To guarantee future growth, East African countries must act now

Posted on January 14, 2014 01:50 pm

All East African countries will face political and economic uncertainty between 2015 and 2017 as they all face legislative and presidential elections starting with Tanzania next year. This is well known and most businesses should factor them into their calculations. In Tanzania, JK’s second and final term comes to an end and for the first time since 2005 election, the country that have the world Mwalimu Julius Nyerere will be transiting to fresh faced leaders and most probably there will be generational change. The other East Africans must hope that the chosen leader to lead Tanzania will not be anti- East African community and will play cool like JK as President Jakaya Kikwete is fondly referred to by the country and regional media. Experts have severally warn that East Africa’s rise could still be derailed by internal and external obstacles and especially the lack of adequate regional institutions that have the power to safeguard and punish those countries that goes off the regional pact rails. Traditionally, the economic sentiment weakens before, during and after the election and as an interested investor in the region I think there is an urgent need for the governments to step up policies implementation to boost confidence and ensure that gross domestic product growth does not slow too much starting from next year election in Tanzania followed by Uganda in 2016 and Kenya in 2017.

The most urgent task facing the region is accelerating infrastructure developments and full implementation of economic growth policies and structures that have continued to suppress regional development. Studies have showed that in politically sensitive times, the lack of or the presence of poor infrastructure will bite into business confidence and raise costs eventually reducing the region’s competitiveness, especially in the agriculture sector that employs more than 80% of region’s employed population. Also, poorly managed ministries and funding processes always contaminate development in East African countries, especially if, rather than responding to people’s needs, they allow for a concentration of authority that fuels corruption and raises the incentive for the existing political order to maintain status quo, no matter how beneficial for the common good. It’s no surprise then that East African countries, on average, score in the bottom third of German based Transparency International’s corruption Index with those mandated to fight graft and maintain law and order topping the list of the most corrupt. East African governments needs to shift its focus to creating the right incentive framework that will encourage and allow businesses to grow and invest and need to promote and encourage competition among the regional businesses. However, not taking the right action today will lead to slower growth moving forward.

Implementation has been East Africa’s Achilles’ heel and unless this issue is resolved, the region will lag behind regional competitors. It is clear the region cannot rely solely on commodity exports and consumer spending to generate growth. The five countries need to expand their industrial base and promote new sectors, especially in the information and technology space. In Tanzania and Uganda there is need to encourage greater innovation and invest in research and development like their more illustrious neighbor Kenya has done if they are to rise up the economic value chain. East African region needs infrastructure projects and that is why ‘coalition of the willing’ plan that include Rwanda, Kenya and Uganda is laudable and welcome but my wish is to see Tanzania and Burundi included as their isolation puts the regional bloc existence at risk as I argued last year on my post. To ensure there is sustainable growth, there is need for public-private partnerships that help build small and mid-size businesses that have played key role in the economic bloc growth since its revival in 1994. You can count Contador Harrison as among the increasing number of people excited and hopeful about what’s happening on the ground in East African region. Markets are booming, from goldmines in Tanzania to oil rigs in Uganda, coffee exports in Rwanda to expected Titanium exports in Kenya it’s a new generation of leaders, workers and entrepreneurs that are driving East African region’s growth.

Contador Harrison