East Africa is ready to build, but will investors invest?
East African countries have largely agreed that pan Africanism is the way to go for one of the world poorest region. The five member economic bloc countries are rushing to western countries for funding of their huge infrastructural projects ranging from water, road, air and seaport projects in an effort to upgrade decrepit infrastructures that dates back to pre colonial era. Kenya last month was said to be the most attractive to investors in equity market and there are plenty of investors’ eager to tap one of the Africa’s fast-growing stock market. The big problem with East Africa is lack of infrastructures that offer shortage of projects offering compelling returns, chronic bureaucracy and regulatory uncertainty that have continued to undermine the ambitious plans the continent.
There’s a lot of money floating around but it’s money looking for a return and after years of chronic under development, East African countries in the region of 135 million people have begun to sharply raise their infrastructure budgets to improve transport and energy networks. Attracting private funds remains difficult. Project finance lending in East Africa still remains far behind compared to other regions according to the latest data in my possession. In more than half the population of East African countries, there are plenty of investor-unfriendly laws. This has translated to delays in various mega projects due to conflicting national and local interests. In my opinion, for most of the East African countries I have traveled to, institutional capabilities at local administrative level are underdeveloped.
In addition to that, the regulatory regimes are largely untested and the judiciary processes are below acceptable international standards and are bedrock of corruption. The struggle to attract private investors means that East African governments may have to play a bigger role. While public infrastructure spending is rising in the continent, it remains well below where it should be. Some countries s’ ability to expand infrastructure spending is encouraging with Kenya’s Thika highway, Konza city project, Lamu port project and Jomo Kenyatta Airport expansion, Uganda’s 35km Entebbe-Kampala highway, Tanzania’s Dar Es salaam Rapid Transport system and the proposed $20 billion Bagamoyo port to mention but a few. East Africa region has to rethink radically its strategy on infrastructure if they are to attract worthy investments.