25 December 2012

East Africa: Improved Infrastructure to Unlock Region

Kigali — East Africa's ports are congested, its road and rail networks are in a poor state and both importing and exporting goods involves unnecessary ordeals.

If no specific measures are implemented to reduce the time and hassle associated with moving goods across borders, then the economic growth of EAC economies will be in slowed

During a recent summit in Kigali attended by International business leaders and policymaker, the EAC was warned that it is in danger of experiencing an economic slowdown if no urgent efforts are worked on to improve the wanting areas.

"Without addressing major infrastructure and trade facilitation constraints, the economic growth of East Africa could be compromised over the next decade," warned Frank Matsaert, Chief Executive Officer of Trademark East Africa.

The main motivation for leaders of EAC states is that, according to the experts, East Africa has the potential to become one of the world's fastest growing markets - if it can drive through reforms across a diversified economy covering energy, services, manufacturing, tourism, mining and construction.

But the emphasis must be centered on energy and infrastructure according to experts, the 'movers of the economy.'

According to participants in the conference, with recent discoveries of offshore gas in Tanzania and oil in Uganda, East Africa's prospects look better than ever yet that is no guarantee if some of the glaring gaps are not filled.

While regional efforts to improve interlinking roads are ongoing but slow, countries like Rwanda have own national initiatives to boost energy production and internal roads to boast own competitiveness within the block.

And Clare Akamanzi, the Chief Executive Officer of Rwanda Development Board (RDB) who attended the summit said Rwanda already understands the significance of a developed infrastructure and energy and this can be seen on the number of projects being implemented in that direction.

Rwanda has recently revealed that it will invest US$4.7billion on developing energy sector with the ambition being to produce at least 1000 mega watts of electricity by 2017.

The plan will see Rwanda have ample stocks of energy supply enough to run its growing industry sector as well as bringing down the cost of electricity seen as one of the highest in the region.

The electricity consumption projections suggest that Rwanda's domestic demand is expected to account for 60% of peak demand, while cross border mining projects are expected to account for 20% with sub regional electricity markets consuming the remaining 20%.

To ready for this future, Rwanda is involved in some inter-state investments within the region including the Rusizu III Hydro power project on Rusizi River being developed by Rwanda, Burundi and DRC.

With the feasibility study concluded, the project will finally commence in 2013 at an estimated cost of US$565million where upon conclusion its planned 145 mega watts will be shared equally by three countries.

There's also the US$400 million Rusumo Falls hydro project an undertaking by Rwanda, Burundi and Tanzania whose construction is also set to start in 2013 and expected to generate around 90mw for the three countries to share equally.

On the issue of NTBs also highlighted by experts as another impediment to regional progress, countries were urged to work together to eliminate unnecessary barriers to trade if benefits of the common market are to be realized by citizens in all partner states.

There are reports that NTBs on major routes are remerging even after efforts in the past had proven to be working.

But Dr. Enos Bukuku, the Deputy Secretary General in charge of Planning and Infrastructure at the EAC refutes the suggestions of remerging NTBs instead saying the efforts are on course.

"NTB's are being reduced, not increased; we have been able to reduce roadblocks from 30 to 15. Bear with us; we are putting in much effort to see that these trade barriers are eliminated," he said.

While responding to questions during the East Africa Economists Summit Bukuku insisted that the East African Community (EAC) is working towards eradicating Non Tariff Barriers (NTBs) to accelerate trade in the region after reports that the trade barriers have increased along the Northern Corridor.

Bukuku and Tanzania's Prime Minister Mizengo Pinda formed part of the panel that discussed a session whose focus was on, "Removing trade barriers: challenging government to do better."

"While we can't eliminate these barriers in one day, quite a number of things have been improved, it is work in progress and much is being done to eliminate these barriers to reach a stage when there will be no roadblocks anymore," ironed Bukuku.

The EAC Partner States agreed to remove roadblocks and replace them with electronic cargo tracking systems and police patrols by December 2012.

During an NTB dedicated session held in Nairobi recently, it was decided that transit vehicles, for instance, will be weighed twice from the Port of entry and Port of exit for Kenya, Rwanda, Uganda and Burundi while the United Republic of Tanzania awaits a study on the establishment of the weighbridges.

Tanzania which has received criticisms in the past for being slow on NTBs saw its Prime Minister Pinda conceding that indeed NTBs are still a challenge to the region's growth despite efforts to eliminate them.

"We have NTBs monitory committee in Tanzania and we are working closely with other committees from partner countries and I am quite sure these trade barriers are going to be eliminated soon," pledged the Prime Minster.

Under the EAC's Tripartite with COMESA and SADC, partners agreed on joint planning and implementation of infrastructure programmes which mainly comprise of surface (road, rail, border posts, seaports) and air transport, ICT and energy the main aim of which is to enhance physical interconnectivity through infrastructure development and improving operational efficiencies of border crossings and seaports in order to speed up economic development.

To deal with ports, the regional partners are negotiating to regionalize the ports to improve their efficiency but progress is slow with national interests overriding regional aspirations.

The revival of the railway is another slow moving project. According to a Canadian consultancy firm, Canarail, which was hired to conduct a feasibility study, the East African Railway line that will connect Rwanda- Tanzania and Burundi project would cost about $5.2 billion and it's not clear how such a massive project will be funded.

"The final study will be complete in February and the remaining big challenge will be for the governments to solicit funds for the construction to commence," remarked Donald Gillstrom, Canalrail's senior vice president and chief engineer.

Rwanda's Infrastructure Minister Dr. Alex Nzahabwanimana notes that the project's success will be vital to the country's economic development as well as other partner states.

"There is no other way for Rwanda to cut the price for the goods without this project.

"Air transport has its limitations especially the high transportation costs and the railway line would be more favorable to traders," observed the Minister.

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