20 June 2014

East African Business Council to Move Headquarters to Kigali

The East African Business Council (EABC) has confirmed that it is moving its offices from Arusha to Kigali.

The organization's executive director, Andrew Luzze, confirmed that the decision was dictated by economics rather than any deliberate move to weaken Arusha as the regional seat.

"EABC is not getting money from governments; it's funded by members and, therefore, we've to invest where we will be assured of the high returns in the short run," he said.

He noted that it would make a lot of business sense to undertake the council's headquarter construction project in Kigali.

"Lakilaki (the current headquarter location, near the Arusha Airport) is not bad, but we are looking for a place that will give us better returns in the short run. The Kigali site can easily attract financiers and the rate of investment returns will be higher and recouped in a shorter period than it would be in Arusha", he pointed out.

Luzze was, however, firm that the move to relocate to Kigali followed a delay on the part of the Tanzania government to heed their request for land.

According to him, the request for land in Arusha was made in 2003 and renewed last year, but it was not until last month that the offer was finally granted.

"When the request to the Tanzanian government took too long, in February we decided to make a request to four other partner states in the bloc.

"Rwanda responded within 21 days (in March) and offered us a plot in a prime zone within Kigali, whereas Tanzania's response was received last month," he explained.

The executive director said the matter was subjected to discussions at the annual general meeting of the council, which commissioned a study comparing Arusha and Kigali.

"The cost-benefit analysis favored Kigali; the decision was unanimously supported by members from all the five states," he explained. The body has 170 members, 60 of whom are from Tanzania.

Luzze was quick to note, however, that the Rwanda government has always been comparatively more supportive of the headquarters project.

"We were offered a plot right within the Kigali city center; such investments often get better results because of their advantaged location," he explained.

He noted that three-acre Lakilaki plot, located nearly 10 km from Arusha city center along the Dodoma road, would be slow in getting financiers.

Other locational factors that favored Kigali included cheaper air connections between the Rwandan capital and the rest of the region when compared to Arusha, he explained.

The two-acre plot offered in Rwanda is already serviced with electricity, a tarmac road, cable wire for Internet and telephone lines, which is not the case with Lakilaki.

Luzze further revealed that the Rwandan government has promised to facilitate EABC employees with tax holidays once the regional body relocates there.

"Rwanda says: you don't pay taxes while you are there. In Tanzania, you have to pay taxes. Which is the better package?" he asked.

However, he pointed out that the move has mostly been dictated by the high rate of return for investment on the land in Kigali and associated advantages and not a move to ditch Arusha, which, according to him, had initially been their preferred choice for the project.

EABC was formed in 1997 as a voice of the private sector for EAC. Arusha was deliberately made head office to enable it to liaise with the community secretariat based there.

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