From: Magaga Alot
Subject: PRESS RELEASE ROUNDUOP OF 2ND EAC INVESTMENT CONFERENCE
Date: Tuesday, August 4, 2009, 1:34 AM
TO ALL CORRESPONDENTS/NEWS EDITORS
Please find as attached herewith Press Release Roundup of the just concluded 2nd EAC Investment Conference that was held in Nairobi , Kenya on 28th-31st July 2009 for your kind attention and publicity as appropriate.
Thank you
Magaga Alot
Corporate Communications Expert, EAC
PRESS RELEASE
COME AND INVEST, EAC TELLS WORLD
– As the 2nd EAC Investment Conference concludes on upbeat note, President Kagame, Chair of the EAC Summit , says Conference sounds clear message of emerging, vibrant single market and investment area in East Africa –
ROUNDUP OF THE 2ND EAC INVESTMENT CONFERENCE, KENYATTA INTERNATIONAL CONFERENCE CENTRE, NAIROBI, KENYA, 29TH- 31ST JULY 2009
EAC Headquarters, Arusha, 1st August 2009: The 2nd EAC Investment Conference was held at the Kenyatta International Conference Centre in Nairobi, Kenya from 29th to 31st July 2009, under theme Invest in EAC where Challenges are Opportunities. The Conference, which was organized by the EAC Secretariat in collaboration the East African Business Council and the Investment Promotion Agencies (IPAs) of the East African Community Partner States, ended with a rallying call for a strong public private sector partnership to turn the EAC region into a new hub of global trade and investment destination of choice.
The EAC Investment Conference is an annual event held in rotation in the EAC Partner States since the inaugural one that was held in Kigali, Rwanda in June 2008. It is the premier forum for the EAC and the Partner States to promote the region as a single market and investment area.
The Opening Ceremony of the 2nd EAC Investment Conference on 28th July 2009 was attended by H.E. Paul Kagame, President of Rwanda and Chairperson of the Summit of the East African Community, H.E. Mwai Kibaki, President of Kenya, H.E. Pierre Nkurunziza, President of Burundi, H.E. Dr Amani Abeid Karume, President of Zanzibar and Chairman of the Revolutionary Council, Rt. Honourable Raila Odinga, Prime Minister of Kenya; H.E. Kalonzo Musyoka, Vice President of Kenya; Rt. Hon. Eriya Kategaya, First Deputy Prime Minister, and Minister for EAC Affairs, Uganda; and Hon. Uhuru Kenyatta, Deputy Prime Minister and Minister for Finance, Kenya. Also in attendance at the Opening Ceremony were the Ministers responsible for EAC Affairs of the five EAC Partner States and other Ministers from the EAC Partner States responsible for various areas of EAC Cooperation; Rt. Hon. Abdirahin Haithar Abdi, Speaker of the East African Legislative Assembly; Amb. Juma Mwapachu, Secretary General of the East African Community; Deputies Secretary General of the East African Community; Senior Government officials , top business leaders and other dignitaries.
The 2nd EAC Investment Conference brought together over 1,800 participants including policy makers, business leaders and the regional and international investment community to the event which reviewed the investment outlook of the EAC region, discussed investment opportunities and showcased the EAC region’s economic potentials and opportunities.
In his welcoming remarks, H E Mwai Kibaki, President of Kenya said the conference had come at a time when the region needed to address the challenges posed by the global financial crisis. Retrenchment of aid and investments threatened to erode the gains which the African economies have realized in the past. The President said it was necessary for the EAC region to strengthen investments and trade promotion noting that Africa was not attracting its fair share of investments inflows and only accounted for 3% of world trade. He said the East African Standards Law, Competition Act and Joint Negotiation Act which have been enacted by the Partner States recently were important interventions which would leverage EAC’s competitiveness in international trade. He said the harmonization of capital markets and securities had resulted in cross-listing of stocks, demonstrating that there was a great potential to raise regional capital from local savings for infrastructure projects. The promotion of large scale businesses had given rise to mergers and acquisitions in the region. However, challenges remained in the areas of infrastructure including roads, ports, rail, ICT, energy and financial resources. He stressed the need for private sector support for infrastructure development to address the sector in partnership with the governments of the region.
The Rt. Hon. Raila Odinga, Prime Minister, Kenya, noted that the holding of the conference as an annual event on a rotational basis would enhance regional integration as a way of securing synergy between governments and the private sector in promoting economic growth. He stressed the role of governments in creating e conducive environments and opportunities for the private sector to invest. He said Kenya has embraced regular roundtables between the government and the private sector which have promoted consultations and interactions leading to trade facilitation measures being pursued, including the removal of excessive police road blocks along the transit highways and the introduction of 24-hour operations at ports and borders to facilitate faster clearance of cargo.
Hon. Uhuru Kenyatta, Deputy Prime Minister and Minister for Finance, Kenya as in charge of the host Ministry for the Investment Conference gave an overview of the conference theme stating that it was well selected in view of the challenges emerging from the global economic and financial crisis, drought and climate changes which have resulted in, among others, high energy costs for the region and reduced economic growth. He said that after robust growths in the previous years, the economies of Uganda and Tanzania were expected to grow at only 5% in 2009 while Kenya would register an even lower rate of 3%. However, the growth momentum could be sustained through investment and expenditure in infrastructure and agriculture, sectors that held great stimulus for growth of the regional economy.
Hon. Monique Mukaruliza, Minister for East African Community, Rwanda and Chairperson of the EAC Council of Ministers, said the conference had come at a time when the Partner States were intensifying their efforts to widen and deepen their cooperation. Hon Mukaruliza cited the ongoing negotiations towards a Common Market as a clear manifestation of this endeavor and a reflection of the political will to create one strong regional economic bloc. She said the region needed to strengthen ties with emerging markets, notably China, India, Brazil and others in order to benefit from experiences of those countries and also exploit the huge markets for the region’s products.
Amb. Juma Mwapachu, Secretary General of the East African Community said the central focus of the conference was to transform challenges posed by both the economic meltdown and regional encumbrances to a more competitive business environment. The conference reflected growing confidence in the region’s attractiveness to investment flows from abroad as well as higher growth of the investments from regional economic players. He said the conference demonstrates the bold spirit and resolve to overcome challenges and steer the region on a robust path of growth and development. The EAC countries have good prospects to achieve GDP growth rates of 7%-10% by 2010-2015 , from the current average of 5%, he said.
The Official Opening ceremony was also addressed by H.E. Pierre Nkurunziza of Burundi, H.E. President Abeid Amani Karume of Zanzibar and Rt. Honourable Eriya Kategaya, First Deputy Prime Minister and Minister for EAC Affairs, Uganda who in their statements expressed strong support for regional integration noting that it was the way to go and the path to take towards a new era of growth and prosperity for the EAC region.
In the Keynote address to the Conference, H.E. Paul Kagame, President of Rwanda, and Chairperson of the EAC Summit, said that following the Kigali Meeting last year, the 2nd EAC Investment Conference would reinforce the shared purpose between East African public and private sectors. The President urged a spirit of moral purpose, self determination and entrepreneurship to spur initiative, foster progressive human values, make the Community stronger and negate the characterization of Africa as an aid-dependent, impoverished accessory to major trading and investing nations. EAC should position itself as part of the global system, and not its victim and actively engage in seeking solutions that leverage the region’s abilities and experiences to innovate and meet high and rising goals. The 2nd Investment Conference should critically assess the implementation of what was resolved in Kigali, and take stock of the concrete results in order to take further corrective measures. The President noted that many efforts had got underway including the movement towards establishing the East African Common Market, scheduled for January 2010 and the efforts in the development of efficient and reliable regional infrastructure. He said the Nairobi Conference should sound a loud and clear message to the world of a single, articulate common market emerging in East Africa.
CONFERENCE FOCUS AND FORMAT
The Conference focused on major areas, topical issues and sectors of growth opportunity in banking and finance, manufacturing, agriculture and agro-processing, ICT, tourism and other hospitality industries; infrastructure and energy, especially hydro, geothermal, methane and natural gas; roads and railways.
Major topics were addressed in investment environment, the challenges of the global liquidity and credit crunch, corporate finance in challenging conditions; achieving regional competitiveness, fighting counterfeits, investing in food security and exports through improved agricultural practices, and achievements of the EAC economic integration agenda.
An international exhibition of products and services was held parallel to the plenary sessions. EAC Partner States and other country delegates exhibited their products and services showcasing priority sectors. The last day of the Conference (31st July 2009) was devoted to networking opportunities.
CONFERENCE DELIBERATIONS AND RECOMMENDATIONS
Achieving Regional Competitiveness
The Conference heard strong appeals for setting up institutions and promoting policies to enhance productivity in the EAC region. These should aim at solving various problems including poverty, poor economic growth, reliance on subsistence agriculture and unemployment. The region should be able to cope with the ever changing local and international competition through removal of trade barriers and facilitation of trade and investments.
For competitiveness to be successful it has to be well coordinated and all the key players need fully cooperate with each other. Of utmost importance is the need for a viable partnership between Government and the private sector. The Conference identified the following main pillars of a competitive regional economy:
Conducive Institutional Environment, providing a framework within which the governments and private sector interact to generate wealth and income
Efficient, Reliable, Infrastructure
Macroeconomic stability, with controlled inflation, ensuring firms would make informed decisions and governments would provide efficient services
Health and primary education, a healthy workforce is vital to a region’s productivity and hence competitiveness.
Higher education and training, vital for economies that want to move up the value chain beyond simple production processes and products
Goods market efficiency, producing the right mix of products and services given supply and demand conditions
Labour market efficiency, critical for ensuring that workers are allocated to their most efficient use in the economy
Financial market sophistication, important for the functioning of national economies and are necessary for proper allocation of resources
Technological sophistication, providing the agility with which an economy adopts existing technologies to enhance productivity of its industries
Market size, affects productivity because large markets allow firms to exploit economies of scale
Business sophistication, conducive to higher efficiency in the production of goods and services
Innovation, Technological innovation is particularly important for economies as they approach frontiers of knowledge.
Avoiding complacence, noting that even with a fair level of competitiveness, it is nevertheless important to avoid complacency which can result in running the risk of being overtaken by others.
Fighting Counterfeits within the EAC Region
The Conference heard presentations on the problem and serious effects of counterfeits and piracy on the regional economies and international trade. It noted that counterfeits account for US$ 630 billion annually around the world, in the form of lost revenues to companies producing genuine products, and when added to lost tax revenues to governments, the figure almost doubles. In the EAC region, about US$ 0.5 billion is lost annually in unpaid tax.
The effects of counterfeit products not only affected revenues but also the well being of whole populations. For example, use of counterfeit electrical conductors and cables which catch fire, fertilizers which could result in total loss of crops, batteries which explode or leak, personal care products which can cause skin and mouth irritation as well as food products and medicine which have exposed EAC populations to great health risks. Of major concern was that 30% of pharmaceutical products in the region were fake products with some having actually expired. The existence of counterfeits hurt entrepreneurs the most because their products were sold alongside the cheap counterfeits to the detriment of their sales figures.
The issues of counterfeits would not be effectively tackled nationally for a variety of reasons, including outdated, non-existent or inadequate national laws and lack of capacity of individual governments to cope with detailed investigations required to mount a prosecution (as exemplified in the music and film industries). Therefore, there was need to have a common legislation (preferably regional) to tackle the issues which were normally cross-border in nature. In cognizance of this requirement, the EAC with support of the Investment Climate Facility (IFC) has reached an advanced stage in finalizing a policy tool defines the nature of the problem as well as developing a legislation that would effectively deal with the problem. It is expected that the legislation should be ready for tabling before the East African Legislative Assembly in November this year.
Investing in Food Security and Agriculture Development
The Conference discussed the key thematic areas on Food Security situation in the EAC region; factors prohibiting food security in the region; government; policies investment opportunities in agricultural sector; and marketing destinations for agricultural exports.
The Conference noted that while agriculture remains the backbone of the region’s economy and contributes largely to employment levels and exports, EAC region remains food insecure, despite availability of sufficient arable land and a large labour force. Among the factors inhibiting food security in the region were climate change – frequent dry spells, unpredictable rainfall patterns and floods; reduced soil fertility and soil erosion; land ownership structure – prevents production on large scale; lack of sufficient incentive mechanism for agricultural production – limited access to credit, high cost of inputs, slow infrastructure development; Inadequate capacity building along the value chain; and low uptake of technology, research and development in promotion of agricultural production.
The Conference noted that the EAC Partner States were addressing the challenges in the agricultural sector through, among others, putting in place policies to improve water harnessing and management – irrigation schemes and dams expansion of credit provision to the agricultural sector; land reforms to address the current challenges in land use and ownership; and development of food and nutritional policies, agricultural development strategies and clearly outlined plans of action.
The Conference noted that opportunities were available through development of value chains along the agricultural sector; value addition and product diversification – production of semi finished and finished products for exports – food processing, dairy processing etc; Infrastructure development to open up the hinterland to the markets; power generation; Importation and distribution of fertilizer and other farm inputs – Plans for manufacturing of the same within the EAC countries are underway; Trade in agricultural commodities Tourism opportunities – aquaculture parks and sport fishing.
The Conference concluded that the food security situation in the EAC region is serious and needs collective action to address it appropriately. It is important for countries to invest in value addition processes for all agricultural exports so as to increase quality, gain a competitive edge and generate more revenues out of increased sales and competitiveness.
The Conference recommended that, towards attaining food security in the region there is need for the EAC Partner States to encourage partnerships and harmonization of agricultural policies – through production and commercialization; establish appropriate mechanisms and incentives to encourage private sector participation in food production; enhance surveillance for food and animal diseases in the region; Development of the “last-mile infrastructure”. This would enhance delivery of inputs to the actual user and catalyze the production process; Establishment of centers of excellence for conservation and transformation of agricultural products; and investment in research and development to address disease and other factors affecting crop and animal production.
Investments in ICT and Business Process Outsourcing (BPO) in the EAC
The Conference heard presentations by the Partner States on the aspect of BPO development in the development in the respective countries; policy, legal and regulatory environment; infrastructure; capacity building; and promotion of ICT as a key investment opportunity.
The Conference noted that the governments need to do more in providing a better enabling environment for ICT investments through policies and legal and regulatory framework. It emerged that not much is known about the impact of the national and submarine cable networks being rolled out.
The landing of two fibre optic cables and expected arrival of two others has created a number of challenges, particularly with regard to training/local content development as well as promoting investment in the sector to utilize available bandwidth. There is need to clarify when and how the effects of the landed submarine cable network would be felt by the consumer in terms of cost reduction and better services.
The Conference recommended that national fibre networks being rolled out by the governments should be open to the private sector. Governments should ensure to be key consumers of BPO services to stimulate the development of BPO. The conference further noted that linkage between ICT and economic growth has been demonstrated in such economies as Silicon Valley (California) and Finland. The same may be replicated in the EAC. Capacity development including incorporation of ICT curriculum in the primary educational system and tertiary ICT education should be regulated. Development of incentives targeting local entrepreneurs in software development and software maintenance e.g. preferential treatment in Govt. ICT projects should be encouraged. There is need to promote incentives for BPOs outside major urban areas so as to reduce rural-urban migration.
Investing in Alternative Sources of Energy
The conference noted that each of the EAC Partner States has strength in energy generation resources as follows:
Rwanda – methane gas
Kenya – geothermal
Uganda – hydro
Tanzania – gas
Burundi – hydro and peat
The Conference noted that each of the countries has shortages of power; however, they are not interconnected. There is need to interconnect immediately to enable power sharing and complementarities in the region. Existence of interconnections could stimulate development of large generation projects beyond the capacity of an individual Partner State.
The Conference further noted that the all the countries rely on biomass 85-90%; which is destructive to the environment if development of other forms of energy is not accelerated. Reliance on resources from the development partners has contributed to slow development of energy sector projects. The EAC Partner States should give priority to development of energy projects and allocate significant local resources for them.
Over-dependence on hydropower generation, has contributed to power shortages experienced in the region. All the EAC Partner States are making efforts to diversify from hydro generation. However, hydropower generation will continue to be an important resource in the region’s generation mix.
Each country has strength in electricity generation resources. These resources should be developed in a complementary manner for the benefit of the Region. Solar and Wind are emerging as important energy resources in the region that should promoted.
EAC Partner States should diversify the generation mix to reduce over-dependence on hydro generation. Private sector should take advantage of the low access levels, existing opportunities in mini hydro, wind and solar energy to invest in the Region.
MAIN RECOMMENDATIONS OF THE CONFERENCE
Fighting Counterfeits in EAC
There is need to have a common legislation (preferably regional) to tackle the issues which are cross-border in nature. The adoption of regional policies and laws should be supported at the highest political level, the Summit of Heads of State, in order that their implementation is fast-tracked for the sake of the regional economy. The East African Legislative Assembly should have a big responsibility in this regard of enacting the necessary legislation.
Food Security and Improved Agricultural Practices
Towards attaining food security in the region there is need for the Partner States to encourage partnerships and harmonization of agricultural policies – through production and commercialization. Appropriate mechanisms and incentives should be put in place to encourage private sector participation in food production. It is necessary to enhance surveillance for food and animal diseases in the region. These enhancement measures should target delivery of inputs to the actual user and catalyses the production process. Centers of excellence should be established for conservation and transformation of agricultural products; and investment in research and development to address disease and other factors affecting crop and animal production.
Investment in ICT
National fibre networks being rolled out by the governments should be open to the private sector. Governments should be encouraged to be key consumers of BPO services to stimulate the development of BPO. Governments should support incubator centers for software development. Capacity development – ICT curriculum should be incorporated earlier in the educational system and Tertiary ICT education. Need to develop incentives for BPOs outside major urban areas so as to reduce rural-urban migration.
Investing in alternative sources of Energy
EAC Partner States should diversify the generation mix to reduce over dependence on hydro generation. The EAC Partner States should allocate significant local resources towards the development of energy projects and reduce reliance on development partners for the development of their energy expansion programmes. These energy resources in the region should be developed in a complementary manner for the benefit of the entire Region. Private Sector should take advantage of the low access levels, existing opportunities in mini hydro, wind and solar energy to invest in the Region. The EAC Partner States should work towards full interconnection of their transmission networks.
Experience of doing business in the EAC
The challenge of counterfeiting and pirating of goods should be addressed at the regional and national level. The governments should partner with the private sector in the fight of this menace. The laws being developed by EAC should spell out severe punitive measures against the offenders and Partner States should comply and adhere to the anti-counterfeiting and anti-piracy policy and law once adopted. Partner States should act decisively against corruption. Exposure of corrupt officials and prompt action against the perpetrators is an effective way of fighting the vice. Rwanda has applied such measures which have ensured strict discipline and Partner States should draw lessons and apply such measures.
Discriminatory treatment of Burundi nationals when entering Tanzania should be addressed particularly requirement of visas and yellow cards. Secretary General should follow up on such matters with the EAC Ministries. Transmittal of policy decisions made in Arusha to the border stations and other operational areas for implementation should be enhanced in order to make the Customs Union and Common Market a reality. The Ministries of EAC should ensure all policy decisions are cascaded to the lowest level of implementation in Partner States.
Development and establishment of an EAC Stock Exchange is a positive step which should be expedited to promote capital flows among the Partner State. Tanzania should be urged to liberalize the capital account in order to enable its national participate in the stock markets of other Partner States.
The monopoly contract of the Dry port in Tororo in Uganda is contrary to the policy of trade liberalization and against the spirit of free movement of goods in the region which should be reviewed. Transit licensing of trucks in the Partner states is being addressed through an amendment of the EAC Customs Management Act due for enactment in a week’s time by EALA.
Extractive Industries
Access to affordable finance should be made easier for the medium sized players. Infrastructure (especially roads and rail) to mining areas should be developed. Squatters – and the related compensation costs should be given priority prior to any major investment. Lack of local skilled manpower (especially Oil exploitation) should be addressed through investment in centres of excellence. Tax holiday for value added exporters should be encouraged in the region. The region must embrace transparent public procurement procedures with international bidding. Import duty exemptions on mining equipment should be legislated in.
Tourism
Establishment of Conference and Convention Centres in the business cities like Kigali, Arusha, Jinja, Mombasa, Bujumbura, Dar-es Salaam etc. Investment in Amusement Parks should be encouraged. Establishment of Specialized Modern Colleges for Hotels and Tourism Management. Investment in historical museum to preserve historical values of east Africa. Development of three to five star hotels to accommodate business persons and Tourists visiting commercial cities within East Africa, e.g. Mombasa, Kampala, Nairobi, Dar es Salaam, Kigali, Bujumbura, and Zanzibar. Establishment of specialized cuisine restaurants to serve Thai, Chinese, French, Japanese, Tanzanian foods etc.
Infrastructure
Governments in the region supported by the development partners should mobilize sufficient resources to rapidly develop to bankable pipeline of regional infrastructure projects in particular targeting roads, railways and energy sub sectors. The Community should take the lead in the development of a regional framework to support the establishment of an EAC infrastructure development fund and an effective public private partnership strategy.
The matter of regional licensing for infrastructure service providers should be incorporated within the provisions of the Common Market Protocol to ensure that EAC benefits from capacities available in the region for expansion of and access to infrastructure. The ongoing harmonization of policies in the infrastructure sub sectors should be fast tracked and governments should ensure the implementation of these harmonized policies at national levels are expedited.
Governance issues, including corruption, weak project management, and institutional arrangements in the infrastructure sub sectors must be addressed in order for the countries to be able to attract long term capital for infrastructure development. Governments must ensure that impacts on environment and social disruptions during expansion and development of infrastructure must be kept at a minimum and must be addressed during project design and implementation planning covering mitigation plans, resettlement, designs, supervision, among others; and Governments must urgently address the weak infrastructure maintenance and rehabilitation programming and infrastructure utilisation oversight strategies to ensure that infrastructure facilities survive up to their design life.
Impact of Climate Change on Investment
Measures allowing for adaptation and mitigation of climate change. Other recommended actions are: Set up an Investment Promotion Agency (Burundi). Adopt strategies for access to international financial mechanism. Development of legal and regulatory framework to address climate change. Take into account the climate change in all investment schemes. Adopt regional and national resources protection (CDM and REDD Programs). Take into account the climate change while developing economic policies. Strengthen regional cooperation and cross border approaches. Develop common positions in international negotiations; and t track and finalize the implementation of the master plan and other ongoing strategies to address the problem of climate change and investment within the EAC region.
Challenges of the Global Economic Meltdown on EAC
Partnerships – governments should make resources available – from local and international sources. Domestic resource mobilization strategies – support production e.g. infrastructure bond. Strengthen institutions and capacity of those institutions – coordinated framework across regulators. Stay the path of reforms – build capacity for future growth – development budget should not be cut. Aid delivery modalities in times of crisis – quick disbursements to allow countries to ride over shocks quickly. Look at reform of the global financial architecture. Need for concerted policy statements and actions on a regional level. Value addition. Promotion of trade and investment within EAC. Promotion of regional and domestic tourism. Financial supervisory skills and regular reports. Sustained macro-economic stability and management.
2nd EAC INVESTMENT CONFERENCE: BACKGROUND
The 2nd EAC Investment Conference followed the first one which was held in Kigali, Rwanda in June 2008. It was at the Kigali Conference that the EAC Investment Conference was launched as an annual event to be held on rotation in the EAC capitals. The inaugural event was itself very successful. The Kigali Conference was attended by all the five EAC Heads of State. It brought together over 1200 participants from the region and the international community. It attracted 15 countries from outside the region. A lot of business was transacted during the conference and important business contacts were made. Reports from the national IPAs indicate that a sizeable number of projects have been registered arising from the 1st EAC Investment Conference.
The 2nd EAC Investment Conference was therefore held against the favourable background of the encouraging success and achievement of the inaugural Conference. It incorporated improvements in organization and levels of participation and impact.
State of play in investments promotion in the EAC Region
The EAC Partner States have established statutory agencies that promote and facilitate investments in the region. The agencies are Investment Authority (KenInvest), Tanzania Investment Centre (TIC), Zanzibar Investment Promotion Authority (ZIPA), Uganda Investment Authority (UIA), and the Rwanda Development Board (RDB). In Burundi, investment activities are coordinated by the National Investment Commission under the Ministry of Planning. Currently, Burundi is in the process of establishing an Investment Promotion Agency which is expected to be operational in 2009. These investment promotion agencies (IPAs) were established by respective Acts of Parliament in each Partner State and follow similar basic requirements for promotion of investments.
The role of the IPAs is to promote and facilitate investment activities. Facilitation is carried out by providing a set of incentives as provided for in the countries’ respective investment codes. The incentives provided range from waiver of customs duties and VAT on imported capital goods related to the submitted investment proposals, the facilitation for obtaining of administrative formalities to corporate taxes reduction.
Since the re-launching of the EAC in 1999 and the setting up of the EAC Secretariat, harmonization of investment policies, incentives and laws of the Partner States has been going on under the auspices of the EAC Secretariat. Some aspects have been harmonized and include investment approval requirements, export processing zones and free zones regulations, corporation tax and other incentives.
However, there still exist some variations on the minimum capital threshold requirement among the Partner States. For instance, in Kenya, the minimum threshold is US$100,000 for foreign investors and US$12,800 for domestic investor. For Tanzania the minimum threshold is US$300,000 for foreign investors and US$100,000 for domestic investors; while in Uganda the minimum threshold is US$100,000 for foreign investors and US$50,000 for domestic investors.
On the other hand, Zanzibar maintains a different approach that focuses on sectoral thresholds for investment capital per project. For example, investment in hotels requires a minimum of capital US$4 million for foreign investors and US$300,000 for local investors. In Rwanda, the minimum threshold for foreign investors is US$250,000 while for local and COMESA investors it is US$100,000. These and other variations related to offered incentives are being identified and further harmonized to bring about a more favourable investment climate in the EAC region.
Since 2001, most EAC countries have established and implemented the One Stop Centre concept which consists of providing almost all needed facilitation under one roof. The One Stop Shop Concept is an investment facilitation strategy where relevant government agencies are brought to one location, coordinated and streamlined to provide prompt, efficient and transparent services to investors. It is aimed at simplifying and shortening of procedures and guidelines for issuance of business approvals, permits and authorizations thereby removing bottlenecks faced by investors in establishing and running businesses. The One Stop Shop concept is based on four principles namely: Convenience, Efficiency, Simplicity, Speed and Transparency.
The type of services offered under One Stop Shop include: business incorporation and registration; instant granting of approvals in principles, permits and licenses; provision of investment information. The One Stop Shop concept is good for both the investor and the government in that it:
? Substantially reduces the cost of doing business.
? Ensures that FDI, DDI are properly tracked.
? Ensures close and professional working relationship among
government agencies to meet the needs of investors.
? Triggers and fast tracks public sector reform which would
ultimately result in structurally more attractive investment
environment.
Global Context
The 2nd EAC Investment Conference also came at a time when the global economy is undergoing a major downturn. Giants of the business world are going into recession and turning to governments for bailouts or stimulus packages. In the face of these challenges, the EAC is maintaining a strategic posture towards stronger political and economic business environments to weather the storm. The EAC countries remain on a rapid growth path and, with a number of other African countries, are in the middle of the strongest economic recovery in the past 40 years.
The IMF predicts an overall 1.3% decline in global economic activity in 2010 particularly of the economies of the industrialized countries, while some of the EAC countries, and a number of African countries are projected to grow by between 5% and 7%. It is indeed a rare moment as they come in global development trends, however into the scenario, the EAC is determined to stake a claim and foster a strong economy and competitive business environment.
EAC is buoyed by the great interest and positive appreciation it is attracting among an international trade and investment community that is turning to East Africa where they perceive that a new, vibrant investments and trade platform is emerging. In August 2006, just over one year after the launch of the EAC Customs Union in January 2005, the EU delegation at the WTO meeting in Geneva declared that the EAC was “the most successful illustration of regional integration on the African continent”.
DIRECTORATE OF CORPORATE COMMUNICATIONS
EAC SECRETARIAT
ARUSHA
AUGUST 2009
