Unleashing the East African Lion Mind Speak 6th December 2014 - PowerPoint PPT Presentation

Click icon to add picture Unleashing the East African Lion Mind Speak 6th December 2014 www.trademarkea.com

The Good News www.trademarkea.com 2

Growth is Good  East African economies growing at 5-8%  5/10 fastest growing cities will be in East Africa  Income growth accelerating – emergence of growing middle class  Labour cost inflation in China beginning to attract investment – e.g. socks in Rwanda  Growth is balanced & not just extractives  Extractives offer windfall gain for investment & value addition www.trademarkea.com 3

Opportunities Expanding  Regional market opportunities high – consumer base in EAC of 150m, wider markets 300m  Regional Integration reducing challenges to trading across borders & larger  Free Trade Area from Cape to Cairo (Tripartite) emerging  Extractives discoveries provide new momentum for growth  Trade Growth is projected to increase by six times to 2030  Incremental improvements to investment climates  Governments recognise need to invest in trade infrastructure & energy as part of a competitiveness strategy www.trademarkea.com 4

EAC Growth Corridors Overlays Northern Corridor Highw ay Rail Central Corridor Highw ay Rail Transit Points Sea Ports Border Post www.trademarkea.com 5

Economic Density Map www.trademarkea.com 6

Large Growth in Trade Projected 100 89.58 90 77.93 80 77.04 70 60 s n Northern Corridor traffic o i l l 50 i M - NC traffic through port of s n 40 Mombasa o 35.26 T 31.74 30.33 30 NC traffic by road 21.5 20.21 18.28 20 10 0 2009 2015 2030 www.trademarkea.com 7

Political Will increasing www.trademarkea.com 8

Big infrastructure investments Six Lane Highway? 10 lane Highway? www.trademarkea.com 9

Challenges www.trademarkea.com 10

Region as a % of Global GDP www.trademarkea.com 11

Not all Challenges….. • Demographics & skills in labour markets • Complex and burdensome red tape – increases potential for corruption • 3rd quartile investment climate rankings with the exception of Rwanda – unpredictability deters investment • Low levels of competitiveness in a variety of goods, high in commodities – need for value addition • Infrastructure & energy deficits & high costs • Shallow supply chains - most businesses are small and informal • Barriers to growing the regional market (only 18% trade) increase trade costs www.trademarkea.com 12

Infrastructure Deficit www.trademarkea.com 13

Trade Barriers - Border Delays www.trademarkea.com 14

High Transport & Trade Costs www.trademarkea.com 15

Transport Cost Components Costs for an average Bujumbura bound container 14000 23% 12000 1% 10000 Bribes Distance-Based 8000 Costs $ 49% t s o Fixed Costs 6000 C Time Based Costs 4000 2000 0 Mombasa Port/Mombasa CFS Channel Kampala Bujumbura www.trademarkea.com 16

What are we? • Trade and Markets East Africa (TMEA) • Not for profit registered in all partner states • Regional & National presence - branches in all 5 member states, Juba & Arusha • Multi-donor – Belgium, Canada, Denmark, Finland, Netherlands, Sweden, UK & USA • Budget - $590m 2010 to 2017 www.trademarkea.com 17

TMEA’s Approach • National implementation of regional policies • Trade facilitation (‘ software ’) combined with trade infrastructure (‘ hardware ’) • Fast & flexible demand-led approach • Strong national and regional governance • Focus on private sector engagement & dialogue • Results and value for money driven www.trademarkea.com 18

Increased Trade Increased Enhanced Increased physical trade business market environment competitiveness access Increased Trade competitiveness in East Africa www.trademarkea.com 19

PORTS CORRIDORS RAILWAYS BORDERS www.trademarkea.com 20

Expected Results by 2016 10 increase in the total value of exports from the EAC region % 25 increase in intra-regional exports when compared to total exports in the region % 15 reduction in average time to import or export a container from Mombasa or Dar es Salaam % to Burundi or Rwanda 30 decrease in the average time a truck takes to cross selected borders % Value of benefits $ 17 billion - $30 return for every $1 invested www.trademarkea.com 21

Emerging Results • 6 positive reviews – solid backbone of 160 projects – interest in replication of model • Trade Facilitation: Electronic Single Window in Rwanda – time reduced from 8.5 days to 21 hours; Customs system for Uganda $56m savings pa & halving of clearance times; • Regional Integration: $290m pa trade standards harmonised, NTB legal sanction mechanism • Revenue: 110% increase in national revenue collection from 2011 in Burundi through support to new revenue authority – 40,000 people with improved access to health services monthly • Infrastructure: Rwanda Logistics Hub, Dar Port (Berths 1-7), on-going construction at 7 OSBPs, Mombasa Port program, Charter • Private Sector engagement: CEO round-tables, traders' platform www.trademarkea.com 22

Future Themes: 2016-2020 1. Reducing trade costs through full Customs Union & implementation of improved trade facilitation (Bali TFA) 2. Increased informal trade , women in trade & poverty focused trade programme 3. T ransformative development of trade corridors to support emerging growth & spatial development – fused with policy development www.trademarkea.com

Risks www.trademarkea.com 24

Possible Bear Traps • Need for institutional reform resilience – reforms must continue and adapt – requires deeper institutions • Dutch Disease – need to avoid macro-effects & over- reliance on extractives income • Political commitment to reform needs to be sustained, some power needs to be ceded regionally • Asymmetric benefits need to be addressed – inequality, landlocked countries, youth unemployment • Security & civil unrest – Kenya & South Sudan www.trademarkea.com 25

Thank you www.trademarkea. com www.trademarkea.com