East Africa Economic Report

Presidents of Kenya, Rwanda and Uganda. These three think on their feet SIBLING RIVALRY is at the heart of Tanzania’s laggard attitude towards EAC integration, we can report. Tanzania, the second largest economy in the region harbours ambitions of being a super power in the region. Kenya, the largest economy in the bloc holds that position.  For Tanzania overtaking Kenya is an uphill task for it requires huge investments in infrastructure, diversification of the economy and investment in personnel. That cannot be attained in a year or so. It needs decades.  Although at some point, Tanzania appeared set for the target when she discovered natural gas. But that advantage was quickly erased when Kenya also discovered oil. Now, it seems, the battle for supremacy will be won or lost on transport infrastructure.And to win the battle on this front needs decisive and firm action.  Kenya is the hub of economic activity in east Africa. Consequently, its transport infrast...

Railway construction: Will need cash   KENYA WILL ISSUE A  sovereign Bond worth US$2 billion before the end of next month. And analysts expect the bond to be oversubscribed by a wide margin. This is because of improved economic and Political risk which feed on growth prospects for 2014 and beyond. And ahead of the floatation, visits by a number of high powered delegations of top guns in the financial world show a growing interest in Kenya. The delegations indicated that the bond was on their diary during the visit. Hence analysts in Nairobi are upbeat that the bond will be oversubscribed.  They have a reason to be positive. Investor confidence in the frontier market is growing as investor move lower down the ladder to Frontier Markets. Investors are shifting funds from the emerging markets to the fast growing frontier markets. Data available to this publication shows that all sovereign debt issued by African governments in the last two years was ov...

THE AFRICAN DEVELOPMENT Bank has committed a further US$700 million for transport infrastructure in Tanzania over the period 2014-2016, we can report. Of the amount, improvement of all roads will take the largest chunk of US$400 million, Development of Bagamoyo Port ($10 m), improvement of Port efficiency $150M); improvement of railways ($100m) says an AfDB report.  The report also breaks down the funds to roads as follows: trunk roads $200Million; rural roads S50 million and sustainable urban transport $150 million. The report, Tanzania Transport Sector Review states that AfDB will focus on transport infrastructure as an enabling sector of the economy. The Tanzania transport sector faces a myriad of hurdles, chief among them poor infrastructure, which then becomes a bottleneck to economic growth and integration.  For instance, of the 12,786 KM of trunk roads, only about 4000KM of 32 per cent, are bitumen standard. And of these, 409 Km are in poor state, says the report....

An Hydro Dam: Investors wary of the construction risk ALTHOUGH ALL DATA available is not comparable, there are indications that the East Africans in the diaspora remit  home an estimated US$3 billion a year.  Kenyans lead the pack remitting home US$1.3 billion last year, Ugandans came second remitting up to US$800 million last year. Although the numbers are uncertain, Tanzania remit an estimated US300-400million a year or thereabouts. We are talking about an estimated US$2.5 billion or more flowing into the region mainly for subsistence consumption. The east African diaspora comprises of highly paid, highly skilled manpower living and working abroad. If we assume that the remittance level forms 10 per cent of their total earnings, then the diaspora earning are nearly as large as Tanzania’s GDP in 2012. Tanzania’s GDP in 2012 stood at US$28 billion. This means that the diaspora is potentially a large source of sustainable finance for the regional infrastructure. ...