27 December 2012

East Africa: EAC Should Rethink Development Strategies

opinion

As we celebrate Christmas and prepare for the new year, the region needs to look closely at the issue of aid and aid cuts and the philosophy of self reliance.

This year alone, we have seen Rwanda's aid being strangled over accusations of supporting the renegade M23 rebels. In Uganda and Tanzania, donors have been tough on how issues of corruption, governance but more fundamentally, that European economies can no longer support these economies as they used to.

But thanks to the many discoveries of oil, gas, minerals and now new sources of hydro and geo-thermal power, the region can now look at being self-sustaining and independent economically from the west and do its own things using its own resources.

Recently, the AfDB president, Dr. Donald Kaberuka stressed the the importance of each economy finding it's own development models if it is to attain sustainable development.

While on the same subject of sustainable development, another set of experts and world leaders met in Rio De Janeiro late this year and came up with a statement to the effect that sustainable development was possible if the private sector resources were harnessed sufficiently and other innovative sources of finances found.

In East Africa, the major models of economic development and management have long been those that were inherited from the colonial powers mainly Britain and Belgium.

Most of these economies make many assumptions and in many cases are set up in a way that makes private sector development rather difficult.

It is no wonder, therefore, that many of the huge corporates in East Africa are foreign based.

It is rare to find a locally grown company achieving the status of a group corporate, flourishing to the extent that it can make meaningful and substantial contribution to the national economy.

One of the major setbacks to the growth of the private sector in East Africa is the Financial climate. In East Africa, the rates of borrowing from Banks is nearly 30% p.a, while in Europe and America, it is less than 10% p.a and in some nations it is as low as 2% p.a.

Government incentives towards local business are also very poor, and they have been seen to favour foreign investment.

It is imperative, therefore, if East Africa is to develop, for us to create our own sustainable models and economic paradigms. East African Business Week wishes all its readers a Merry Christmas and prosperous 2013.

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