The 150 million people strong EAC Common Market has opened a window for cross-border expansion, nurturing homegrown multinationals that now straddle the region. Kenyan companies have been the most adventurous, with their cross-border advances returning a mixed bag of fortunes. Some firms have recorded huge successes while others have rued the decision to venture outside their home markets. Fast-growing sectors such as financial services, manufacturing, retail, transport and ICT have provided launch pads for those itching to venture outside their comfort zones. “The spirit of the Common Market Protocol encouraged Kenyan companies to venture into the region but most realised the situation on the ground was quite different. Despite the challenges, Kenyan companies have benefitted specifically when it comes to free movement of persons, labour and capital,” said Meshack Kipturgo, managing director of logistics company, Siginon Group. EAC countries have to a large extent domesticated the Common Market Protocol making it easier for private companies to establish cross-border operations, but some have gone against the agreement on areas like free movement of people and land use that remains restricted. Some of the notable Kenyan companies with regional operations include KCB, Equity, DTB and NCBA banks, East Africa Breweries, Bidco Oil Refineries, Brookside Dairy, Siginon Group, Nation Media Group and Britam. Stiff competition For most of these companies, the search for revenue growth opportunities and stiff competition in the domestic market both from local companies and global conglomerates coming into the region forced them to seek new opportunities regionally. Efforts to...

Summary Kenya and Tanzania’s rise to lower-middle-income countries raises the bar for fellow East African Community (EAC) member states. I would argue that we should not be thinking of when Uganda, Rwanda, Burundi, and South Sudan will become middle-income countries, but how. The World Bank on July 1 categorised Tanzania as a lower middle-income country (MIC), becoming the second country in the East African region to achieve this milestone after Kenya. The World Bank categorises a middle-income country as one with gross national income (GNI) per capita between $1,006 and $12,235. Tanzania’s GNI per capita was reported at $3,140 in 2018, according to the World Bank collection of development indicators. Becoming a middle-income country reflects the hard work and sacrifices of citizens, and sustainable, people-centred development programmes by the Kenya and Tanzania governments. It requires a quantum of resources and discipline in the governments’ expenditure pattern. Kenya and Tanzania’s rise to lower-middle-income countries raises the bar for fellow East African Community (EAC) member states. I would argue that we should not be thinking of when Uganda, Rwanda, Burundi, and South Sudan will become middle-income countries, but how: How they effectively implement their development plans, and if they strategically identify the key priority sectors they can massively invest in to accelerate growth based on each country’s comparative advantage. Several factors contribute to attaining the middle-income status. Kenya and Tanzania’s long-term political stability provided a solid foundation for growth and development, providing the impetus for citizens to focus on and achieve individual...

Summary In its latest African Economic Outlook 2020 Supplement report, the African Development Bank (AfDB) says that despite countries embarking on a cautious reopening of economies to stem further damage, the impact of the pandemic is bound to be severe. Losses are expected to be carried over to 2021 because the projected recovery will only be partial with losses ranging from $27.6 billion (baseline) up to $47 billion (worst case) from the potential GDP of $2.76 trillion without the pandemic. Cumulatively, the pandemic could lead to GDP losses in 2020–21 of between $173.1 billion and $236.7 billion in current value terms. At mid-year, African economies, already battered by the Covid-19 pandemic are now facing a total GDP loss of at least $145.5 billion. With many countries recording an unprecedented surge in the number of infections, and the continent’s total cases surpassing the half million mark as per World Health Organisation data, Africa is forecast to suffer GDP losses of between $145.5 billion and $189.7 billion from the pre-Covid-19 estimated GDP of $2.59 trillion. In its latest African Economic Outlook 2020 Supplement report, the African Development Bank (AfDB) says that despite countries embarking on a cautious reopening of economies to stem further damage, the impact of the pandemic is bound to be severe. Losses are expected to be carried over to 2021 because the projected recovery will only be partial with losses ranging from $27.6 billion (baseline) up to $47 billion (worst case) from the potential GDP of $2.76 trillion without the...

Kenya Railways will in the next two weeks start the upgrade of the old track from Nakuru to Kisumu after dropping the use of external contractors. Philip Mainga, the Kenya Railways managing director, said that the refurbishment of the rail network, which is more than a century old, would start on August 1 and take eight months. The project marks a policy U-turn given that the State earlier ruled out reviving the line that had fallen into disrepair. Mr Mainga told the Business Daily that Kenya Railway engineers and National Youth Service will refurbish the line in a bid to cut the upgrade cost. Initially, Kenya had plans of tapping the Chinese for the upgrade. The 216km line will connect to the recently refurbished Sh3 billion Kisumu port, which will enable ferrying of cargo and passengers to Uganda, Rwanda, Burundi and Democratic Republic of Congo on ships via Lake Victoria. Kenya dropped its plan to extend the standard gauge railway (SGR) to Kisumu and later on to the Ugandan border after failing to secure a multi-billion shilling loan from China, which funded the first and second phases of the project. The old line, which had a thriving passenger service in the 1990s, will form the major supply route to deliver cargo to the neighbouring countries through the Kisumu port. Plans to upgrade it came after Uganda also announced that would start refurbishing the old rail network to boost bulk cargo transportation, after failing to secure $2.2 billion in Chinese funding...

Summary/Brief On 3rd July 2020, the Kenya Maritime Authority (KMA) in a notice issued to the public directed shipping lines to extend the free period on the return of empty containers by additional seven (7) days and three (3) days for transit and local traffic, from the existing granted periods. On 3rd July 2020, the Kenya Maritime Authority (KMA) in a notice issued to the public directed shipping lines to extend the free period on the return of empty containers by additional seven (7) days and three (3) days for transit and local traffic, from the existing granted periods. This materialized after consultations with various stakeholders in the maritime industry following KMA’s pledge to engage key players in the logistics chain, with a view of putting in place measures to handle delayed containers in the Northern Corridor stakeholders Zoom meeting convened and chaired by the Northern Corridor Secretariat for rapid information sharing, providing quick interventions and collaboration in mitigating the challenges and the impact of COVID-19 pandemic in each Member State and at each transit or transport node along the Corridor: Port, Weighbridges, One-Stop Border Posts, ICDs, and Transit Parking Yards. The COVID-19 pandemic has ravaged all sectors of the economy with measures, guidelines and protocols instituted by the East African region and individual member countries to curb the spread of the Coronavirus disease partly contributing to delays in clearance and movement of cargo at the port of Mombasa and along the Northern Corridor. These delays have contributed to longer truck...

​​​​​​​IN a move to tackle foreign domination of shipping business in Africa, the African Union (AU) has adopted the Deep Blue Economy strategy by taking initiatives to promote maritime transport, port activities, maritime security, as well as interstate exchanges. In a report “Africa Blue Economy Strategy”, the AU noted that foreigners intentionally destroyed the budding African shipping lines and conferences to ensure that only Europeans offer such services and at their own prices. Besides, the AU is also expecting port activity in Africa to reach two billion tonnes by 2040. West Africa is home to port facilities in the process of continuous modernisation since the end of the colonial era. East Africa has expanded its ports, including Djibouti, which is responsible for exports to Saudi Arabia, Egypt and India. The port of Dar-Es-Salaam in Tanzania carries many imports from India and China. To this end the group also concluded plans to reduce, if not eliminate foreign domination of shipping businesses in the continent as it commenced research and studies in fisheries, aquaculture, conservation and sustainable aquatic ecosystems, shipping/transportation, trade, ports, maritime security, safety and enforcement, coastal and maritime tourism, climate change, resilience, environment, infrastructure, sustainable energy and mineral resources and innovative industries, polices, institutional and governance, employment, job creation and poverty eradication as well as innovative financing. According to the report, the AU noted that in its current configuration, maritime trade remains dominated by arms conglomerates which unilaterally set freight rates and thus organise the shipping market as they see...

Busia, 17 July 2020: The European Union (EU) Ambassador to Kenya Simon Mordue, in partnership with TradeMark Africa (TMA), visited the Busia One-Stop Border Post (OSBP) - the border crossing point between Kenya and Uganda - to deliver Personal Protective Equipments (PPEs) to the border authorities on the Ugandan and Kenyan side. The delivery was witnessed by Kenya’s Ministry of Health Chief Administrative Secretary (CAS) Dr. Rashid A. Aman, PS Ministry of EAC Kevit Desai and his Ugandan counterpart Edith Mwanje, Uganda Revenue Authority Commissioner for Customs, Abel Kagumire, TMA Chief Executive Officer (CEO) Frank Matsaert, TMA Kenya Country Director, Ahmed Farah, TMA Uganda Country Director, Moses Sabiiti and Busia County Commissioner Joseph Kanyiri. This is part of the EU’s wider support for mitigation measures against the spread of COVID-19 and continuous safe trade in Kenya across all the Kenyan borders. Today’s symbolic handover will cover the needs of customs, immigration, security, and port health officials on both sides of the border for a period of 3 months. Making his remarks at the event, EU Ambassador to Kenya Simon Mordue said: “Trade is the lifeline of the economy and many millions of both formal and informal jobs depend on it. By working together closely the Kenyan and Ugandan governments are ensuring that trade can continue through the border posts in Busia and Malaba throughout this COVID-19 crisis. Government agents working in the front line are essential to the cross-border flow of goods and need to be properly protected. Today’s first...

Today the House of Lords’ International Relations and Defence Committee has issued its first report of the current parliament, The UK and Sub-Saharan Africa: prosperity, peace and development co-operation. The report rightly argues that the UK should take a greater strategic interest in and seek a stronger partnership with Africa to support the delivery of the African Union’s (AU) strategy. In fact, ODI’s written and oral evidence to the Committee argued that the government should consider building on the recent UK-Africa Investment Summit to lay the foundations for a new medium-term post-Brexit economic partnership, to diversify UK investment in Africa and increase trade by taking advantage of Africa’s integration. Together with the All-Party Parliamentary Group (APPG) on Trade out of Poverty, we also suggested a UK-Africa Prosperity Commission is set up to inform these efforts as equal partners. The government must now take note of the House of Lords report, reset economic relations and publish an ambitious Africa strategy. The strategic approach to Africa falls short The Committee’s diagnosis on the state of UK-Africa economic relations is stark. It warns of a flatlining of the relationship between the UK and African countries between 2008-2018 in terms of trade and investment, at a time of growth in the continent and increased integration through the African Continental Free Trade Area (AfCFTA). Reflecting insights from the APPG on Africa and ODI, it also presents the UK’s visa policy as a thorn damaging the relationship, but notes the good track record of UK aid for trade programmes such as TradeMark Africa and aid to support industrialisation in Ethiopia. It...

The East African Community (EAC) is likely to see a sharp decline in Foreign Direct Investments (FDIs) this year owing to the current Covid-19 pandemic that continues to ravage economies across the globe. According to the latest World Investment Report 2020 by the United Nations Conference on Trade and Development (Unctad) FDIs in East Africa declined by nine per cent to $7.8 billion in 2019, from $9 billion in 2018. The report forecasts FDI inflows to the continent will fall by 25 to 40 per cent in 2020, exacerbated by low commodity prices. “Although all industries are set to be affected, several services industries including aviation, hospitality, tourism and leisure are hit hard, a trend likely to persist for some time in the future,” said James Zhan, Unctad director of investment and enterprise. The decrease, according to the report, comes after the continent recorded a 10 per cent decline in FDIs flows to $45 billion in 2019 from $46 billion in 2018. Alternatively, the expected transformation of international production also brings some opportunities for development, such as promoting resilience-seeking investment, building regional value chains and entering new markets through digital platforms, the report reads in part However, capturing these opportunities will require a shift in development strategies. According to Mukhisa Kituyi Secretary-General of Unctad, export-oriented investment geared towards exploiting factors of production, resources and low-cost labour will remain important. But the pool of such investment is shrinking, and the first rungs on the development ladder could become much harder to climb. He...

Delays in cargo clearance at the Nairobi Inland Container Depot (ICD) have increased the cost of importing cargo. A survey by the Shippers Council of Eastern Africa (SCEA) reveals that only 40% of cargo is cleared within the 4-day free storage period, leaving 60% of the cargo to incur storage costs between KSh 3210 and KSh 9630 per day for every container. A report by the Star shows that cargo clearance takes an average of 5-6 days, up from the previous 0-4 days within the free storage period. By last week, 1774 Twenty-Foot Equivalent Units (TEUs) exceeded the 21-day stay at the facility. This is beyond the four-day free storage period, and the 17 days charged stay, after which KRA takes custody of the cargo. Under KRA custody, importers have to pay the rent for Custom warehouses, failure to which the agency auctions goods to recover costs. The Federation of East African Freight Forwarders Association (FEAFFA) says that the volume of cargo that has overstayed for between 21-120 days grew by 9% to 581 twenty-four foot equivalent containers from last week’s 531. Cargo Clearance is Taking a Toll from the Pandemic Restrictions due to the pandemic have reduced the available staff for cargo clearance and moved some clearance functions online. This has impeded processes like verification and release, which cannot happen online. Further, clearance agents now require prior permission to access KPA and KRA facilities to solve clearance related problems, which fuels delays. Working online also affected the timely delivery of actions...