David Malingha Doya
29 June 2008
Nairobi — President Yoweri Museveni of Uganda rallied an East Africa Heads of State Summit in Kigali last week in speaking against reliance on donor money in the funding of infrastructural projects in the region.
A major regional initiative - the East Africa Trade and Transport Facilitation Project - that lumped together several infrastructural projects covering the five East African countries and whose implementation was to start in 2006, is yet to take off mainly due to lengthy procurement procedures imposed by its main sponsor - the World Bank.
President Museveni, who handed over the chairmanship of the Summit to President Paul Kagame of Rwanda, said Uganda had managed to get around delays associated with projects funded by donors by setting up a $215 million energy fund that has caused the speeding up of energy projects. "This money was wholly raised by Ugandan taxpayers," he added.
"The construction of 250MW Bujagali dam has now started. It had been delayed on account of the slow movement of our external partners that sometimes amounts to obstruction and sabotage," President Museveni said
The East African Heads of State Summit agreed to jointly invest in infrastructure and to improve the region's investment climate.
Opinion among the scores of investors who attended what was East Africa's first investment conference, taking place simultaneously with the Summit, was unanimous that poor roads, railways, energy and communication links were the greatest impediments to trade within the region.
Museveni's call for funding projects from locally generated funds would appear to resonate among a wide cross section of leaders.
A separate meeting of East African ministers for regional affairs also suggested that governments in the region should create joint special infrastructural development funds without relying on donors.
Also proposed was a mix of funding by governments and donors, but with East African governments as the primary source of funds.
These sentiments are coming up at a time when the preferred model for international financial institutions is cross-border infrastructural projects. The thinking is that such projects promote regional integration, and save on resources that would be spent on appraisal and supervision for all countries involved in the project on an individual basis.
"The East African infrastructural development strategy could not have come at a better time, but we need to get it off the drawing board and make the plan work for us through speedy implementation," said President Kagame.
Despite challenges, investment in the region has increased, going by the amount of intra-regional trade consequently realised, with Uganda emerging as the biggest gainer. Uganda's exports to Kenya and Tanzania, for instance, increased by 34 per cent in 2006, and by 123 per cent in 2007.
In the financial year 2005/06 Uganda exported goods worth Ush157 billion ($95 million) to Kenya, and Ush28 billion ($16 million) to Tanzania, while in 2006/07 exports to the same countries were Ush270 billion ($159 million) and Ush46 billion ($27.5 million) respectively.
Kenya's exports to Uganda declined from $520.6 million in 2005 to $401 million in 2006, while Tanzanian exports to Uganda were valued at $30 million in 2005 and $28 million in 2006. Exports to Rwanda from Uganda increased from $30.5 million in 2006 to $83.3 million in 2007, while those to Burundi increased from $20.5 million to $42.7 million over the same period of time.
Kenya's President Mwai Kibaki said, "We should do everything possible to facilitate the flow of trade and investments amongst our members and with other countries on the continent and beyond. I am pleased to note that since the Customs Union came into force, the intra-EAC volume of trade has increased tremendously."
These sentiments were echoed by Cedric Simonet, Africa area manager of Sebimu Exploration and Mining Company in Kenya.
"In our sector, geological resources are trans-boundary, so we need to be present in more countries and we must move equipment and people; therefore, regional approaches to investment will make our work efficient. Also, we need proper infrastructure, particularly power, if we are to effectively tap into this sector."
East African Breweries' Patricia Ithau said, "Other problems can be dealt with quickly, but infrastructure is a long term problem that needs co-operation to solve. Poor infrastructure is the leading contributor to the cost of production for most companies working in this region.
"We believe that East Africa is the next frontier for investment, because it is still untapped and there are good returns. Rwanda has shown enthusiasm and we are happy to have invested here," Ms Ithau added.
"Rwanda has shown good organisation despite its past history, but it needs the market offered by the Community," said Eriya Kategaya, chairman of the East African Council of Ministers.
Rwanda intends to ride on an improved political environment to attract more investments to its economy as it positions itself in the regional bloc being marketed as a single investment destination.
It emerged during the investment conference, attended by over 800 delegates and the five heads of state, that all the countries had offered incentives for prospective investors, and among issues left to consider was the political risk of investing in each of the countries.
Rwanda scored well with a show of sustained peace and security since the 1994 genocide combined with minimal corruption levels, and appeared to show more enthusiasm for attracting investment. The country started tapping into foreign investment when it privatised 40 state enterprises, bringing in $37 million in foreign investment.
EAC Secretary General Juma Mwapachu said Rwanda had shown enviable enthusiasm as a new member, attracting investment to its economy with great vigour.
Officials from the Rwanda Investment and Export Promotion Agency said the country's government is targeting $500 million in investments over a period of five years.
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