East Africa: Reforms Could Propel EA to Middle Income Economy in Shortest Period

interview

Outgoing Africa Development Bank director general for the East Africa regional development and business delivery office Gabriel Negatu spoke to Njiraini Muchira on his three-year tenure in the region.

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How would you sum up your time as AfDB's point man in East Africa?

I am grateful for the opportunity to have served here. For me it has been a credible journey. There was no better time to serve the region than now when governments are reform minded and economies are growing.

Governments understand what needs to be done politically and socio-economically to advance their respective nations. These reforms include managing debt, containing borrowing, putting borrowed money into proper use, investments in infrastructure, liberalisation of policies to attract investments and measures to ease doing business.

Politically, democracy is taking root and transfer of power has become a major event that is no longer bloody. These reforms signal that East Africa is rising and continues to be the fastest growing on the continental--a trajectory that will see countries achieve middle income status in a very short period.

You have presided over a period when the profile of AfBD has risen significantly. How did you achieve this?

The best decision the bank took was to bring it closer to its clients. In addition to the nine country offices in East Africa, we decided to open a regional hub that decentralised not only the office but also the authority, the budget, the decision-making and staff.

That meant the bank has become more visible and has been able to achieve a lot in financing infrastructure, health, education, agriculture and even in advisory services.

What is AfDB's portfolio in the region?

In this region we have a portfolio of $10 billion. That amount has helped to impact, illuminate, connect and change the lives of millions of people.

The projects we are financing such as roads transform lives by providing farmers easy access to markets for their produce. The electrification we are able to support through the last mile connectivity concept helps to run health centres and facilitate small scale enterprises.

What project in the region are you most proud about?

I am proud of all the projects we have financed but I can also easily say the last mile electricity connectivity in Kenya stands out.

Recently, we visited a home where a 77-year old couple got connected to the national grid for the first time. The smile and the tears on their faces said how much impact the project has had. This makes me very proud. At the rate we are going, Kenya will be the first African country to achieve universal electricity access.

Which project was the most challenging?

All our projects have had challenges, which are there for us to surmount, not to lament about. The Lake Turkana Wind Project was full of challenges but the co-operation between the bank, the government of Kenya and the sponsors enabled us to prevail in the end. We can look back and say there were challenges but they did not stop us from achieving the goal.

AfDB has come under criticism for focusing on infrastructure funding and ignoring agriculture. Comment.

It is true we focus largely on infrastructure but the kind of infrastructure we build enables agriculture. When we build a road from the farm gate to the market, it greatly contributes to agriculture productivity by ensuring fresh produce gets to markets on time and reduces waste.

We are also supporting irrigation systems. For us, the focus is on the infrastructure aspect of agriculture such as building irrigation systems, silos and abattoirs. This is our contribution to agriculture.

AfDB is financing the Ethiopia-Kenya interconnector whose implementation is behind schedule. Comment.

The Ethiopian side is finished and I know where the delays are on the Kenyan side. One and most significant factor is that there is no land access issue in Ethiopia. Land belongs to the state. In Kenya land is privately held and there are compensation negotiations for wayleaves. That has caused delays.

There has also been a problem with the contractor. We need to understand there is no such thing as a project with no problems.

The transmission line is now almost complete under budget and it will commence transmission of power and connect to Tanzania which will connect to Zambia and all the way to Cape Town.

Connecting the East Africa power pool and the Southern African power pool is crucial in facilitating power trade.

Do you consider the bank's $10 billion portfolio to have contributed to debt burden in the region?

In the case of Kenya, we are not worried about debt stress. It is something to be watched closely and carefully, but it is not an alarming issue.

Kenya's debt has grown but so has the economy. The loans are also not being used to pay wages and build frivolous things. They have been used in projects like the standard gauge railway, last mile connectivity and will help Kenya become a middle status country.

Across the region one or two countries' debts have reached unsustainable levels and they have ceased borrowing. The good news is that investments have gone to the right areas.

Are you happy with the rate of EAC integration?

East Africa is the most integrated region in the whole of Africa. But having said that, I am personally not satisfied with the level of integration compared with what it could be.

The non-tariff barriers that exist need to be brought down; partner states should allow greater trade, more mobility of people, capital and goods so that we work towards a unified and prosperous East Africa.

Integration is the only game in town and our economies are too small and not diversified enough to stand on their own. Either we rise together or we sink together. No one country can be an island in this region.

How would you describe the role of China in the region?

China is a long-standing partner in Africa and has become much more engaged and more active in recent years. This reflects its own growth and prosperity that has enabled it to spread its influence across the world.

China has been a partner for many African countries and has helped the continent build critical infrastructure.

We have to access our relationship with China from a standpoint of our advantage. Because of what China has done, the rest of the world is looking at Africa more critically, more re-engaged.

China has given Africa visibility and has shown Africa can be a good investment decision that offers good returns.

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