Business

Focus on inter-trade, EAC partner states told

As rate of FDIs flow into bloc slows down

Sunday January 7, 2018

By Joe Lihundi, Trranquility News reporter, Arusha

The East African Business Council (EABC) has asked the public sector in the region to give cross-border investments (CBIs) high priority in the wake of sluggish flow of foreign direct investments (FDIs).

The FDIs flow into the region is considerably low at global level, notwithstanding partner states’ continued efforts to create conducive climate for them.

Going by the East African Community (EAC) preliminary 2016 Trade and Investment Report, the total of FDIs movement into the bloc amounted to $6.7 billion during the year.

The amount is slightly below $6.9 billion registered over the last three years when the region has been concentrating on the extractives sector, which does not provide much in terms of employment.

Mr Adrian Njau, the EABC Head of Trade and Policy

While FDIs to Burundi, Uganda and Tanzania increased, FDIs to Kenya and Rwanda fell during the year when investment inflows mainly concentrated on the services and industrial sectors, with manufacturing creating 20,439 jobs.

Inflows to Burundi increased more than 10 times due to cessation in the conflict in the country allowing business to resume.

However, going by the EAC global competitiveness as well as the ‘ease of doing business’ reports, a lot is required to improve the business environment and attract more investments into the region.

The EABC has in this backdrop come up with a six-step proposal it believes will pour investments into the region and ease the shock arising from the stagnation of FDIs flow.

We ought to create a credible rules-based regional investment regime that enhances predictability for investment policies and laws with mechanisms to resolve trade disputes, enhance awareness and promote the EAC as a single destination for FDIs,” – Mr Adrian Njau, the EABC Head of Trade and Policy.

The EABC Policy and Trade Advisor, Mr Adrian Njau, said the EAC partner states should, in the first place, promote CBIs and double their efforts in encouraging East Africans to take advantage of regional opportunities for them to grow their businesses instead of over-depending on FDIs.

The value of intra-EAC investments stood at 6.9 per cent to $254.1 million in 2016, up from $237.8 million registered the previous year.

Tanzania’s President John Magufuli displays a copy of the East African Code of Conduct for Business within the region shortly after the book was launched at Ngurdoto Mountain Lodge in Arusha, Tanzania, early last year. Looking on (left) is the EABC chief executive officer, Ms Lilian Awinja.

The number of projects registered also increased by 50.9 per cent to 86 in 2016 from 57 in 2015.

Burundi attracted 33.7 per cent of all projects last year and Uganda, Tanzania and Rwanda 29.1 per cent, 17.4 per cent and 11.6 per cent of all projects, respectively.

“We ought to create a credible rules-based regional investment regime that enhances predictability for investment policies and laws with mechanisms to resolve trade disputes, enhance awareness and promote the EAC as a single destination for FDIs,” Mr Njau said at the EAC seat in Arusha, Tanzania.

The EABC also highlighted the need for improving free movement of capital as well as factors of production among partner states by implementing the region’s Common Market Protocol.

The private sector also wants improved and modernised Information and Communication Technology to remove impediments to trade and investments in the region.

“Fast-tracking and strengthening the legal and institutional reforms with regard to business registration and resolving disputes are also key ingredients in attracting both CBIs and FDIs flow,” Mr Njau explained.

He said the EAC partner states should continue with business regulatory reforms as one of their key agenda.

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