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

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Unleashing the East African Lion

Mind Speak 6th December 2014

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The Good News

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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

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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 4

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EAC Growth Corridors

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Northern Corridor Highw ay Rail Central Corridor Highw ay Rail Transit Points Sea Ports Border Post

Overlays

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Economic Density Map

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Large Growth in Trade Projected

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2009 2015 2030 10 20 30 40 50 60 70 80 90 100 21.5 35.26 89.58 18.28 30.33 77.04 20.21 31.74 77.93 Northern Corridor traffic NC traffic through port of Mombasa NC traffic by road T

• n

s

• M

i l l i

• n

s

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Political Will increasing

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Big infrastructure investments

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10 lane Highway?

Six Lane Highway?

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Challenges

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Region as a % of Global GDP

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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

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Infrastructure Deficit

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Trade Barriers - Border Delays

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High Transport & Trade Costs

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Transport Cost Components

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Mombasa Port/Mombasa CFS Channel Kampala Bujumbura 2000 4000 6000 8000 10000 12000 14000

Costs for an average Bujumbura bound container

Bribes Distance-Based Costs Fixed Costs Time Based Costs C

• s

t $ 1% 49% 23%

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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

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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

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Increased Trade

Increased physical market access Increased business competitiveness Enhanced trade environment

Increased Trade competitiveness in East Africa

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PORTS CORRIDORS BORDERS RAILWAYS

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Expected Results by 2016

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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

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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

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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

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Risks

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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

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Thank you

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