East Africa attracting investment

Demand for logistics services in East Africa is growing as the region’s economy expands. The region offers a number of opportunities for South African exporters and importers who will find that they are competing against established trade links with Europe and the East. However, South African companies have a geographical advantage. There are a number of lines offering regular services between South African and East African ports. It is a region which offers some of the best opportunities in Africa. After the rebasing of gross domestic product (GDP) statistics, the East Africa Community (EAC) market is estimated at US$134 billion, a 19.6% jump from 2013. This is excluding economic growth in the last year. Manufacturing output is growing, thanks to investment by multinational companies. Foreign Direct Investment (FDI) into East Africa increased by 11%, to $6.8bn in 2014, according to the World Investment Report 2015 by the United Nations Conference on Trade and Development (Unctad). FDI rose in the gas sector in Tanzania, while Ethiopia is becoming a hub for multinational enterprises (MNEs) for garments and textiles. The International Monetary Fund (IMF) ranks Ethiopia as among the five fastest growing economies in the world. After a decade of continuous expansion (during which real GDP growth averaged 10.8% a year), in 2013/14 the economy posted 10.3% growth. Tanzania is listed as one of the 10 African transportation and logistics “hotspots” by consulting firm PWC. It says Tanzania is expected to become one of the fastestgrowing economies in the world. Key drivers will be natural gas, regional integration supported by an extension of transport infrastructure networks, and a stable democracy. While the logistics is challenging, transport and utilities infrastructure projects worth US$19 billion are in the pipeline. Despite incidents of terrorism, mainly in the north of the country, Kenya remains one of the leading economies in East Africa and the continent as a whole. The economy is predicted to grow by 6-7% over the next two years. A PWC country profile describes Kenya’s longterm growth prospects as “solid”. Another growing economy is that of Uganda. Research company IHS forecasts an acceleration of growth for Uganda in 2015 as lower food and energy prices boost private consumption. Real GDP growth is expected to rise from an estimated 4.9% in 2014 to 8.4% in 2015 “as investment in hydropower and the oil sector begins in earnest,” it says. While conflict in South Sudan has negatively affected Uganda’s agricultural exports, the resulting increased supply in the domestic market has contributed to driving down food price inflation. INSERT 1 11% The FDI increase in East Africa in 2014. INSERT 2 10.3% Economic growth in Ethiopia in 2013/14.