EAC set to reap big from OIC business forum
Written by STEPHEN NUWAGIRA
Tuesday, 24 June 2008
THE BUSINESS WEEK
KAMPALA, UGANDA - The just concluded 1st Organisation of Islamic Conference (OIC) business forum held in Uganda last week could be one of the ingredients that the East African region has been looking to bolster its economic potential and marshal its development efforts.
By the end the two- day conference, a lot of private individuals and companies worth over US$3 billion put together had pledged to set up shop in the region with Uganda as their base. The most prominent of these are the Islamic Corporation for the Development of the Private Sector (ICD), a subsidiary of the Islamic Development Bank (IDB) which had already started talks on possible partnerships with Ugandan banks which would act as its agents in the country.
Another financing institution the International Investment House (IIH) which is going to set up the first Islamic bank in East Africa, the National Islamic Bank of Uganda (NIBU) by the end of this year. It will mainly focus on lending to SMEs and other small private businesses.
Foras East Africa has also pledged to set up shop in Uganda from where it will finance projects in selected areas the region. These are mainly areas that are expected to accelerate economic growth of the region and create more jobs for the region's thousands of unemployed youth. These sectors are agriculture, road construction, cotton and textiles pharmaceuticals and energy. In Uganda focus will first be put on cotton and textiles and coffee processing.
ICD deals in development finance and equity banking among others and according to the banks chief executive officer Mr. Khaled Al - Aboodi, the bank finances projects that could help create jobs, and reduce on the country's dependence on imports. "We finance projects of a minimum of US$2 million to US$5 million, but we can extend line of financing through local banks which then give finding to smaller projects run by mostly SMEs," he said.
He said the bank gives up to 40% funding for any projects and they do not require security for one to get a loan.
However, they also only provide the required assets, equipment or machines that one might be in to do their business and 'charge rental for using the assets instead of interest on the loan. He said that he would extend funding to projects dealing in agriculture, food processing, medicines, technology and ICT because they are vital in the development of the region.
In Sub Saharan Africa ICD operates in Senegal, The Gambia and Mauritania, but this will change when its operations in the region start. The bank started 1999 and has over $500million core capital with about US$1 billion share capital. It operates in 23 countries in Africa, the Middle East and Central Asia.
The President of the Islamic Chamber of Commerce and Industry, Sheikh Saleh bin Abdullah Kamel also told the participants that the chamber was preparing an investment plan which is to be implemented soon in the region. He said that he was impressed with Uganda's tourism potential. He, however, revealed that ICC&I plans to start a state of the art coffee plant in Uganda.
According to the vice chairperson of the East African Business Council Mr. Keli Killu, the region is an emerging economy with a lot of potential which has not yet been tapped. With funding such from the rich OIC members, the region, the second largest market in Africa would be ready for take off.
"With over 120 million people in the EAC and a further 400 million people in the COMESA region you can't go wrong," he said.
He said that OIC private investors can take advantage of the good policies in the region to start projects in the oil industry, organic cotton production and commercial food production to take advantage of the gap that has been created by the industrialisation of China and India the two major rice producers in the world.
The managing director of Roofings Uganda Limited Mr. Sikander Lelani said that these projects provide a good opportunity for Ugandan business community that has long been suffering with exorbitant interest rates on loans that has hindered the growth of the local industries.
"Funding from OIC rich nations will be a timely intervention, the kind that women entrepreneurs who most of the times are denied loans by local banks would benefit from. This will give us better opportunities to expand our small businesses to increase our production and even create more jobs for Ugandans," the chairperson Uganda Women Entrepreneurs Association, Dr. Eve Kasirye - Alemu said. Kasirye, however, said that women entrepreneurs are should be given priority when the financing banks open for business because they have been marginalized for long.
During the conference the Uganda Investment Authority executive director Dr. Maggie Kigozi took participants through the investment opportunities in the country.
She said that some of the priority areas investors from the OIC countries can invest in include manufacturing, agriculture, tourism, ICT, mining, petroleum, services - education, health, financial-, industry, forestry, construction, infrastructure and energy.