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East Africa’s economic transformation is occurring now

JUST a few days ago, the Uganda-Tanzania Business Summit ended after bringing together more than 500 business delegates to discuss different issues on bilateral trade.

The summit was a huge opportunity for the Ugandan and Tanzanian private sector to share experiences, forge business-to-business networks, and pursue investment opportunities.

East Africa’s highly diversified economies are growing northwards of 6.0 per cent in a highly integrated regional market, and are already attracting significant levels of Foreign Direct Investment (“FDI”) relative to GDP.

Even before the region’s current oil and gas potential is considered, Africa’s most dynamic region presents a powerful investment case.

Since most East African domestic content policies set a premium on local business empowerment, the scale of global investment in the region to date offers broader opportunities for growth through local partnerships.

East Africa presents an opportunity to leverage minority interest in high-growth companies rapidly expanding across one of the world’s fastest growing regions.

East Africa represents one of Africa’s oldest trading areas with a deep history of effective integration having almost formed a customs union in the 1970s.

Latest efforts at integration have seen regional trade and investment reach 30per cent, the highest in Africa, with goods, services and people moving freely across borders.

Additionally, the economies in the region are supported by business-friendly governments with political will to support and increase foreign investment, business growth and deeper regional integration .

This is supported by wellintegrated and rapidly growing regional standard gauge rail and an expanding road network.

Augmented by a common English and Kiswahili language, East Africa also shares a universal common law-based legal system operating in functioning democracies holding regular elections.

The regions’ economies are supported by generally open floating currencies managed by liberal independent central banks.

In addition, with an emerging oil and gas sector across the region, the new corridor between Uganda and Tanzania presents immense opportunities for increased trade, development and deeper economic integration.

At the same time, no other African region has so successfully deployed technology to leapfrog the need for legacy transactional infrastructure.

With internet connectivity widely available across the region, the number of mobile transactions far exceeds traditional bank transfers.

This digital economy, literally in the hands of ordinary East Africans, has a huge multiplier effect on business and growth in the regions’ domestic and cross-border economies.

Looking ahead, East Africa’s coastal markets, especially the connectivity infrastructure they are developing, lends longevity to the regions’ growth proposition.

Over time, East Africa will become even more relevant, servicing the eight landlocked countries to its west as they seek to access trade and growth opportunities in China and India.

While the region currently sources about US$30 billion from domestic taxes, it has a development financing gap of about US$25 billion.

More recently, as sovereign debt levels in the region approach 40 to 50per cent of GDP, opportunities are opening for private infrastructure investors in public private partnerships (PPPs).

Unlike government-togovernment projects which often exclude smaller and local players, PPPs generally focus on commercially viable projects with strong, cash-generative, business cases.

These projects are also highly reliant on domestic and other foreign business involvement, support, supply, operation and outsourcing.

This is where, Standard Bank’s strategic partnership with its majority shareholder, the Industrial and Commercial Bank of China (ICBC), is proving so valuable to our clients as we recognise synergies and jointly seek to link Chinese capital with local and other foreign businesses, skills and operational expertise.

As a bank long present and successfully invested in the region, Standard Bank has deep experience in identifying opportunities for clients across multiple sectors, and then partnering with them on their journeys to successfully leverage East Africa’s broad growth landscape.

  • The writer, Patrick Mweheire is Chief Executive Officer with Stanbic Bank Uganda

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