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Chief executives and promotion agencies applauded – Speech by Secretary General – EAC

Posted by African Press International on February 24, 2008

api-correspondent-odera-omolo.jpg<From Leo Odera Omolo in Arusha
Welcome to Arusha and even though we are meeting in a hotel I still would want to welcome you to the East African Community Headquarters. It is an honour and a privilege for me to open this inaugural meeting of Chief Executives of our Investment Promotion Agencies and those of our major business associations. We meet today against a worrisome regional backdrop.
The Kenyan political impasse imposes a difficult and complex environment for the EAC; for investment promotion and for business players alike in the region. Following the Kenyan political situation, trade flows have been negatively affected and so have exchequer and business revenues. Movement of raw materials and fuel has also been seriously impacted, threatening not only industrial competitiveness but also the retention of existing jobs. Tourism in particular has suffered greatly. Thank goodness, there is a silver lining before us. Kenya is quickly returning to normalcy.

However, there are serious lessons that we must all learn from what has happened in Kenya in the context of promoting our region as a destination for investment and tourism and, in particular, in our quest to promote the EAC region as a single investment and tourism destination. We have also seen, for example, that whilst poor infrastructure has all along constituted a major barrier to doing business in our region, and thereby eroding our competitive edge, civil strife has a devastating economic impact even where infrastructure is good.
The lesson we learn is that we can only promote and attract investments sustainably as well as assure effective intra-regional trade, if we have enduring peace and stability.In turn, it is the core values that underpin peace and security that assure sustainable development.
These values embrace democracy, good governance, rule of law and respect for human rights. In other words, we can no longer afford not to address these core values that need to be commonly shared in all the EAC countries as we continuously deliberate on how best to work together as promoters of investment and as business actors.  In April this year, from the 10th-11th, the East African Community and the East African Business Council will stage the Second East African Media Summit in Dar-es-Salaam, hosted by IPP Media of Tanzania, and the core theme will be on these particular issues.
My friends,
Let me also underline that the Kenyan political situation has heightened the importance of addressing the key strategic factors that constitute the bedrock of business confidence and competitiveness. In this area, the availability of reliable and robust infrastructure, in alternative routes in our region, is of critical importance. At the EAC level, steps are already underway to address our infrastructural deficitsin railways, ports and harbours, roads, energy, civil aviation, and lake transportation both on Lake Victoria and Lake Tanganyika. The EAC Master Plans for roads, railways and energy are under review in order to mainstream Rwanda and Burundi in the Master Plans. Progress is also at an advanced stage in promoting an East African Civil Aviation Regime that meets international standards in air safety and security oversight.
All this work is being done in the realization that good infrastructure is what unlocks the potentials for economic growth and development. In as much as our governments, in some Partner States, have concessioned the railways and ports, this remains inadequate as experience has shown. What is at stake is the injection of investments in improving the railway permanent ways and the handling capacities of our ports.
In view of the challenges that lie in these infrastructure areas, the EAC has decided, over the next four months, to give them central attention. Thus the Retreats for Permanent Secretaries and Ministers of our key strategic ministries will be held in Mwanza early March and in Kampala in April, respectively.
My friends,
Globalization has been the driving force behind market-driven economic integration in the world.  The challenges of globalization are best responded to and mastered when efforts toward regional cooperation and integration are undertaken. The reason is simple.
Regional integration assures better sharing of opportunities as well as management of risks. Since the onset of the EAC Customs Union in January 2005, our region has reaped benefits through the growth of intra-regional trade and business confidence.As a result, we have also witnessed growth in intra-regional investments.
Indeed, the liberalization of the capital account in Kenya and Uganda and part liberalization in Tanzania, has catalysed growth in the shares market through the process of cross-listing of company shares in the three stock exchanges. There are efforts to extend the process to Rwanda and later to Burundi.
More importantly, the EAC is fast moving towards the promotion of an East African Capital Market with a Central Stock Exchange.The international Finance Cooperation of the World Bank is funding a major project in this regard and work is in progress. Once developed, the East African Capital Market would act as a spur and a catalyst of vibrant mergers and acquisitions and of greenfield investments that reflect an East African character.  Already, we are seeing a growing Initial Public Offering (IPO) activity as well as a Bond Market in the East African Partner States.
The cumulative effect of these innovative financial products and instruments is improved liquidity in our region that can be available to fund capital investments and grow our various businesses. This is as it should be because the urgency to forge public-private partnerships, especially in the field of capital investments, in areas such as infrastructure development is real and critical.
Our governments are well focused on creating the enabling environment to support PPPs and the business sector, so well represented here by the investment promotion agencies and the leaders of private sector business associations.
The centrality of PPPs could not be overemphasized at a time where there is growing concern, especially in Tanzania, about the letter and spirit of mining contracts. The jury is still not out on the exact character of these contracts. Suffice to state, that the ethos of economic empowerment of our citizens in the EAC region is growing in importance and sensitivity. Ownership by the citizens of their national economic resources, even whilst we seek to forge closer collaborations with foreign capital, technology and skills, is what economic liberalization is all about. I was thus moved by a report published in the Daily News of Tanzania yesterday which reported that Mbeya has huge deposits of high grade phosphate able to produce 30,000 tonnes a year.
The Mbeya authorities, quite rightly and commendably, are moving in the direction of floating an IPO to raise funds for investing in the exploitation of the deposits and the production of fertilizer.  In my view, this is the correct route to take towards achieving the economic empowerment of East Africans. It is a route that our Investment Promotion Agencies and our indigenous private business sector should pursue and develop. Moreover, it is a route that will importantly mitigate the presently heightened fears and concerns about corruption and malfeasance in the high circles of the government, public sector and business. In sum, it is the best route that can create the enabling conditions for a broader ownership of our resources on an East African scale.
My friends,
As I mentioned earlier, our region must quickly move towards creating a platform for the mobilization of peoples savings that can go towards funding not only strategic infrastructures but strategic businesses as well such as that represented by the Mbeya phosphate and fertilizer case. My friends, what I have so far said points to the importance of our working together and, I believe, that this we can attain through joint investment promotion conferences and forums. Two years ago, we were about to start an annual East African Investment Conference. It was slated for Nairobi, Kenya with the collaboration of the Commonwealth Business Council.  It did not take place for reasons that are now historical. Now we are better focused and organized.
Thus, the first annual East African Investment Conference will take place in Kigali, Rwanda from 26th-27th June this year. Contacts are being made with the EABC, the Investment Promotion Authorities and all business associations in our region to ensure that we have a successful inaugural investment conference. The Commonwealth Business Council has already been approached to render a helping hand. We also plan to use the Leon Sullivan Business Summit which President Jakaya Kikwete is hosting in Ngurdoto Arusha from 2nd 6th June as a platform for promoting our own Investment Forum slated for Kigali.
My friends,
You have a unique opportunity before you to discuss how best we can work together in our region in order to achieve the EAC vision of promoting a secure, competitive and prosperous East Africa. I have every trust and confidence in your wisdom, experience and commitment in making this vision possible. As the late Mwalimu Julius Nyerere put it, it can be done, play your part. The EAC will extend to you every support in this important venture. I wish you well and every success.
Published by Korir, API

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