FORGET THE PAST - LOOK TO THE FUTURE!
IS EAST AFRICA FINALLY GETTING ITS ACT TOGETHER?
Renee Horne –London 22 September 2011
When you think of East Africa, you may automatically think of the 1994 Rwandan Genocide, the violent Kenyan elections of 2007, the decades of internal and cross border conflict between the Democratic Republic of Congo (DRC), Burundi, Uganda and Tanzania. Indeed these countries have often locked horns, with some analysts arguing that economic issues between them have been a key contributing factor, however opposing views argue that it was primarily ethnic and clan clashes which claimed the lives of thousands, if not millions. It certainly does paint a picture of doom and gloom with no signs of reviving the East African economies. Perhaps there could be light at the end of the tunnel, as these countries are fast becoming a ‘formidable regional bloc’. Last year, the East African Community (EAC) was launched to create its own common market for goods, labour and capital within the region. The ultimate goal is a common currency by 2012 and a full political federation in 2015. Business leaders are more optimistic than economists about the benefits of the EAC integration. “To critics looking to the past, it’s now time to look to the future, for example the Equity Bank of Kenya has grown in terms of customers, everything has gone up” argues Christian Udechukwu, who is an established entrepreneur and Director of the Business Council for Africa. Udechukwu who is also a member of the Organisation for Economic Cooperation and Development (OECD) speaks exclusively to the World Entrepreneurs Society (WES) ahead of the East African Conference in London next Month. This is where top investors will assess if East Africa really has its act together as a region that has entrepreneurial tenets and interests’ investors (find out more about the conference …. click here). Udechukwu said, “East Africa has moved at a faster rate of development than West Africa as a regional bloc”. Read more….
LOOKING EAST
The DRC is increasingly looking to the East to develop its economic and political ties with foreign nations seeking investment from China, India, and other Asian nations. It’s hoping that this will have an important and growing role in the DRC's growth path moving forward. While the dominant player in the East is Kenya which exports financial services, for example via the Kenyan Commercial Bank, there is upgrading of local operators in Tanzania, Uganda and Sudan. “Deepening of cross border trade and regional infrastructure, most of the companies in East Africa, do not operate in a single country, for example Kenyan companies operate across Uganda, Rwanda etc. East African Breweries, Kenya Commercial Bank; they are regional as opposed to national companies”. Uganda is hoping that this regional unity will assist its tourism potential through integration with established regional circuits. Experts argue that this new regional family unity shows signs of a business culture orientated to making profits through economics of scale and not on protectionism. Udechukwu provides a quick tip to foreign investors, “Do not discount your local partner when you want to invest in East Africa as, as he or she is the most reliable. Any international company can adapt to the local environment quicker as the local partner has that knowledge to guide you”.
GOOD AND BAD NEWS FOR ENTREPRENEURS
While many economists advocate that entrepreneurs are the critical agents of economic change and development. It is the entrepreneur that introduces new goods and services into the market and develops new methods of production. So are these pioneers taken seriously in East Africa? The Bad News is that “Start-up entrepreneurs have to fill in loads of forms and process paperwork in East Africa. There is a lot of Red Tape”, states Udechukwu. There might be a glimmer of hope, “This has been remedied as East African countries are in competition with each other to join the regional market, however, the problem of red tape for start-up entrepreneurs still exists. They [the entrepreneurs] need to be taken seriously as they are the greatest job creators and also the inventors of new technology”. The Good News is that “Micro-credit finance is readily available in East Africa and it is especially available to Small Medium Enterprises (SME’s), so we are seeing financial institutions actively support SME’s”. Is this a fallacy, entrepreneurs across the world can provide endless stories of banks not lending? “Banks in East Africa are also growing in size so they are able to lend, part of this strategy is the insistence to mandatory lending i.e. lending a certain percentage to entrepreneurs and SME’s. Of course, most East African banks were insulated from the global market crisis” said Udechukwu. There’s controversy here, are banks obliged to lend after all, like entrepreneurs, the bottom line is making a profit? Another, bone of contention is, given East Africa’s poor track record, i.e. internal conflicts and not so good relations between political leaders, is this mere smoke and mirrors or is this the real deal where entrepreneurs prosper providing good fertile ground for investors? Have your say…..