister for East African Community Affairs.'The meeting is set to receive a report from chiefs of defence to discuss the agenda on ceasefire and re-opening of the Goma airport as arrived at by the heads of state.'The Dar es Salaam summit sought to bridge regional differences by bringing the two blocs together. It called for an immediate ceasefire and direct talks with the M23 and other non-state actors. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (
