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EAC region poised to be Africa`s major economic powerhouse

Discussion in 'International Forum' started by Michael Paul, May 15, 2011.

  1. Michael Paul

    Michael Paul Verified User

    May 15, 2011
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    EAC region poised to be Africa`s major economic powerhouse


    While Africa has demonstrated greater than expected resilience through the global economic crisis and has become one of the fastest-growing regions in the world, the East African Community (EAC) region is poised to be a major economic powerhouse on the continent.

    The Africa Investment Forum 2011 held recently in Dar es Salaam, Tanzania put the EAC bloc, which consists of Kenya, Uganda, Tanzania, Burundi and Rwanda, under the spotlight to offer unique and highly prospective opportunities for investment and trade.

    Addressing the forum under the theme of "Accelerating East African Investments and Accessing an African Market of a billion people," Tanzanian President Jakaya Kikwete expressed his full confidence on the bloc's development potential.

    With an encouraging positive trend, total intra-EAC trade has increased from USD1.85bn in 2005 to USD3.5bn in 2009, while total Foreign Direct Investment (FDI) has risen from USD910m to USD1.72bn during the same period, Kikwete said.

    "At the same time intra-East African investment flows has been on the increase. Take the case of Tanzania, Kenya is now the second largest investments source country after the United Kingdom," he added.
    In the past five years, the EAC capital markets have also witnessed phenomenal growth, which is a sign that investments in the EAC are rising fast, according to the Tanzanian president.

    "We could do better and aiming to do that should be our guiding motto. It should inform our vision and actions," Kikwete noted, adding: "I have no doubt in my mind that if we act together, the EAC region can easily become a major powerhouse on the continent."

    The president listed unique comparative advantages in the EAC countries in a number of sectors such as agriculture, fishing, agri-business, oil and gas, power (including green energy) , infrastructure (roads, railways, lake transport and ports), air transport, logistics, water resources, manufacturing, health care and tertiary education, as well as tourism.

    The EAC region has a growing consumer market currently standing at 133.5 million with a combined Gross Domestic Product of USd74.5bn, while the bloc'c integration is in high gear and making steady progress.
    The EAC Customs Union was launched in 2005. Burundi and Rwanda joined the Customs Union in July 2009 after their admission to the EAC in 2007, and the Customs Union phase has been completed successfully.

    The EAC has now embarked on building the Common Market, which was formally launched in July 2010 and will provide for free movement of goods, services, capital and labour upon completion.
    Meanwhile, the East African Monetary Union Protocol is expected to be adopted in 2012, three years ahead of schedule.

    "The completion of the Customs Union and the emergence of the Common Market makes the EAC a region with unparallel prospects for investment and trade. No region compares to EAC in Africa and if these prospects are utilised fully, can make the EAC the hub and a major entry point to access the 1 billion people of Africa," Kikwete observed.

    He also commended the EAC at the center of the prospective larger Free Trade Area under Common Market for Eastern and Southern Africa (Comesa)-EAC-Southern African Development Community (SADC) Tripartite Arrangement involving 26 countries with a combined population of 530 million and GDP of 630 billion dollars.

    Moreover, all the EAC countries have embraced public-private partnerships policies and an expected regional law to promote and regulate public-private partnerships in the region will foster greater business confidence and augurs well with the quest for making East Africa an investment destination, according to the Tanzanian president.

    World Bank's Global Economic Prospects Report for 2011 rates Africa highly, with an expected average GDP growth for sub-Saharan Africa at 5.3 percent this year as compared to 4.7 per cent last year.
    At an average of 6 percent in 2010/2011, East Africa is poised for highest growth on the continent, according to the African Development Bank.

    Meanwhile, Tanzania's economy is forecast to grow by 5.8 percent in 2011, slightly up from the expected 5.7 percent last year, according to the Africa Economic Outlook, which combines the expertise of the African Development Bank, the Organisation for Economic Cooperation and Development (OECD) Development Centre, the United Nations Economic Commission for Africa, the United Nations Development Programme and a network of African think tanks and research centres.

    In his closing remarks at presidential country roundtables with business leaders during the Africa Investment Forum 2011, Kenyan President Mwai Kibaki asserted: "we are making progress."
    Kenya is projected to achieve a 4.2 percent economic growth compared to the 3.6 percent forecast for 2010.

    While inflation, adverse weather conditions and rapid population growth may prove to be a setback to growth, East Africa as a whole is also facing a major dent with the ongoing piracy by Somali gangs in the Indian Ocean, which has caused high cost of shipping and insurance which at the end comes as expenses to consumers.

    The failure to curb piracy will force the nation to resolve into using more expensive air transport to import raw materials and finished goods, thus it "will increase costs and reduce our competitive edge at a time when the Kenyan economy is showing significant growth potential," said Kenyan Prime Minister Raila Odinga.
    In a final communique after the Extraordinary EAC Summit held here on April 19, the EAC leaders commended the African Union Mission in Somalia (AMISOM), Burundi and Uganda for their excellent work.
    They said their efforts and sacrifices have resulted into improvement in the security situation in Somalia. They called on the United States and the European Union to enhance their support to AMISOM, besides addressing the menace of piracy.