Invest in the COMESA Region 2017 by Harfield Media

INVE S T I N T HE

COMESA RE G I ON 20 17

Leveraging Economic and Social Opportunity THE CASE FOR INVESTMENT

DOING BUSINESS IN THE COMESA REGION

COMESA – COUNTRY BY COUNTRY

Ongoing structural progress, market reforms and better macroeconomic management

A guide for investors – facilities and incentives on offer to assist foreign business

Profiles of the 19 member states, details of investment agencies and relevant organisations

SPONSORED FEATURE

Today, exports to COMESA member countries represent around 10.7% of total exports.

As you said, Mauritius benefited from its COMESA membership in terms of exports. What do you think is the value addition that Mauritius can bring to Africa?

INTERVIEW

Kee Chong Li Kwong Wing GOSK Chairman, SBM Holdings Ltd

The Chairman of SBM Holdings Ltd explains the importance of COMESA membership to the country’s economic development Mauritius developed from a monocrop economy to a manufacturing economy, then to a service sector economy. The country is ranked first in Africa for ease of doing business and has a well-developed economy. Has the COMESA trade agreement also contributed to the development of Mauritius? Mauritius’s combination of political stability, strong institutional framework, low level of corruption, favourable regulatory environment and an educated population has helped lay the foundation for economic growth, while its open trade policies have been key in sustaining growth. Constrained by its size, Mauritius has chosen a model based on export-driven growth, and being

part of regional trading blocs, such as COMESA, is a cornerstone of this economic model. COMESA membership has made a valuable contribution to the development of the Mauritian

Exports to COMESA member countries represent around

10.7

of total exports

economy over the years, with COMESA being one of the regional blocs in which Mauritius makes a trade surplus, generating employment and enhancing manufacturing efficiency.

Africa has been described as the ‘most attractive investment destination of the 21st century’, but it is still fraught with lots of challenges. Nonetheless, big rewards await the bold. This is where Mauritius enters the picture. We are an African nation with a strong governance framework, underpinned by the rule of law, a well-functioning hybrid legal system and an emerging regional arbitration centre. Our society is a multilingual and multicultural society with a strong tradition of hospitality. Mauritius can, therefore, act as a showcase for Africa and become a gateway for investment in the region in the same way as we helped in the economic growth of India. Mauritius has a proven track record as an investment platform and business hub that, at one point, channeled over 65% of FDI into India. Issues must not come in the way of the development of Africa. Mauritius already possesses the right eco-system and suitable skill set and regulatory framework. We can put it to work for Africa. The country also boasts expertise in several sectors, such as sugar, green energy, hotels and hospitality, garment manufacturing, financial services and business process outsourcing, among others. We can export this knowhow to Africa, hence boosting investment, growth and job creation, upgrading capabilities and enhancing standards.

SPONSORED FEATURE

Mauritius can emerge as the technology and financial centre for Africa and become a prominent player in the continent’s development.

According to press reports, SBM is ready to acquire the Fidelity Commercial Bank in Kenya. As a leading financial institution, what will be the role of SBM in Kenya and Africa? In Mauritius, SBM has the advantage of brand, reach, stable and low-cost funding, and strong market share. However, we are limited by domestic market size. Given this limitation, SBM has embarked upon a

The exit of many Western banks and companies from the continent is not necessarily linked to profitability or performance concerns. Regulatory and compliance burden, as well as liquidity concerns in their home markets, have played an important role in this retrenchment. But Africa is home to us. We have to fill the gap that the large international banks are leaving. And, with a growing consumer market, infrastructure development, and improving governance and institutional strength, we believe that the economics make sense for us to enter Africa. The cultural and historical ties, as well as geographical proximity, are also

— We aspire to become a ‘go-to’ Bank for the region. We will seek to accelerate development by accompanying investors in their African ventures market diversification strategy through geographical expansion, namely in Africa. The acquisition of the Fidelity Commercial Bank in Kenya is our first baby step into East Africa. Indeed, we aspire to become a ‘go-to’ Bank for the region. We will seek to accelerate development by accompanying investors in their African ventures, providing adequate market research and developing meaningful relationships with local players.

Many banks and companies are leaving the continent, and still you see great opportunities and potential for growth in Africa. How do you explain this?

important factors. This is why our government is also encouraging Mauritian companies, including financial institutions, to play a larger part in the African market and vice versa.

We are talking about Africa becoming an E-commerce platform and about Fintech. Do you believe that technology is today questioning the existence of Free Trade Agreements among countries? Well, at the moment that Free Trade Agreements were drafted and the regional blocs were created, it would have been far-fetched for us to say that technology would be what it is today. These

agreements were designed in order to encourage free movement of goods and people within a given region, so as to promote trade, investment and growth therein. It was, at that time, unimaginable that technology would have been causing so much dramatic disruption to our economy and our way of life. Today, with e-commerce, mobile money and the digitalisation of financial services, trade across borders is being carried out seamlessly and we need to adapt our thinking, processes and policies to this ‘new reality’. Authorities throughout the world are losing income from tariffs as imports are becoming harder to track. But regulations are going to become tougher. For example, BEPS proposals – driven by the OECD – aim, among others, to make it harder for these imports to go untaxed. Thus, regional trade agreements would still have a role to play. In the same breath, I believe that the technology and digitalisation have the power to fasten and deepen economic integration. In Africa, we need to take full advantage of this and, perhaps, further strengthen our economic ties through an alignment of our technology ecosystems, providing interoperability and economies of scale to member countries.

SBM Tower 1, Queen Elizabeth II Avenue Port Louis, MAURITIUS Tel Fax Email Web

(230) 202 1111 (230) 202 1234 sbm@sbmgroup.mu www.sbmgroup.mu

CONTENTS LEADERS’ PERSPECTIVES

HE Hery Rajaonarimampianina President of the Republic of Madagascar and Chairperson of the COMESA Authority

Flora Mutahi Second Vice Chairperson, COMESA Business Council; Chair, Kenya Association of Manufacturers

Leaders’ quotes

19-21

Insights from COMESA’s leaders

HENITSOA RAFALIA/ANADOLU AGENCY/GETTY IMAGES

10-11

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EDWIN REMSBERG/ALAMY

28-31

INVESTING IN THE COMESA REGION

Promoting prosperity For more than two decades, the Common Market for Eastern and Southern Africa has brought countries together to promote development, overcoming barriers and borders and encouraging cooperation

The case for investment

25 UNECA How the United Nations Economic Commission for Africa plays a key role in formulating policies to foster development

COMESA member states are reaping the benefits of the New Partnership for Africaâ&#x20AC;&#x2122;s Development. Including a message from Dr Ibrahim Assane Mayaki, CEO, NEPAD

Sectoral growth and a booming consumer market is drawing investors to the region and creating globally competitive markets

Doing business in COMESA A guide to the organisations and agencies that are facilitating greater foreign direct investment to COMESA countries

COMESA and NEPAD: working together

COMESAâ&#x20AC;&#x2122;s central banks Deeper integration and the use of more global currencies is making the COMESA region an increasingly attractive place to do business

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CONTENTS

PRIORITY INVESTMENT SECTORS

Energy and power

49 Manufacturing Member states are vying for the prestigious title of ‘regional manufacturing hub’, but first they must address the areas that are hindering progress

Africa has vast – and largely untapped – renewable energy potential, with some of the continent’s best investment opportunities residing within the COMESA region

39 Minerals

52 Agribusiness Investors are being invited to tap into the potential of COMESA’s farming and agribusiness industries, where productivity and sustainability are key to future success

With vast mineral wealth ready to be explored, COMESA is working with global partners to enhance its mining sector – and the bloc is not short of prospective investors

58-63

VODAFONE

42 Infrastructure A look at major efforts being undertaken to finance infrastructure projects. Including a message from Dr Akinwumi Adesina, President, African Development Bank

Transport and logistics Improved transport links – via road, air, rail and water – are smoothing the passage of both goods and people throughout the COMESA region, and economic growth is being boosted as a natural consequence

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Banking and financial services Thanks to rapid innovation taking place within Africa’s banking systems, the continent’s unbanked are gaining greater access to financial services

64 ICT The fast uptake of new technologies is creating demand for clever cybersecurity strategies. Including a message from Andrew Rugege, Regional Director for Africa, International Telecommunication Union

CONTENTS

GE HEALTHCARE

68 Healthcare Investment in infrastructure, service provision and training is needed for COMESA’s expanding healthcare market

72 Environment ‘Going green’ is a priority across Africa, and environmentally friendly policies are being put in place throughout the COMESA region

75 Water COMESA’s water sectors are awash with investment opportunities, from resource management to productive partnerships

78 Tourism COMESA’s tourism industries are working to develop in line with consumer trends. Including a message from Kaddu Sebunya, President, African Wildlife Foundation

COMESA – COUNTRY BY COUNTRY

Country profiles A look at each of COMESA’s 19 member states, including details of investment agencies and other relevant organisations

68-71

103

Invest in the

COMESA Region 2017

COMESA national investment agencies

Managing Editor Barry Davies Senior Editor Emily Eastman Editorial Contributor Emilie Ally Art Director J-P Stanway Managing Director, Avaug Communications Martin Cousens

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© 2017. The entire contents of this publication are protected by copyright. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means: electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher. The views and opinions expressed by independent authors and contributors in this publication are provided in the writers’ personal capacities and are their sole responsibility. Their publication does not imply that they represent the views or opinions of the Common Market for Eastern and Southern Africa (COMESA) or Avaug Communications Ltd and must neither be regarded as constituting advice on any matter whatsoever, nor be interpreted as such. The reproduction of advertisements in this publication does not in any way imply endorsement by COMESA or Avaug Communications Ltd of products or services referred to therein.

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LEADERS’ PERSPECTIVES

His Excellency Hery Rajaonarimampianina President of the Republic of Madagascar and Chairperson of the COMESA Authority

OMESA is one of the most important economic groupings in Africa. As you are well aware, this Regional Economic Community comprises 19 countries, and maybe a little more very soon. It is a group of countries that face a paradox in Africa today, because although we are together, we do not really work as one. We are still importing a lot of goods from outside our region that we can produce in our countries. Africa is still importing much of its needs from Europe, Asia and the United States. This is a great challenge in Africa, which is why the African Union mandated us to achieve economic integration at regional as well as continental levels… We must take responsibility for the future of our people as it is only when we are together that we can effectively develop our continent. COMESA has a very important role to play in addressing the countless challenges, particularly in infrastructure, energy and agriculture, which is the main economic activity. We need to develop strategies that will allow us to progress in these various areas. We must also face the major challenges such as climate change. As we all know, climate change affects our countries’ production and development. We must forecast possible measures to be incorporated into our development plans where climate change is seen as a variable. Alongside this we are encouraging our countries to pioneer the development of renewable energy. Of course, we have already developed hydropower, but we also have to develop other sources of energy – such as solar, wind or biomass – in our different regions. Needs are there and it is thanks to energy that we will bring about development in the industrial and social sectors of our countries. For example, we need electricity to improve education and health sectors. And it is our commitment to preserve our planet in terms of environmental protection… In addition to these challenges, the most important issue is to develop intraregional trade and working towards eliminating tariff and non-tariff barriers; striving to overcome them while respecting the standards we put in place, which may be different from others, but not far from international standards… We are turning to our region knowing that it is full of immense resources and that it has great potential that we must exploit for the good of our people first and, of course, for the good of our respective countries.

XINHUA/ALAMY

Edited extracts from a speech given by President Rajaonarimampianina at the COMESA Secretariat in Lusaka, Zambia, on 8 June 2017

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LEADERS’ PERSPECTIVES

Flora Mutahi Second Vice Chairperson, COMESA Business Council; Chair, Kenya Association of Manufacturers

n our quest to secure the future of Africa, we need to build and invest in sustainable formidable economies by opening up borders across the continent, which is why it is exciting for me to be part of a team that is committed to increasing investments in the COMESA region. As the second largest continent in the world, we can grow our intra-trade to more than it stands at now – 10%. If we decide to make accessibility within Africa our number-one priority, and focus on investments inwards while developing means to ensure resources and commodities can easily move in and out of Africa, we will grow into a very powerful force in global trade. Many African countries have invested in a variety of projects to boost their economic prosperity, a majority having focused on building and expanding infrastructure extensively. These are aimed at ensuring that commerce thrives and socioeconomic development increases from opening up highways, building port capacity and railway development. Restricting movement is stifling economic growth for our countries in the COMESA region. Free movement of goods and people has been the catalyst of tremendous social, political and economic development in the world for years and we need to find ways to enable free movement to leverage each other’s strengths. Easy access not only provides a level playing field, but it also leads to a competitive market. Our competitive nature will not only be an advantage to our continent, but it will allow us to have the capability to compete in a global market. In order to build a sense of nationhood within the continent, we need to view our differences as our strengths. We need to grow and enrich each other’s social and cultural practices to create a close-knit African society that advances together towards the same pan-African goals. Most of the world’s resources come from within our borders and, therefore, I believe that trade with emerging economies should not overshadow our trade with each other. If we increase the movement of goods, capital, services and people within our continent, we will see a boom in sectors such as tourism and trade and, essentially, the sophistication of our economic structures. We all have the same goal in mind for economic advancement and sustainability and, if we look carefully, we will realise that as Africans we have more in common than that which is different.

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LEADERS’ PERSPECTIVES

LEADERS’ QUOTES HE Paul Kagame President, Rwanda — “People move more freely than ever before and communication within the region has become more affordable and convenient. It is easier to trade and do business with each other and we are collaborating to expand energy and transportation infrastructure. ...When the good progress made internally by each country is aggregated, the benefits are even better for everybody in our region… When we work together, we are all better off. When we work against each other, everyone is worse off… So let’s empower our institutions to do what they are supposed to do in support of our collective prosperity.” Extract from remarks made in March 2017 at the East African Legislative Assembly in Kigali

HE Pravind Jugnauth Prime Minister, Mauritius — “My vision is to make Mauritius a rainbow nation, an inclusive nation where all the different ethnic groups work peacefully, hand in hand, where all people are treated similarly, unhampered by artificial barriers or prejudices or preferences, a country where the people live healthily amidst a clean environment, and where women are treated with respect and dignity.” Addressing the nation on National Day 2017

HE Hailemariam Desalegn Prime Minister, Ethiopia — “As a continent, our development priorities are not exclusively global – there are regional as well as national dimensions to our development challenges and opportunities. …Our growth and transformation plans represent a new generation of development frameworks that go beyond poverty reduction. They underline our vision for industrialisation and structural transformation of our economy as a means for development and prosperity.” Extract taken from a speech at the Conference of Ministers of Finance and Planning in April 2016

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LEADERS’ PERSPECTIVES

HE Abdel Fattah el-Sisi President, Egypt — “Mankind should restore the core of their humanity through sharing knowledge, information and technology without any monopoly. They should unite in the face of threats. Since Egypt has always been an example of the accumulation of civilizations, she renews before you today her commitment to continue its contribution to enhancing coexistence inside the international family with a view to creating a world that is more secure and prosperous for our coming generations.” Conclusion from the president’s speech to the United Nations General Assembly in September 2016

HE Edgar Lungu President, Zambia — “We have to look to science and technology, commerce trade and industry, energy, health, water development, research and development, including education and skills development as essential components of our envisioned green revolution in Zambia …Diversification and industrialisation are important strategies government will employ to attain sustainable economic growth. [We need] to diversify away from copper to agriculture and manufacturing among other sectors of the economy so as to create wealth and prosperity for all.” Extracts taken from a speech to parliament in September 2016

HE Dr Barnabas Sibusiso Dlamini Prime Minister, Kingdom of Swaziland — “[The] sustainable development goals (SDGs), a universal push to transform our world, calls upon all of us to contribute to the development of our respective countries and continents. ...The theme of this [United Nations] session is indeed a cross-cutting subject which covers every aspect of life. We are pleased to inform this body that the kingdom has done a lot towards mainstreaming and popularising the SDGs through public awareness campaigns, education and training at all levels. The Kingdom of Swaziland has also integrated the goals to the national development framework. Furthermore, appropriate institutional arrangements have been put in place to ensure that the implementation of the goals is properly monitored at all levels.” Speaking in September 2016 in the morning session of the fifth day of the 71st Regular Session of the UN General Assembly (UNGA 71) in New York PHOTO: RWANDA, VENI MARKOVSKI; MAURITUS, PMO.GOVMU.ORG; ETHIOPIA, WORLD ECONOMIC FORUM/ ERIC MILLER; EGYPT, 360B/SHUTTERSTOCK; ZAMBIA, US EMBASSY ADDIS ABABA; SWAZILAND, COMMONWEALTH SECRETARIAT

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OMNIS:

A KEY PLAYER IN THE PETROLEUM AND STRATEGIC MINERAL RESOURCES SECTOR IN MADAGASCAR With 40 yearsâ&#x20AC;&#x2122; experience in the oil and gas industry and uranium exploration, OMNIS has always been at the fore when it comes to creating an incentivized and competitive environment for investment, helping partners access the latest exploration data to allow easy and reliable prospect appraisal. Today, all IOCs on the island are at an advanced stage of exploration. Some are in the production and commercialization stage, with an estimated 6,000-10,000 bpd of heavy oil produced for local consumption and exportation in the future. Madagascar has enormous untapped energy potential â&#x20AC;&#x201C; it boasts around 1.5 MMBLS of conventional oil, as well as proven reserves of gas and sandstone oil. OMNIS expects to promote 40 offshore blocks and onshore free blocks once the new code is promulgated. It also offers laboratory analysis and the treatment and characterization of mining and petroleum products.

21, Lalana RAZANAKOMBANA, Antananarivo 101 - Madagascar +261 20 22 242 83 | secdg@omnis.mg

05 sedimentary basins: 1,104,900 km²

• • • • •

Morondava: 616,200 km² Majunga: 171,200 km² Ambilobe: 46,500 km² East Coast: 196,700 km² Ambre Cape: 74,300 km²

Oil and Gas Resources Evaluation

•

Conventional: –– Geological resources: 1587 MMBBLS

•

Proven non-conventional reserves: –– Tsimiroro heavy oil: 1.7 MMBBLS –– Bemolanga sandstone oil: 2 MMBLS

•

Gas Resources: –– Manambolo Ouest: 2.9 Tcbf –– Sikily: 1.085 Tcbf –– Toliary: 0.7 Tcf

omnis.mg

•

Other figures: –– 40 blocks to be called for tenders –– 225 petroleum blocks requiring geophysical survey –– Currently 6,000-10,000 bbls/day heavy oil production and later 100,000-150,000 bbls/day

PROMOTING PROSPERITY

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ormed in December 1994, the Common Market for Eastern and Southern Africa (COMESA) is a free-trade area comprising 19 member states that cover a large expanse of the African continent. Its formation was, in part, a result of regional integration efforts aimed at facilitating structural transformation in Africa, whereby overcoming barriers and borders and encouraging countries to work together has deepened cooperation and fostered economic success. COMESA replaced a preferential trade area that had existed since 1981 and, as stated in its treaty, it was established “as an organisation of free, independent sovereign states which have agreed to cooperate in developing their natural and human resources for the good of all their people”. Its objectives are wide-ranging, largely focusing on promoting peace and security in the region and fostering sustainable development. Its core mandate is to promote economic prosperity through regional integration, essentially establishing a vast economic and trading unit that can overcome the barriers faced by individual countries in the bloc.

For more than two decades, the Common Market for Eastern and Southern Africa has brought countries together to facilitate development and promote peace and security

COMESA’s stated objectives are: To attain sustainable growth and development of the member states by promoting a more balanced and harmonious development of its production and marketing structures;

•

to promote joint development in all fields of economic activity and the joint adoption of macroeconomic policies and programmes to raise the standard of living of its peoples and to foster closer relations among its member states;

•

to cooperate in the creation of an enabling environment for foreign, cross-border and domestic investment, including the joint promotion of research and adaptation of science and technology for development;

•

to cooperate in the promotion of peace, security and stability among the member states in order to enhance economic development in the region;

•

to cooperate in strengthening the relations between the common market and the rest of the world and the adoption of common positions in international fora; and

•

to contribute towards the establishment, progress and realisation of the objectives of the African Economic Community (AEC).

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HENITSOA RAFALIA/ANADOLU AGENCY/GETTY IMAGES

INVESTING IN THE COMESA REGION

The AEC is an organisation of the African Union (AU), a continental union composed of 55 member states that, among other things, seeks greater unity and solidarity among African countries and nations. The AEC acts to establish free trade areas, customs unions, a single market, a central bank and a common currency, with the view to achieving economic and monetary union. COMESA is one of Africa’s many Regional Economic Communities (RECs), and these RECs form the pillars of the AEC. Together, they work towards establishing grounds for mutual economic development across Africa.

TRADE AND INVESTMENT One core objective of COMESA is to remove obstacles that block the free movement of people, labour and services. In October 2000, a free trade area was formed after nine of COMESA’s member states eliminated tariffs on products produced in the bloc. Today, COMESA has a free trade area among 15 of its member states. A customs union was launched in 2009, within which member states agree to lift duty charges on goods traded among them and apply the same rates of customs duty on goods imported from beyond their borders. Benefits of the COMESA customs union include increased cross-border investment, an enlarged market, fewer disparities in production costs for manufacturers, and more weight in World Trade Organisation (WTO) negotiations. Yet there are challenges too. Overlapping membership is one, as is protectionism and the proliferation of non-tariff barriers. Strong, transparent governance is a must if COMESA is to continue its positive development. In mid 2007, the Investment Agreement for the COMESA Common Investment Area (CCIA) was adopted. The agreement grants national and mostfavoured-nation status to COMESA investors and promotes and protects cross-border investments. Its core objectives include harmonising investment policies, regulations and legislation, and encouraging intra-regional trade. In late 2008, COMESA, the East

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Leaders pose for a ‘family photo’ at the 19th COMESA Heads of State and Governments Summit held in Antananarivo, Madagascar, in October 2016

African Community (EAC) and the Southern African Development Community (SADC) agreed to negotiate a tripartite free trade agreement (FTA) among these RECs. The process was lengthy, with the agreement officially launched in June 2015 and yet to enter into force. Once outstanding work on tariff liberalisation and trade remedies, among other things, is complete, this agreement could effectively create Africa’s largest free trade area, potentially boosting intra-regional trade by as much as one-third. In 2015, COMESA recorded a deficit in global trade as a result of fluctuating commodity prices in global markets. According to COMESA’s Assistant Secretary General for Programmes, Ambassador Kipyego Cheluget, provisional figures showed that COMESA’s global trade deficit was Potential boost $100bn in 2015, and 2014 to intra-regional and 2015 showed the highest trade as a result of levels of trade deficit recorded COMESA/EAC/SADC over a nine-year period. tripartite FTA “The level of COMESA trade has continued to grow, although it was affected for 2015 by the fluctuating prices of commodities on the world market. COMESA’s global total exports declined by 20% from $85bn in 2014 to $68bn in 2015,” said Dr Cheluget, speaking in late 2016 at the 32nd meeting of the trade and customs committee in Lusaka, Zambia. “Intra-COMESA trade represented 7% of total COMESA trade each year for the past four years. This level of intra-trade is low and calls for concerted efforts for our economies to move up the value chain so as to enhance the value of trade exchanges among our countries.” In addition, Dr Cheluget called upon COMESA member states to

1/3rd

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The 19 COMESA member states

Egypt

Libya

Sudan Eritrea

Djibouti Ethiopia

Uganda

Seychelles Rwanda Burundi

Kenya

Democratic Republic of the Congo Union of Comoros

Malawi

Mauritius

Zambia Madagascar Zimbabwe Swaziland

Further information on individual member states begins on page 82

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honour their FTA obligations and to resolve pending non-tariff barriers, which are having an impact on trade. As COMESA takes steps to deepen cooperation and integration among its member states, it has adopted a number of treaties and protocols. One example is the adoption of the COMESA Monetary Cooperation Programme, which targets the establishment of a monetary union by 2018. In order to do so, a number of stages need to be completed; for instance, introducing an informal exchange rate union and coordinating economic policies via a common monetary institution.

COMESA organs The COMESA Heads of State and Government (COMESA Authority) The Council of Ministers The COMESA Court of Justice The Committee for the Heads of Central Banks The Intergovernmental Committee

PROMOTING PEACE AND SECURITY COMESA’s efforts to ensure greater peace, security and stability are closely aligned with the AU’s African Peace and Security Architecture. This initiative is built upon a broad agenda that includes: early warning and conflict prevention; peacemaking, peace-support operations, peace-building and post-conflict resolution and development; promotion of democratic practices, good governance and respect for human rights; and humanitarian action and disaster management. COMESA has its own Committee on Peace and Security, consisting of high-level officials of the Ministries of Foreign Affairs of member states. Part of its role is to make recommendations to the COMESA Authority, which has implemented a system for faster intervention in regional conflicts. The system includes programmes to promote regional stability, with a

The Technical Committees The Secretariat

This focus has become a niche for COMESA because we recognise that peace processes do not end with the signing of agreements, but the phase that follows is critical for ensuring lasting peace.” COMESA also has a number of institutions that support the region developmentally. For example, the COMESA Regional Investment Agency, launched in June 2006, is charged with making the region a viable and attractive destination for investment. COMESA’s financial arm, PTA Bank (Preferential Trade Area Bank) is open to non-member states, and its mission is to extend development, advance regional growth and encourage greater regional integration via innovative financing instruments. The Association of Commercial Banks and ZEP-RE (PTA’s reinsurance company) are two more of COMESA’s financial institutions, the latter of which is tasked with promoting trade, development and integration within the COMESA region through trade, insurance and reinsurance business. COMESA itself has evolved a comprehensive decision-making structure. At the top sit the heads of state of each member country. A Council of Ministers is responsible for policy-making, and is supported by 12 technical committees and numerous advisory bodies that work with partner countries and the business community. Each member state also appoints liaison officers within their ministries who are responsible for day-to-day communications. COMESA came about as a result of lagging regional integration and sluggish growth. Since inception, the community has flourished, reducing poverty and setting the region on a sustainable development path. Continued cooperation, collaboration and coordination will be key to COMESA’s long-term success.

— COMESA has flourished, reducing poverty and setting the region on a sustainable development path long-term view of avoiding conflicts and tension, and post-conflict programmes where needed. Structures are in place for the involvement of both state and non-state actors, as well as strategic stakeholders. Speaking in Madagascar ahead of COMESA’s 19th Summit of the Heads of State in October 2016, COMESA Secretary General, Sindiso Ngwenya, discussed crisisprevention measures that have been implemented. “We have put in place a robust early-warning system on conflicts in the region, known as COMWARN, and completed our first structural vulnerability assessments, which we disseminated to all countries last year,” he said, before talking about how COMESA’s post-conflict programmes are reinforcing trade and investment into the bloc. “We are now at an advanced stage of establishing five border markets and access roads in the same region with an estimated budget of approximately €5m [$5.3m], mobilised from partners.

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THE CASE FOR INVESTMENT Sectoral development coupled with a developing consumer market in the COMESA region is not only drawing investors, but also creating globally competitive markets

ver the coming years, COMESA is expected to continue offering top returns on investments in all sectors. In June 2006, the COMESA Regional Investment Agency (RIA) first opened its doors. It was established with the aim of making the COMESA region an attractive investment destination, and now acts as the gateway to opportunities in all sectors within COMESA member states. The agency spearheads programmes and activities targeted at promoting cross-border and foreign direct investments in the region, and is

tasked with improving the business and investment environments within member states. To do so, it works with the regionâ&#x20AC;&#x2122;s investment promotion agencies in order to implement capacity-building programmes. Such activities fall in line towards one common goal: to create a fully integrated, internationally competitive and unified regional economic community in which goods, services, capital and persons can move freely for the sustainable economic development of the region. To achieve this, the COMESA RIA has chosen the route of fostering integration through increased trade and investment.

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The Tripartite FTA The

26 countries covered by the deal represent:

48%

of the African Union’s membership

51%

of continental GDP

more than

630 million people

Angola, Botswana, Burundi, Comoros, Djibouti, Democratic Republic of the Congo, Egypt, Eritrea, Ethiopia, Kenya, Lesotho, Libya, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Rwanda, Seychelles, South Africa, South Sudan, Sudan, Swaziland, Tanzania, Uganda, Zambia, Zimbabwe

The objectives set out in the COMESA RIA charter are: To make COMESA one of the major destinations for regional and international investors while simultaneously enhancing national investment; and To carry out other activities in the area of investment promotion, facilitation and advocacy complying with the COMESA Treaty.

•

The COMESA RIA provides a platform from which the private sector can interact with governments in the region. It is also an information hub where prospective investors can access a wealth of relevant information, such as details on legislation and policies that affect the

Memorandums of Understanding (MoUs) with the Islamic Development Bank Corporation, the Jeddah Chamber of Commerce and Industry, the Bahrain Chamber of Commerce and Industry, the Sharjah Chamber of Commerce and Industry and the Federation of Arab Chambers of Commerce. In 2010, the COMESA RIA established a partnership agreement with the Dubai Chamber of Commerce and Industry. As well as these long-standing partnerships, interest from the Middle East is being piqued by the formation of Africa’s Tripartite Free Trade Area. This is a free-trade agreement between COMESA, the East African Community (EAC) and the Southern African Development Community (SADC) signed on 10 June 2015 in Egypt. The agreement creates an integrated

— For COMESA, the Tripartite free trade area is considered a milestone for Africa’s regional integration process business environment in individual countries and the wider region; the cost of doing business; investment incentives and procedures; major events that could have an impact on the investment environment; and in-depth and up-to-date details on investment opportunities and projects. The agency works closely with the investment promotion agencies of each COMESA member state to promote the region, both within Africa and to a global audience.

MARKET INTEGRATION In recent years, the COMESA RIA has established a number of affiliations, agreements and partnerships. Back in 2008, the COMESA RIA was elected as a member of the steering committee of the African Investment Promotion Agency. The following year, it established

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market comprising Africa’s three largest Regional Economic Communities (RECs). Days later, at the 25th African Union Summit in Johannesburg, South Africa, negotiations were launched to create an African Continental Free Trade Area (CFTA). The third round of negotiations concluded towards the end of last year. If successfully adopted, the CFTA would create a single market spanning all member states of the African Union – a market of more than a billion people with a combined GDP of more than $3trn. It would be the largest free trade area (FTA) in the world by number of participants. For COMESA, the Tripartite FTA is considered a milestone for Africa’s regional integration process. The 26 countries covered by the deal represent 48% of the African Union’s membership, 51% of continental GDP, and a population of more than 630 million. The region

INVESTING IN THE COMESA REGION

COMESA consumer market growth

$1.4trn

consumer spending reached

$1trn 313 million

middle-class consumers

has long been considered a main ‘Africa rising’ player, and this is supported by the growth seen here in recent years. Between 2004 and 2012, merchandise trade value within the Tripartite region grew from $23bn to $55bn – an increase of 140%. Such figures demonstrate the region’s resilience against global economic shocks. Notable progress has been achieved through ongoing structural change, market reforms and better macroeconomic management, and the Tripartite FTA reflects COMESA’s determination to promote international trade. These efforts will go a long way to tackling the inequalities that often eclipse the region’s successes in meeting its development targets, including those laid out in the United Nations Sustainable Development Goals.

STRATEGIC PLANNING In July 2016, representatives from member states gave their final input to the COMESA Medium-Term Strategic Plan for 2016-20. The plan, approved in October 2016, focuses on entrenching trade facilitation, market integration, developing infrastructure, industrialisation, institutional and regulatory policies, resource mobilisation and capacity development. At the review meeting, COMESA Secretary General Sindiso Ngwenya encouraged state representatives to enable it to contribute to economic and structural transformation in their respective countries. “Member states have a responsibility to domesticate the Strategic Plan through alignment with their National Development Plans and take on ownership of the implementation process,” he said. Such action is expected to bring particular benefit to small and medium-sized enterprises. Small businesses will also benefit from greater market integration, which presents challenges to the flow of goods and capital. “Intra-regional trade remains below 10%, transaction costs are high and huge

2016

2017

2018

2019

2020

obstacles exist to the free movement of goods, capital, investments and people in the form of non-tariff and technical barriers to trade,” said Ngwenya. “The need to transform our economies from an over-reliance on primary commodities and lowvalue-added products will continue to drive [the] planning and execution agenda.”

FUTURE DEVELOPMENTS What does this mean for investors? COMESA is putting everything in place to deliver many benefits to members and partners. In the long term, the region would offer investors a vast, harmonised, competitive market with greater industrial productivity in every economic sector. COMESA expects more agricultural production and greater food security, and is planning for the better exploration and exploitation of natural resources. In the finance sector, COMESA is laying the foundations for more harmonised monetary, banking and financial policies. Infrastructure-wise, the region is to be home to more reliable transport and communications infrastructure – a boon for any business. Not only that, but the COMESA region represents a growing consumer market. Its middle class comprises more than 313 million consumers, and consumer spending has broken the $1trn mark. By 2020, consumer spending is expected to hit $1.4trn. In addition, the region’s cities are growing, and prospective investors are increasingly seeking new market opportunities away from the naturalresources sector. According to Ernst and Young’s Africa attractiveness survey for 2014, financial services, technology, media and telecoms, and retail and consumer products are the three sectors that have been the primary beneficiaries of foreign direct investment. As the region continues to grow and develop, there will undoubtedly be a wealth of opportunities for investors in a wide range of sectors.

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n an increasingly globalised business environment, the role of foreign direct investment is more important than ever. In recognition of this, the governments of the COMESA region have put in place a series of measures and incentives to encourage greater levels of foreign investment, making it easier and cheaper to launch operations. Behind these prospects are burgeoning economies and dedicated agencies. For example, the COMESA Regional Investment Agency (RIA) is working hard to transform the region into an internationally competitive investment area, making opportunities for foreign direct investors simpler to identify and seize. The core task of the COMESA RIA is to make the region a major destination for both regional and international investors, while at the same time enhancing national investment. To do so, it is working to improve the investment environments within

DOING BUSINESS IN COMESA As business becomes ever more global in nature, governments are increasingly recognising the important role played by foreign direct investors. Now, COMESA member states are vying for their attention with competitive incentives

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COMESA member states, partly by identifying best practices and working alongside governments in order to help encourage their adoption at a national level. It is also responsible for gathering and disseminating information. This is done by sharing relevant information online at comesaria.org, and includes topics such as the cost of doing business, investment procedures, opportunities and general details in regard of the investment environment.

TAILORED ADVICE In addition, the COMESA RIA promotes the economic communityâ&#x20AC;&#x2122;s free trade area and common investment area, and places special focus on promoting investment opportunities that would have a positive impact on the region. But it is not all promotion. The COMESA RIA also recognises issues and barriers to investment, and actively identifies constraints before recommending measures to help overcome them, thereby contributing to a healthier environment for investors to operate in. Finally, the COMESA RIA provides training and development support to the national investment agencies of member states. There are, however, gaps within the region when it comes to ease of doing business. According to the

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World Bank’s Doing Business report from 2015 on the COMESA region, there is quite a large disparity within the area in terms of the ease of completing business transactions. Out of 189 countries, Eritrea ranks 183 for starting a business, while Burundi sits at 18. The Figures from the World Bank’s regional average ranking is 126. For registering a Doing Business report for 2015 property, Libya comes last at 189, while Rwanda ranks 15th. Eritrea is also the worst performer in the region for getting credit, ranking at No 1 185, while Rwanda comes in very close to Ease of for starting the top at number four. doing a business Where issues exist, they are being business tackled at national level with the support of rank COMESA’s overarching institutions. There has Burundi 157 been a measurable improvement in transparency within member states in recent years, and prospective Union Comoros 153 investors can generally access any relevant data, statistics or information they require.

Economy rankings

Starting a business 18 161

DR Congo

184

Djibouti

171

172

Egypt

122

Eritrea

189

183

Ethiopia

159

179

Kenya

116

Libya

188

163

Madagascar

167

183

Malawi

133

150

Mauritius

Rwanda

Sudan

168

156

Swaziland

111

154

Seychelles

137

Uganda

115

165

Zambia

105

Zimbabwe

161

183

BETTER BEST PRACTICE To attract greater levels of investment, COMESA developed a Double Taxation Agreement based on models from the Organisation for Economic Cooperation and Development (OECD) and United Nations (UN). Its establishment followed a review of international and regional best practice in solving double taxation issues, and seeks to simplify business transactions and make the fields of accounting and taxation more transparent. In doing so, there are fewer issues with cross-border investments, and economic trade and investment is further encouraged. Speaking at the time, the European Union (EU) representative in Zambia, Daniel Hurtado-Dominguez, explained the need to develop relevant trade and investment instruments to make the COMESA region more of a magnet for foreign direct investment. “Efficient and fair systems are crucial for, among other things, growth, poverty reduction and good governance as they tend to result in higher and more stable revenues, and sustainable Leading investments,” he said. for ease of Prospective investors can find support doing from the COMESA Business Council business (CBC), which is a business-membership organisation and a recognised private-sector institution of COMESA. Established in 2005, the CBC is the voice of the private sector in the region. It serves as a platform for three core services: business support services and linkages, policy advocacy and membership development, and addressing constraints to business and competitiveness in the region by influencing policy and increasing private-sector participation in the regional integration agenda. Private-sector development is the central focus of the CBC, which is managed by a board of

Source: The World Bank www.doingbusiness.org/rankings

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COMESA national investment agencies

Burundi Investment Promotion Agency www.investburundi.bi Union of Comoros www.invest-comoros.com

directors from nine of the national apex business associations of COMESA member states. The CBC’s stated focus is on: Key drivers of the regional integration agenda through the establishment of a competitive business environment;

• •

Smart and strategic advocacy for business;

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Organisational development for change and growth in the private sector;

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Membership development and services; and

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World-class business links and services

Democratic Republic of the Congo www.investindrc.cd/en

Djibouti www.djiboutinvest.com

Egypt www.gafi.gov.eg

Eritrea www.eritrean-embassy.se/invest-in-eritrea

Ethiopia www.investethiopia.gov.et

Kenya www.investmentkenya.com

Libya www.lia.com.mt/en

Madagascar www.edbm.gov.mg

Malawi www.mitc.mw

Mauritius www.boimauritius.com

Rwanda www.rdb.rw/home.html

Sudan www.sudaninvest.org

Swaziland www.sipa.org.sz

Seychelles www.sib.gov.sc

Uganda www.ugandainvest.go.ug

Zambia www.zda.org.zm

Zimbabwe www.investzim.com

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As the voice of business interests in the region, the CBC works to promote the creation of a market-driven economy as well as effective regional integration, competitiveness, trade and investment. The CBC has high-level partners: the EU; USAID; the International Trade Centre; International Lawyers and Economists Against Poverty (ILEAP); and the Canadian International Development Agency. The CBC is a great place to start for prospective foreign investors. The organisation facilitates networking events, including the COMESA Business Forums and international trade fairs, and disseminates information through its website, comesabusinesscouncil.org. The CBC is constantly collecting, analysing, interpreting and responding to information and member needs, and is the foremost place to gather the latest information relating to regional integration, trade and investment opportunities, policy developments and relevant global and regional trends and events.

ADDITIONAL SERVICES The CBC also provides business advisory and capacitybuilding services: organising technical and skills-based business training and management courses; facilitating business links and strategic partnerships, including joint ventures; assisting in the establishment of primary business membership organisations and associations; providing tailored consulting services for things such as regional tax issues and credit guarantee; and establishing regional sectoral organisations aimed at enhancing competitiveness in the COMESA region. Prospective investors to the region should contact the COMESA RIA or COMESA CBC for advice and information on the country they’re interested in operating in. To find out more details of the unique investment incentives available in each COMESA member state, investors can also visit the websites of the national investment authorities (see left).

UNECA

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UNECA, an agency of the United Nations, plays a key role in researching and formulating policies that foster economic development in Africa

stablished in 1958, the United Nations Economic Commission for Africa (UNECA) is one of the UN’s regional commissions, mandated to promote the economic and social development of members states, foster intra-regional integration and promote international cooperation for the continent’s development. Following a recommendation of the UN General Assembly, UNECA was established by the UN Economic and Social Council to encourage economic cooperation among its 54 member states across the African continent. It is the oldest pan-African institution. The UNECA is the only UN agency authorised to operate at regional and sub-regional levels to use and mobilise resources and bring them to bear on Africa’s

priorities. A key role is collecting current and original regional statistics for determining policy, developing capacity and providing advisory services. The work of the commission is structured within several programme divisions. The African Centre for Statistics (ACS) is mandated to help support economic and social development within the member states, as well as promote regional and international integration and encourage international cooperation that underpins the continent’s development. Crucially, the ACS is responsible for statistical analysis, the results of which are used to enlarge the capacities of African countries and support their economic and social development. Part of the ACS’s work is to improve statistical coordination at the UNECA Secretariat. The

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benefits of this trickle down into African economies, whereby statistical systems in individual countries follow suit and are enhanced. The role of the centre involves the promotion, coordination and advocacy for statistical activities in Africa – particularly for growing capacity within member states to produce and use demographic and social statistics; establishing a data hub at the UN Economic Commission for Africa that focuses on providing data on the continent’s development; keeping track of the informal sector and rates of informal employment; and supporting statistical training. In addition, it measures data found in specific sectors such as the environment and agriculture. The centre is involved in a number of statistics-related projects. One example is a project based around strengthening the capacity of African countries to use mobile technologies to collect and disseminate data for effective policy and decision-making. This is designed to help establish UNECA as an authoritative source of original data on Africa. The ACS is carrying out essential work in statistical development across Africa, preparing reports on activities across the continent and conducting vital research in a number of areas. The centre is also advocating resource mobilisation, ensuring that the data is used and analysed in efficient and effective ways.

Fostering a favourable environment for privatesector growth and the development of the financial sector is an important feature of UNECA, as is action undertaken to reduce poverty across the continent. The organisation is active in its encouragement of African countries to pursue strategies that work towards sustainable, equitable growth and development, based on the implementation of policies that serve this development.

SOCIAL DEVELOPMENT POLICY

Social development covers a broad range of areas, including: living spaces; urbanisation; migration (nationally, regionally and internationally) and population distribution; health, fertility and mortality; and shifting age structures within populations. To this end, UNECA is involved in comprehensive research that supports policies directed towards equitable and sustainable development in Africa. The organisation develops tools and guidelines to facilitate the design and implementation of policies and programmes that support socioeconomic development, and its work extends to providing information on relevant global processes and development markers. Such information is crucial to development, as best practice is encouraged and social development moves on a positive trajectory. The organisation is now working in line with the post-2015 development agenda, which Egypt is consists of a number of comprehensive the leading social development goals.

MACROECONOMIC POLICY

In this particular area, UNECA places a contributor focus on collecting and analysing data, to COMESA preparing annual surveys and producing INNOVATION AND TECHNOLOGY region’s GDP informative reports and profiles on According to UNECA, “Africa is increasingly economic conditions, governance and becoming a key player in acquiring, the management of development across the generating and applying knowledge to development African continent. challenges. Yet more needs to be done to make The organisation supports inclusive growth and innovation play its part in the quest for transformation the sustainable development of the private sector. and diversification of the African economies. Ensuring fair employment opportunities, value Sustained support to help member states put in addition and positive economic transformation also place a favourable innovation environment to fall within its core focus areas. On macroeconomic address their pressing needs is required, such as policy, UNECA produces reports such as the Economic the green economy, industrialisation, and job and Report on Africa, which highlights best practice for wealth creation.” economic development and management. In recognising that more needs to be done, UNECA works on a knowledge-sharing basis, UNECA is building on past experience and focusing providing information on successfully coordinating on formulating, adopting and implementing policies and implementing new policies, and monitoring and pertaining to the use of new technology and evaluating their performance. The organisation also innovation that will drive transformation in Africa’s carries out policy studies both nationally and economic sectors. regionally, which look at things including economic The scope of UNECA’s work in the spheres reforms, capital flows and exchange rate management. of innovation and technology is vast, stretching

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PHILIPPE LISSAC/GODONG/DPA/PA IMAGES

INVESTING IN THE COMESA REGION

from the welfare of the continent’s people to the competitiveness of businesses operating here. To ensure that Africa doesn’t get left behind when it comes to the fast-moving world of technology, UNECA conducts research on national and regional innovation and technology systems, looking at how and where knowledge transfer occurs and how emerging technologies can support economic growth, particularly in key areas such as agriculture.

integration. Kenya scores highly on trade integration, productive integration and the free movement of people, while Ethiopia is last in the region in the overall dimension scores. The index comprises five categories: trade integration; regional infrastructure; productive integration; free movement of people; and financial and macroeconomic integration.

REGIONAL INTEGRATION AND TRADE

CAPACITY DEVELOPMENT

Much of Africa’s development plans rely on regional integration that supports intra-regional and global trade and plays a lead role in sparking economic growth. In this regard, the UNECA is channelling efforts towards promoting policies and programmes that strengthen economic cooperation across Africa. This is no small undertaking: integration is needed across all economic sectors if it is to support development and poverty reduction throughout Africa. From infrastructure and agriculture to the trade of goods and services and beyond, policy research is being undertaken on how best to encourage interactions that support deeper integration. As part of its work, the organisation created the ECA Regional Integration Index to help African states identify and, where necessary, improve integration activities. The index shows that, within COMESA, Egypt is the leading contributor of wealth creation, accounting for 35% of regional GDP, but is fourth for regional

UNECA defines capacity development as “the process through which individuals, groups and organisations, and societies deploy, adapt, strengthen and maintain the capabilities to define, plan and achieve their own development objectives on an inclusive, participatory and sustainable basis”. Its central aim is to promote the efficient and effective use of policy research within member states that would enhance the abilities of policymakers. Supporting governments and panAfrican institutions at individual, organisation and institutional levels is another core focus of UNECA, which saw its Capacity Development Strategy approved by the Conference of Ministers in Abuja in 2014. This strategy is reflective of UNECA’s role in supporting member states and Africa’s institutions in promoting, achieving and sustaining inclusive economic growth, and accelerating structural transformation, all within the context of the African Union’s priorities and its work towards Agenda 2063.

Exploring and developing alternative sources helps provide power to subSaharan Africa, where two-thirds of the population lives without electricity

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The New Partnership for Africa’s Development plan reaches into all areas of the continent’s economy, and COMESA member states are reaping the benefits of the plan’s strategic focus

COMESA AND NEPAD: WORKING TOGETHER he New Partnership for Africa’s Development (NEPAD) is a comprehensive economic development plan, which the African Union (AU) adopted in 2001 at the 37th Assembly of Heads of State and Government held in Lusaka, Zambia. The goal of the programme is to accelerate economic cooperation and integration among African states. To do so, NEPAD provides an overarching vision and policy framework that countries can work within. This framework has been strategically developed with primary objectives in place. These are:

•

To eradicate poverty;

•

To place African countries on a path of sustainable growth and development;

•

To accelerate the empowerment of women by fostering partnerships at country, regional and global levels;

•

To stop the marginalisation of Africa in the globalisation process; and,

•

To fully integrate Africa into the global economy.

NEPAD was established to escalate efforts in these areas, and African leaders have stepped up to realise a new vision for ‘Africa’s renewal’ – the plan’s ultimate vision.

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NEPAD’s strategic focus rests on factors that will improve and support African economies. It seeks to create favourable conditions that are conducive to investment, high economic growth and sustainable development. African countries have huge potential, and NEPAD works to realise this and increase their competitiveness in the global economy. It also seeks to transform the donor/recipient status quo that has, for many years, defined Africa’s relationship with the world’s developed countries and multilateral institutions. Instead, NEPAD aims to enhance the investment environment, increasing foreign direct investment to the continent to fuel social and economic development – a goal that aligns closely with the COMESA agenda.

TARGETED AND INCREASED INVESTMENT Specific economic areas have been identified for targeted and increased investments, including agriculture and food security; science and technology; trade and market access; infrastructure, covering energy, transport, water and sanitation, and information and communication technologies; the environment; gender; and capacity development. NEPAD is structured and organised under the governance of the NEPAD Planning and Coordinating Agency, which is responsible for implementing the AU development agenda. The NEPAD Agency is the technical body of the AU, and its core mandate it to facilitate and coordinate the implementation of priority programmes across the continent. It is also responsible for establishing relationships that lead to partnerships, mobilising resources and

INVESTING IN THE COMESA REGION

EDWIN REMSBERG / ALAMY STOCK PHOTO

knowledge management. The agency has worked to develop partnerships with international development finance institutions, including the the G7/G8, the World Bank, the European Commission and the United Nations Economic Commission for Africa (UNECA).

DEVELOPMENT PROGRAMMES Throughout NEPAD’s history, a number of development programmes have been established, including the Comprehensive Africa Agriculture Development Programme (CAADP), which aims to launch a ‘green revolution’ in Africa and is based on the central role that agriculture plays in development. COMESA signed the Regional CAADP Compact in November 2014, and NEPAD has provided technical training to member states for data collection, which enables countries to monitor high-impact indicators for Agenda 2063 – the AU’s long-term development strategy – and other regional, continental and global targets. Also, the Programme for Infrastructure Development in Africa (PIDA) comprises a number of transboundary infrastructure projects in transport, energy, water, and ICT. One example is the ZambiaTanzania-Kenya Transmission Line, whereby NEPAD is promoting power interconnection and the development of new power-generation projects to enhance electricity export potential. Other important initiatives include the NEPAD Science and Technology Programme and a Pan-African Infrastructure Development Fund to finance highpriority cross-border infrastructure projects. In November 2015, COMESA member states attended the Week of the Programme for Infrastructure

Women prepare produce at the Fruit and Vegetable Growers Cooperative in Meki Batu, Ethiopia. COMESA and NEPAD cooperate on agriculture programmes

Development in Africa, in Abidjan, Ivory Coast. Infrastructure development is a key focus of COMESA, and by working with NEPAD its members can look forward to accelerated development in this area. Infrastructure is not the only area in which COMESA and NEPAD are working together. In July 2015, they partnered to address the focal points of the CAADP in the COMESA region. One such focal point is the need to internalise the Malabo Declaration on Accelerated Agriculture Growth and Transformation for Shared Prosperity and Improved Livelihoods. The goals of the declaration include recommitting to enhancing investment finance in agriculture; ending hunger and halving poverty by 2025; and boosting intra-African trade in agricultural commodities and services. In November 2016, the NEPAD Agency held an information and knowledge-management training workshop with the African Union Commission and COMESA, with a focus on nutrition security and trade. This was held in support of the CAADP framework. NEPAD has also supported COMESA in efforts to combat and mitigate the challenges posed by climate change. In Ethiopia, for example, more than 1,300 women have received training in entrepreneurship, leadership and environmental protection and management. NEPAD is upscaling its projects for COMESA in the interlinked areas of gender, climate change and agriculture, and its interventions in all areas are delivering results.

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AFRICA RENEWAL/UN

Leveraging economic and social opportunity

Dr Ibrahim Assane Mayaki CEO of the New Partnership for Africa’s Development (NEPAD), explains why developing Africa’s infrastructure is critical to the social and economic growth of the continent

The aim of NEPAD is to transform Africa by eradicating poverty – a goal it feels can be achieved by bringing about sustainable economic growth within countries, regional economic communities (RECs) and the continent as a whole. Doing so will put Africa on a path of sustainable growth and development and enable it to harness the benefits of globalisation. However, sustainable economic development cannot be achieved in isolation. The African Union (AU) Agenda 2063 roadmap represents a common vision for Africa and its First Ten-year Plan is a strategic framework within which all existing development initiatives from the RECs can be pursued in an integrated and coordinated manner. It is within this framework that the NEPAD Planning and Coordinating Agency (NPCA), as the technical arm of the AU, has been given the mission to coordinate and implement this programme.

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Africa’s eight RECs (COMESA, ECOWAS, SADC, EAC, ECCAS, IGAD, CEN-SAD and UMA) are the building blocks of AU/NEPAD, meaning any development strategy needs to be implemented at the regional level to maximise success. Multinationals, fund managers and other investors give preference to regional – rather than national – markets in making decisions on where to invest because national markets in most African countries (including COMESA countries) are too small to attract investments on their own. The NEPAD Agency considers that the regional markets attract more investments as they have more consumers than national markets and hence more purchasing power. Therefore, implementation of programmes and projects for development should be at the national, sub-regional and regional levels. The accomplishment of this requires the integration of countries’ economies within the RECs as well as between them, to enable the pooling of resources and improving the economies of scale needed to encourage the large investments required for the continent’s development. Factors determining the inward flow of foreign direct investment (FDI) are generally well known and may be grouped in three categories: basic economic factors including per capita GDP, GDP growth rate, economic integration, the difference in the rate of return on capital across countries/region, the portfolio diversification strategy of investors and market size of the host country/region; trade and the exchange market policies including trade liberalisation and exchange rate movements; and other, but very essential aspects of the investment climate such as infrastructure, labour costs and availability of skilled labour/ education, incentive factors, political risk, and the role of institutions. Indeed, the lack of funding for investment programmes and projects has truly never been a real problem for Africa. The money is there waiting to be invested in a continent offering profitability levels not seen elsewhere in the world. What Africa really needs is a driving force,

INVESTING IN THE COMESA REGION

— NEPAD is focusing on developing infrastructure within its development corridors to fast-track the industrialisation of Africa an authority responsible for identifying projects and ensuring they are viable; for defining clear rules that provide visibility for investors; for coordinating and serving as a catalyst for various initiatives at a national level while partnering with the private sector. Moving forward with investment for development and regional integration in Africa requires a conducive business environment to good governance at both micro- and macroeconomic levels. The COMESA region offers top returns on investments, and with the quality of its workforce and it central logistics position in the continent the bloc is likely to remain a regional business hub and retain regional FDI advantages. The COMESA region continues to attract substantial amounts of investments coming from large transnational companies in sectors such as petroleum and tourism, but also from other areas such as the small transnational corporations, stand-alone foreign entrepreneurs and diaspora investments. With a market of 456 million people, a growing middle class and consumer base, membership of the Tripartite Free Trade Arrangement – which covers a market of around 620 million people – and a GDP of $1.2trn, COMESA is well positioned to attract more large-scale investments and continue along its development path. Based on the seven aspirations of Agenda 2063 and the development initiatives of the RECs, the NEPAD Agency identifies four priority focus areas: regional integration, infrastructure and trade; natural resource governance; agriculture and food security; and science, technology and innovation, human capital development and youth employment.

These programmes are the foundation upon which the NPCA, partnering with stakeholders including COMESA, wants to develop the continent, encourage international investment and participate fully in the global economy.

TOWARDS CONTINENTAL INTEGRATION The NEPAD Agency considers infrastructure as one of the most important factors for investors, and one of the leading components of economic, trade and human development for the countries and peoples of Africa. The development of infrastructure and energy capabilities are seen by NEPAD as vital building blocks towards the achievement of regional integration and ultimately continental integration. Therefore, NEPAD is focusing on developing infrastructure within its development corridors to fast-track the industrialisation of Africa. Under this framework strategy, NEPAD encourages public-private partnerships, especially in infrastructure projects. Private-sector involvement in COMESA programmes and projects is crucial, because the business world can provide resources to fund projects and leverage expertise to help COMESA reach its objectives. The bloc is one of the largest RECs and has its own common investment area, where there are many opportunities for investors in areas such as agriculture and related activities (agro-processing and agri-business, and large-scale commercial farming), mining and minerals, services, and manufacturing. NEPAD and COMESA can collaborate on targeted feasibility studies to identify further areas and opportunities for foreign investment.

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From encouraging deeper integration to ensuring more global currencies can be used in markets, action is being taken throughout the COMESA region to make it a more attractive place to do business

COMESA’S CENTRAL BANKS n most countries of the COMESA region there is a gap between total investment needs and the mobilisation of domestic resources. In these economies, fiscal policy is key to creating an environment for rapid economic growth and monetary integration that will culminate in monetary union. COMESA has a number of viable financial institutions. The Preferential Trade Area (PTA) Bank is a trade and development institution and official financial arm of COMESA. In September 2016, the bank signed a memorandum of understanding (MoU) with the US Export-Import Bank, under which the banks will explore using up to $100m in export-import bank financing programmes. ZEP-RE, PTA’s reinsurance company, is launching an academy to provide training and technical skills to insurance executives. Another major institution is the African Trade Insurance Agency, which recently opened branches in Ethiopia and Zimbabwe. In both countries, the agency has a project pipeline estimated at more than $1bn. Other institutions include the African Commerce Exchange and the COMESA Monetary Institute, and all of them are making significant contributions to the COMESA region’s financial and monetary landscape.

REGIONAL COOPERATION In November 2015, the 21st meeting of the COMESA Committee of Governors of Central Banks endorsed a 2016 work plan for the COMESA Monetary Institute and the COMESA Clearing House. In part, the plan dealt with public debt management in member states. In his statement at the meeting, COMESA Secretary

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General Sindiso Ngwenya emphasised the important role of regional monetary cooperation programmes in achieving wider continental integration. “Integration allows our societies to create more economic, social and cultural linkages among our people and serve as a vehicle for enhancing the region’s competitiveness and attractiveness to investors,” he said. “It is also an important instrument to mitigate external shocks. In this regard, the consolidation of our free-trade area, the full operationalisation of the customs union and implementation of the COMESA Common Investment Area will lead to macroeconomic stability, improved governance, increasing competitiveness and diversification of our economies.” Ngwenya proposed to put monetary cooperation on the Tripartite agenda between COMESA, the East African Community (EAC) and the South African Development Community (SADC). Doing so, he said, would speed up the integration being pursued by the Association of African Central Banks (AACB). Economic growth in 2015 was higher than the average global rate, fitting the ‘Africa rising’ narrative. “The growth in COMESA was underpinned by private consumption and gross capital formation supported by improved governance and macroeconomic management, continued urbanisation and a rising middle class driving aggregate demand, and diversified trade and investment ties with emerging economies,” said Ngwenya. “In a number of countries, there was also improvement in the business environment. The lower international oil prices are also boosting growth in member countries since most of our economies are importers of oil.”

INVESTING IN THE COMESA REGION

Despite this good news, Ngwenya expressed Ngwenya has been asked to lead a task force concern at existing vulnerabilities, especially on comprising the COMESA Clearing House, PTA the fiscal front and in an unfavourable external Bank, COMESA Business Council and other relevant environment. The meeting addressed issues relating institutions to work with central banks and traders and to monetary integration in the COMESA region, encourage them to channel all their payments and and Ngwenya spoke of the Regional Payments and receipts through the REPSS. Settlement System (REPSS), which was introduced in Also speaking at the 2015 meeting was Bank of late 2012 and is aimed at creating a common payment Uganda Deputy Governor Louis Kasekende, who area for COMESA member states. REPSS is a multilateral urged COMESA’s central banks to tighten loopholes to netting system with end-of-day settlement in a single prevent money laundering. “We need to strengthen the currency, providing a gateway for the region’s banks framework for monitoring illicit flows related to money to effect payment in a multicurrency environment. laundering and financing of terrorism,” he said. “A more This increases intra-regional trade, as traders are able vibrant financial system should result from broadening to pay and be paid through an efficient, cost-effective the spectrum of players, instruments and products, platform. The system offers a raft of benefits including: engendering competition and innovation; fostering reduced transactional costs; real-time fund transfers macroeconomic and financial stability.” across borders; enhanced safety through new Calls for deeper integration have been a recurring infrastructure; increased accessibility; faster theme. Dr Bwalya Ng’andu, Bank of Zambia AUGUST: settlement; greater reliability; and improved Deputy Governor in charge of operations, Transactions processed on the REPSS reached almost $14m

Regional Payments and Settlement System was introduced

2012

SEPTEMBER: PTA Bank signed an MoU with US Export-Import Bank

2015 2013

2016

2014

NOVEMBER: COMESA Committee of Governors of Central Banks endorsed a 2016 work plan for the COMESA Monetary Institute and the COMESA Clearing House

risk-control mechanisms. The platform is considered central to COMESA’s path to achieving full regional economic integration.

A ROBUST FINANCIAL SYSTEM In October 2016, it was announced that the Chinese yuan and the Indian rupee would be included in the REPSS, joining the US dollar and the euro. The system also has provision for the British pound, Japanese yen and Swiss franc. “This inclusion as the sixth and seventh settlement currencies would make REPSS more robust and meet the growing needs of payments and settlements in the fast-changing financial world,” said Director of the COMESA Clearing House Mahmood Mansoor, speaking to delegates at the 36th intergovernmental meeting in Madagascar. As of August 2016, transactions processed on the system reached almost $14m. The central banks of the Democratic Republic of Congo, Kenya, Malawi, Mauritius, Rwanda, Sudan, Uganda and Zambia are operating on the system, and at the end of last year Egypt and Sudan were poised to begin live operations.

OCTOBER: Announcement that the Chinese yuan and the Indian rupee would be included in the REPSS

said that closer trade integration within the region and deeper monetary and financial integration would positively impact COMESA’s economic performance. Leaders in the COMESA region have long acted to improve the financial landscape. Initiatives such as the COMESA Multilateral Macroeconomic Surveillance Framework are targeted at improving fiscal conditions in member states, as well as creating and maintaining a more effective monetary policy throughout the region. Closer trade integration within the COMESA region aligned with deeper financial integration would no doubt bring significant benefits to the economic performance of member states. Central banks must continue in their crucial role of mitigating risks relating to global monetary policy and macroeconomic developments, as well as overall financial stability. Some areas that require closer attention are low savings rates relative to GDP, the relatively small scope for economies of scale, and the need for the diversification of risk. A regional approach to these and other issues could be the answer, offering advantages beyond borders and encouraging competitive, efficient economies.

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SPONSORED FEATURE

THE STATE OF THE MACROECONOMY

Prof Emmanuel Tumusiime-Mutebile, Governor/Chairman, Bank of Uganda gainst the backdrop of adverse weather conditions on agricultural output, economic activity slowed markedly in the first half of 2016/17. Real economic activity expanded by 0.8% in Q2-2016/17, from a contraction of 0.1% in Q1-2016/17. The recovery in Q22016/17 was supported by services sector that increased by 2.1%. In contrast, the agricultural sector activity has contracted for four consecutive quarters since Q3-2015/16, declining to minus 2.2% in Q2-2016/17, while

the industrial sector contracted by 0.7%. The contraction in the agricultural sector was on account of unfavourable weather conditions which affected harvests of agricultural output. On account of the weak economic performance in the first half of 2016/17, the domestic economic growth outlook remains subdued. The continued weak performance of the agricultural sector, lower public expenditure and subdued private sector credit will offer little support to growth. Consequently, the projected real GDP growth of 4.5% in FY 2016/17, which is already lower than the outturn of 4.8% in FY 2015/16, is unlikely to be achieved. Nonetheless, the economy is projected to perform stronger in FY 2017/18 and over the medium-term, supported mainly by improvements in the agricultural sector activity, a recovery in domestic demand, increased public infrastructure investments, whose multiplier impact on growth is stronger in the medium-to-long-term and strong macroeconomic stability. The overall objective of Bank of Uganda’s monetary policy is to achieve low and stable inflation, defined by the medium-term target of 5.0% of core inflation. Bank of Uganda has since July 2011 used the Inflation Targeting Lite (ITL) monetary policy frame work

in guiding its monetary policy operations, adjusting its policy rate – the Central Bank Rate (CBR) – in line with aggregate demand and the outlook for inflation. During the first nine month of FY 2016/17, inflation remained subdued, with core inflation averaging 5.2%. The medium-term outlook is well anchored around the BoU’s medium term target of 5.0%, driven by low cost pressures due to relative exchange rate stability and subdued domestic demand. The domestic and external risks to the projected inflation and output path remain broadly balanced. Consequently, maintaining a cautious monetary policy stance has been critical, to support economic activity. Therefore, the CBR has been cautiously eased by an accumulated 400 basis points to 11.0% in April 2017 from 15.0% in July 2016. Bank of Uganda pursues a flexible exchange rate policy to ensure that the balance of payments is sustainable, but intervenes in the foreign exchange market only to dampen disruptive volatility in the exchange rate and not to impede exchange rate adjustments – which are necessary to maintain external balance. During the first half of FY 2015/16, the shilling shed 17.2% largely on account of a weak current account balance, global strengthening of the United States Dollar and speculative

SPONSORED FEATURE

behaviour in the foreign exchange market associated with the 2016 general elections. The exchange rate since been stable largely on account of subdued demand for imports and large portfolio inflows, particularly for investment in treasury securities. More lately however, the exchange rate has come under renewed pressure, but this is necessary to ensure that Uganda remains competitive against its trading partners. On an annual basis the Shilling depreciated 6.9% in March 2017, up from 4.4% in February 2017. The nominal effective exchange rate, which depicts the Uganda shilling against a weighted basket of its trading partners, shed 3.8%, from 1.7% over the same period. The latest depreciation is mainly attributed to general dollarstrengthening as US monetary policy normalises, and an uptick in corporate dollar demand, notably from oil importers, manufacturers, and telecom companies.

THE PERFORMANCE OF THE BANKING SYSTEM AND INVESTMENT OPPORTUNITIES IN THE FINANCIAL SECTOR Since the early 1990s, substantial reforms have been undertaken in recognition of the crucial role of the financial sector in the development process. Today, the banking sector as a whole, comprising 25 commercial banks, five microfinance deposit taking institutions and four credit institutions, is adequately capitalised to withstand any shocks. As at end of September 2016, all commercial banks, save for Crane Bank, met the minimum regulatory capital adequacy requirements, with an aggregate industry-wide tier 1 capital adequacy ratio and total capital adequacy ratio of 19.0% and 21.7%, respectively. The total capital to risk weighted assets

stood at 22.5% compared to 20.1% in September 2015. The average return on equity (ROE) and return on assets (ROA) declined from 29.5% and 4.4% in 2011/12 to 13.8% and 2.2% in 2015/16, respectively. Bank funding conditions also remain stable, with deposits contributing 81.5% of the total funding of the banking sector, while banks’ annual after tax profits during the first half of 2016 are estimated at Shs. 214.2 billion, slightly below Shs. 269.8 billion realized during the corresponding period of 2015. Although the ratio of nonperforming loans to gross loans rose from an average of 4.3% in 2015 to 8.3% in June 2016, they declined to 7.7% in September 2016 and are still lower than the average of 12.7% in 2010. The level of savings mobilization and financial intermediation – the extent to which banks convert the deposits that they mobilise from the general public into loans – has greatly increased. Private sector deposits as a ratio of GDP increased from 5.3% 1992 to 17.0% in 2016. Over the same period, private sector credit as a share of GDP also rose from about 5.0% to 15%. The expansion of outreach has also been very impressive. In the year 2000, there were 129 branches of regulated financial institutions in Uganda. By the end of 2016, the branch network had risen five-fold to 706. The number of Automatic Teller Machines (ATMs) in the country has also more than doubled from 405 in 2008 to 922 as at December 2016. All these developments have led to increase in access to financial services. The percentage of the population aged 16 years and above accessing financial services has risen from about 30% in 2006 to over 85% – a good sign of financial inclusion. The phenomenal growth of mobile money services has brought

access to basic payment services within reach of millions of Ugandans who do not have ready access to bank branches or own a bank account. To improve credit risk management in the financial sector, Bank of Uganda launched the Credit Reference Bureau (CRB) and the associated Financial Card System (FCS) in December 2008. Ultimately, CRBs will assist in making credit accessible to more people, and enabling lenders and businesses to reduce risk and fraud associated with default. Notwithstanding this remarkable improvement, the financial system remains relatively underdeveloped, not just in terms of its small size in relation to GDP, but also in terms of its lack of diversity. Commercial banks hold about 80% of the total assets of the financial system. Equity markets are poorly developed. As such, the new investment frontiers in the financial sector should focus on deepening and broadening the financial system and increasing financial inclusion in such areas as: multinational banking groups that promote new financial products, including commercial banking, Islamic banking, agent banking, Bancassurance, venture capital, lease financing and more of microdeposit taking institutions that provide banking services in the unbanked rural areas, and in the insurance sector.

Bank of Uganda P.O Box 7120, Kampala, Uganda Tel Fax Email Web

+256-414-259-090 + 256-41-4230878 info@bou.or.ug www.bou.or.ug

ENERGY AND POWER

PRIORITY INVESTMENT SECTORS

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Africa has vast – and largely untapped – renewable energy potential, with some of the best opportunities for investment within the COMESA region

PRIORITY INVESTMENT SECTORS

eveloping energy infrastructure almost 2,000 stakeholders including government is one of COMESA’s priorities, and representatives, financial investors, power technology this development is taking place providers and engineering, procurement and in a rapidly evolving environment. construction contractors. The event is renowned Between 2000 and 2015, energy use for uniting individuals and organisations to form in sub-Saharan Africa increased by 45%, yet demand partnerships, identify opportunities in the sector and has shifted from fossil fuels to renewable sources collectively move the industry forward. Five major deals as governments work to ‘green’ their economies. and mergers took place during the London forum, with Amid changing energy policy frameworks and Managing Director of EnergyNet UK Simon Gosling shifting demands in the energy market, investors saying that $2 billion worth of deals and mergers and are required to adapt and respond. acquisitions had been announced during the event. According to the recently published African Energy The forum takes place in a different location Resource Atlas, agencies are queuing up to support in Europe each year to facilitate meetings between privately promoted developments, indicating that European and African stakeholders. Simon Currie, independent power projects and other investments Global Head of Energy at Norton Rose Fulbright, said, could bring in the capital needed to provide green, “we come here to see our friends, to do deals, and move sustainable energy across Africa. With governments forward towards a world where we will not sit there and public-sector bodies unable to provide the cash saying ‘Africa has a low electrification rate’. That required to meet ambitious energy targets, it has will not be the future for us anymore”, referring to fallen on institutions such as the World Bank and the fact that the forum helps to bring life to Africa’s African Development Bank to fund power projects. energy sector, rather than just acting as a talking However, bilateral organisations are shop for passive discussion. stepping up. The report notes that the UK’s There was high interest in off-grid CDC Group’s decision to return to African ventures and technologies at the event, energy investment after a decade and as a result of this enthusiasm away reflects a trend whereby bilateral organiser EnergyNet last year development finance institutions announced plans to launch the first are playing a key role in mobilising Africa Energy Forum – Off the Grid increase investment. Mohamed Hassan, in Dar es Salaam, Tanzania. The first Coordinator at the Infrastructure event of its kind was dedicated to off-grid Consortium for Africa (ICA), says that energy projects in Africa, and the 2016 “the private sector is increasingly playing launch event built on the momentum of the an important role in resource mobilisation, with banks and institutional investors channelling funds for public investment in infrastructure, including energy use in sub-Saharan Africa roads, power plants and water facilities”. Taking the trend further still, the ICA’s 2015 African Infrastructure Investment Survey found that some African Energy Forum. It took place on 6-8 December 88% of energy investors who responded said they 2016, and brought together ministries of energy, intended to increase commitments. However, the rural electrification agencies, business bodies, banks, ICA noted that though large-scale projects are being regulatory agencies, multilateral organisations and taken care of, “participation in regional projects off-grid businesses to discuss prominent issues appears too challenging for most private-sector concerning the rolling out of off-grid projects investors and developers”. throughout sub-Saharan Africa. Galvanising There is, however, hope for smaller-scale regional communities to bring energy to markets is a central projects, which were in the spotlight at the 2016 Africa goal of the forum. This event is the most established Energy Forum in London. investment-level conference for Africa’s power sector, The event has long been established as an and last year it concentrated on opportunities for mini international marketplace where governments and and off-grid technology providers and developers. Africa’s power utilities come together with the wider EnergyNet has also launched the Off the Grid energy industry to focus on the delivery of power Club, a membership programme developed to unite infrastructure projects across Africa. The 2016 event credible off-grid technology providers, financiers and marked the 18th annual forum, and was attended by regional leaders to invest in and develop reliable and scalable power solutions for Africa. The club Energy use in sub-Saharan Africa is rapidly increasing, and demand is shifting away from fossil fuels to renewable sources seeks to create partnerships, making it easier

TOM GILKS/ALAMY

INVEST IN THE COMESA REGION 2017 /

POWER AFRICA

PRIORITY INVESTMENT SECTORS

to scale products and bring them to market more quickly. Benjamin Hay, Director of Strategy and Investment at Virgin Unite, the non-profit foundation of the Virgin Group, says that “with the sustainable development goals hoping to deliver affordable, reliable and clean energy for all by 2030, Off the Grid provides a wonderful platform to build partnerships with individuals and organisations who want to help achieve this ambition”. Big names from the COMESA bloc gave their support to the event, with speakers including Simon D’Ujanga, Uganda’s

Kenya’s Olkaria complex is Africa’s first geothermal power plant

— Libya expects to see an almost 6% growth in its renewable energy investment market to 2020 Minister of State for Energy, Isaac Kiva, Director of Renewable Energy at Kenya’s Ministry of Energy, and Dr Benon Mutambi, Chief Executive Officer of the Electricity Regulatory Authority in Uganda. Energy finance specialist from the World Bank Ferhat Esen also shared his expertise and insights with delegates. In October 2016, COMESA member states were urged to enhance their powergeneration capacity in order to support industrial growth and increase access in rural areas. In a statement released ahead of the iPAD Rwanda Energy Infrastructure Forum in Kigali on 1-2 November 2016,

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COMESA Assistant Secretary General Dr Kipyego Cheluget said access to power for industrial and commercial use is a key driver of job creation. He also said that the COMESA bloc will fast-track implementation of key electricity and interconnection projects as part of efforts to support this goal. Projects falling under these plans include the ZambiaTanzania-Kenya power interconnector and the Uganda-Rwanda, Rwanda-Burundi power interconnector projects. “Regional countries also need to tap into opportunities in the renewable energy sector to accelerate the achievement of targets on universal access to electricity, as well as ensure sustainable development in the bloc,” says Cheluget. By 2018, Rwanda aims to provide access to electricity to 70% of its population, and solar technology could play a major role in this. Support to COMESA’s energy markets is emerging from around the world. For example, the European Bank for Reconstruction and Development has allocated approximately $545 million to support renewable energy in Egypt, while Libya expects to see an almost 6% growth in its renewable energy investment market to 2020. In Madagascar, around 360 renewable energy projects are under way or in the pipeline. In addition, the UK is stimulating investment plans by British firms in the Kenyan renewable energy sector, with the British High Commissioner to Kenya saying that the country has one of the most active renewable energy sectors in Africa. Evidently, there is vast scope for private investment in COMESA’s rapidly growing power sector, with activity to improve access and deliver greener energy options bearing good returns on investment.

PRIORITY INVESTMENT SECTORS

MINERALS COMESA is working alongside global partners to enhance its mining sector, and with vast mineral wealth waiting to be explored, the bloc is not short of interest from prospective investors

BLAIZE PASCALL / ALAMY STOCK PHOTO

ust over three years ago, COMESA began working with Western Australia to implement an agreement on developing the blocâ&#x20AC;&#x2122;s mining sector. At conferences, parties discussed issues surrounding mineral policy and environmental regulation in Kenya and Uganda. The agreement is intended to eradicate the hurdles that have impeded development in COMESA member

Zambia has been a key African nation in collaborating with Australian mining companies

states; it is said the bloc has mineral and oil wealth worth trillions of dollars, but these resources remain largely untapped. COMESA Secretary General Sindiso Ngwenya noted at the time that many member states not only lacked relevant expertise, but also faced financial constraints and, therefore, struggled to foster economic transformation. â&#x20AC;&#x153;We need to strengthen legal and institutional frameworks of member states to create the enabling

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IVANHOE MINES

PRIORITY INVESTMENT SECTORS

According to KPMG, the Democratic Republic of Congo has the greatest mining potential across the entire continent of Africa

$24 trn

Estimated mineral wealth of the DRC in 2009

environment to unlock the value of our minerals and other natural assets to enable full integration into local economies,” he said. Ngwenya met with former Western Australia premier Colin Barnett in September 2014 during the Africa Down Under Mining Conference, where the leaders agreed on a schedule to implement the Memorandum of Understanding (MoU) signed the previous January. The conference is an annual event that brings African governments together with business leaders, investors, consultants, financiers and executives from mining services industries. The areas covered by the MoU are fiscal frameworks and mineral policy; strengthening human and institutional capacities; and collection and management of geo-scientific information, as well as research and development; environmental and social issues; and linkages, diversification and cluster development. The 2014 MoU marked the first major action taken by COMESA to exploit the region’s mineral wealth. It came after the COMESA Summit of that year, during which heads of state from the bloc’s member countries agreed to make use of the region’s mineral wealth as an anchor for transformation.

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One example of the region’s potential is in the Democratic Republic of the Congo (DRC), home to minerals including cobalt, diamonds, gold and copper. In 2009, the country’s mineral wealth was estimated at $24trn, but exploration and exploitation has been hindered by poor infrastructure and political instability.

HARMONISING POLICIES The initiative with Western Australia is intended to harmonise policy across COMESA member states, with a core focus on legal and regulatory frameworks. The policy is guided by the broader Africa Mining Vision (AMV), which was adopted by African heads of state in February 2009 at the African Union Summit. The AMV is the continent’s response to tackling the paradox of significant mineral wealth existing alongside pervasive poverty. As well as improving mining regimes by ensuring that tax revenues from mining are optimised and spent appropriately, the AMV seeks to better integrate mining into development policies at local, national and regional levels. It wants workers and communities to see and reap the benefits from large-scale industrial mining, and aims to empower nations so that they are better able to negotiate contracts with mining multinationals. At its core, the AMV is a transformative plan. At a regional level, it integrates mining

PRIORITY INVESTMENT SECTORS

into industrial and trade policy, but more widely it works to enable Africa to shift from being an exporter of cheap raw materials to becoming a manufacturer and supplier of valuable, knowledge-based services. The COMESA Secretariat has led the implementation process since the signing of the MoU, working on profiling mineral beneficiation in the region and developing policy frameworks that cover vital areas such as corporate social responsibility, institutional strengthening and skills development. Speaking at the 2015 Africa Down Under Mining Conference, Ngwenya explained that the primary goal of the MoU is to improve the management of natural resources to ensure they contribute to socioeconomic growth, development and transformation throughout the region. “An important aspect of the harmonised environment would be on optimising the fiscal frameworks

that could be produced locally. Such calls have led to a shift in COMESA’s mineral and mining landscape, especially for investors, and there is interest from around the world in the sector. Africa has become a source of raw materials to fuel China’s economic growth, and the potential investor base in that part of the world is growing. Last year, it was widely reported that South Africa was losing its mining lustre, but there are alternatives for investors looking to launch operations in the region. Though perhaps a riskier choice given the political instability, the Democratic Republic of the Congo offers 10 times more potential than South Africa, and companies including the Minerals and Metals Group, Lundin Mining and Ivanhoe Mines are succeeding there. Leading services company KPMG names Rwanda as having the most mining

times more

The DRC’s potential compared with South Africa

— By 2015, Australian investment in Africa’s mining industry had reached more than $30bn through appropriately configured taxation mechanisms,” Ngwenya said at the 2015 event. “The experience of Australia in using its resource base as a springboard for socioeconomic transformation continues to draw African countries to the ADU [Africa Down Under Mining Conference] to seek optimal ways to exploit the continent’s vast mineral resources to underpin development.”

MORE AUSTRALIAN INVESTMENT Ngwenya also explained how the collaboration had resulted in more Australian mining companies in Africa and mining trade missions by industry leaders to countries including Kenya, Malawi, Uganda and Zambia. According to Barnett, by 2015 Australian investment in Africa’s mining industry had reached more than $30bn. These efforts and plans follow years of lobbying from COMESA member states. It was just a couple of years ago that Zambia, Africa’s leading copper producer, called on fellow member states to increase revenue collection and stop the unnecessary and expensive import of products and materials

potential in Africa. Not only does the country boast good regulation and a safe political environment, but it is a regional investment hub. The World Bank has praised Rwanda’s mining capacity, where export earnings surpassed $225m in 2015. The country officially began speaking English in 2009, making it more attractive for foreign investors. Madagascar and Zambia have joined the list of regional mining giants, and reports from China suggest that Far Eastern investors are watching Uganda, Kenya and Rwanda. Ngwenya cites mineral beneficiation and value addition as the cornerstone of the COMESA industrial development strategy, and these points are central to the Tripartite COMESA-EAC-SADC industrial development agenda. “Higher mineral beneficiation in COMESA member states will consolidate linkages and deepen the role of the minerals sector in COMESA. I strongly believe our region’s industrialisation endeavours would be further strengthened with enhanced value addition to natural resources within the COMESA region.”

$225m plus

Rwanda’s 2015 mining capacity export earnings

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INFRASTRUCTURE

PRIORITY INVESTMENT SECTORS

Major efforts are being undertaken to finance infrastructure development projects, which could be the key to unlocking economic and social development in the COMESA region

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ZUTE LIGHTFOOT/ALAMY

PRIORITY INVESTMENT SECTORS

eveloping infrastructure is a core priority of the COMESA member states. The bloc recognises that good, connected infrastructure is crucial for achieving sustainable economic development, and as such governments in the region are taking steps to ensure resources are mobilised and investment is channelled to the areas most in need. In mid 2015, COMESA Secretary General Sindiso Ngwenya announced a $250m target for mobilising resources for bankable infrastructure projects, which was expected to grow to $1bn by the end of 2015. The fund is intended to give member states access to finance to infrastructure development projects, which would accelerate economic development and regional trade. The COMESA Infrastructure Fund is sponsored by Harith, a South Africa-based company specialising in financing and developing infrastructure projects, and PTA Bank, and is intended to raise capital from global investors to finance infrastructure in the region. The fund acts as a large-scale investor. It targets investments averaging a value of $50m and provides a maximum 10% of the total equity capitalisation. It aims for a base case net internal rate of return of 18% and adheres to risk-mitigating investment policies, such as not investing more than 15% of total fund commitments in any one portfolio company. It also avoids investing more than 25% of total fund commitments in any one country, no more than 40% in ICT, energy or transport sectors, and no more than 20% in health, water and sanitation sectors.

IMPROVED INTRA-REGIONAL TRADE An expected result of improved infrastructure is greater intra-regional trade, wherein importers and exporters can reap the benefits of better, safer connections and simplified regulations. Facilitating trade is key to the bloc’s development goals, and to this end the COMESA Virtual Trade Facilitation System (CVTFS) has been launched. Speaking at a signing of a Memorandum of Understanding (MoU) between COMESA and the Zambia Revenue Authority for the CVTFS, Ngwenya lamented the loss of billions of dollars in revenue due to illicit trade, and Construction work in Kinshasa, the DRC capital. COMESA’s Virtual Trade Facilitation System launched in the country in July 2016

looked forward to expanding the COMESA Infrastructure Fund beyond the $1bn mark. The CVTFS is an electronic system developed by COMESA to monitor consignments along numerous transport corridors and to integrate trade facilitation instruments in the region onto an online platform. Such instruments include: the COMESA Yellow Card; the Transit Data Transfer Module; the COMESA Carrier License for road freight operators; the COMESA Regional Customs Bond Guarantee System; the COMESA Harmonised Axle Load; and Gross Vehicle Mass Limits, which includes the COMESA Certificate of Overload Control and the COMESA Customs Declaration Document. The system is accessible to a number of entities, including: banks; customs; freight forwarders; container freight stations; insurance companies; port authorities; and traders. It is intended to harmonise policies and regulations, and the CVTFS would also contribute to efficient logistics and the reduction of costs related to trade transit. In addition to cost savings, member states using the system can expect to see their rankings in the World Bank’s Doing Business index improve as cross-border trade becomes cheaper and more streamlined, and therefore more appealing to investors.

The COMESA Infrastructure Fund in figures

15%

of total fund commitments in any one portfolio company

of total fund commitments in any one country

DRC DEVELOPMENTS In July 2016, COMESA launched the CVTFS in the Democratic Republic of Congo (DRC). This took place on the Matadi-Kinshasa corridor, along which more than 1,000 trucks travel each month. Ngwenya attended the event, along with DRC Minister of Finance, Henri Yav Mulang, and Minister of Trade, Nefertiti Kisula, as well as other senior government officials and representatives from the private sector. In a statement, Ngwenya thanked the government of the DRC for spearheading the implementation of the system, and described its launch here as a game changer that will plug existing loopholes. Minister Malang said that the CVTFS would contribute to improved revenue collection from both customs duties and value-added tax. Malawi followed in the DRC’s footsteps in September 2016. Steven Kapoloma, Deputy Director of Corporate Affairs at the Malawi Revenue Authority, which implemented the CVTFS, said, “The system will

40% in the ICT, energy or transport sectors

in the health, water and sanitation sectors

INVEST IN THE COMESA REGION 2017 /

More than

of African households cite infrastructure as a leading concern

enable interested parties to achieve more transparency and control in the movement of cargo. This would reduce the cost of doing business in Malawi and the COMESA trading bloc, and increase government revenue.” Infrastructure development is occurring alongside the establishment of new trade agreements in the region. One recent example is a bilateral trade agreement on cross-border trade between Rwanda and the DRC, which is being implemented along with a simplified trade regime (STR) between the countries. Both are expected to contribute towards stability and economic development in the region. Clara Magariño Manero, Project Manager at International Alert in the DRC, said, “We have been calling for such a commitment to regional cross-border trade for many years, and implementation of the STR was a key recommendation of participants at the regional conference on cross-border

— It is estimated that $34bn of annual investment is needed to upgrade infrastructure in COMESA

More than

40%

of the houses completed

trade that International Alert and the World Bank held in Bukavu, DRC, in March [2016]. Implementation of the STR is a historic step for improving the economic conditions of traders and forging closer ties between them. We warmly welcome this positive new dynamic between the two countries.” International Alert is an independent NGO working at local, national, regional and global levels to foster peace and empower communities. It has been supporting cross-border trade in the COMESA region since 2009, and believes such trade brings benefits including: economic benefits, where informal, small-scale, cross-border trade makes up 50% of regional trade; political benefits, as cooperation grows in areas affected by conflict; and social benefits, whereby it provides new sources of revenue. More than 20% of African households cite infrastructure as a leading concern, and as a result there is significant demand for infrastructure investments across the

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THOMAS COCKREM / ALAMY

PRIORITY INVESTMENT SECTORS

Rwanda has agreed a bilateral trade agreement with the DRC

continent. It has been estimated that $34bn of investment is needed each year to upgrade infrastructure in the COMESA region, which would add 6% annually to the economic growth of member states. Such a boost in growth means that there is strong political will behind infrastructure investment and behind the COMESA Infrastructure Fund. And areas for investment have been pinpointed, with viable projects identified in power, transport and utilities, as well as in social infrastructure.

NEW SOCIAL INFRASTRUCTURE Social infrastructure has broad scope, comprising utilities including public schools, universities and medical facilities, as well as non-toll roads, bus stations and water and wastewater treatment plants. There are a number of social infrastructure projects taking place in the COMESA region. In Eritrea, a government housing project has been undertaken by Italian contractor Piccini Group, which is working in collaboration with local construction companies under the umbrella of the Housing and Commerce Bank of Eritrea. On a bigger scale, Libya last year announced a massive programme of infrastructure works in the coastal town of Tobruk. Worth an estimated $36bn, the developments were announced by its Prime Minister Abdullah Al-Thinni, who said programme funding would come from a consortium of Chinese investors. Meanwhile, in Sudan, the government has signed an MoU with the Intergovernmental Authority on Development to implement infrastructure and capacity-building projects as part of the European Union’s funding towards regional integration projects in Africa.

PRIORITY INVESTMENT SECTORS

AFDB

AfDB efforts and funding towards building infrastructure projects for sustainable economic growth in the COMESA region

Dr Akinwumi Adesina President, African Development Bank

Africa is open for international business and more than ready for international investment, especially in infrastructure. The policy and regulatory environment, so critical for the task of attracting foreign investment, is improving in leaps and bounds, and solid growth is being encouraged by better governance and growing regional markets. Of course, there is much to improve in African infrastructure, and the infrastructure gap of $93bn per year is a significant warning sign that economic growth in the continent is being held back. The infrastructure gap is also a sign of the investment potential: equivalent to at least the sum total of the opportunities available for private and institutional investors in the region over the next 10 years. These investment opportunities are legion: they are the Bank’s currency, and to emphasise this the Bank has been accelerating the implementation of its signature High 5s strategy: Light up and Power Africa, Feed Africa, Industrialise Africa, Integrate Africa, and Improve the Quality of Life for the people of Africa. This is Africa’s blueprint for the delivery of sustainable and inclusive infrastructure

development and for the economic transformation of the continent. The UNDP has recently confirmed that achieving the High 5s will also achieve around 90% of the objectives covered by the Sustainable Development Goals and Agenda 2063. The most critical area for progress in infrastructure financing is in increasing access to private finance. New delivery models, improved operations, better maintenance contracts, cost-reflective tariffs and heightened standards of governance will go a long way to improving the financial viability of the sector and its ability to attract private financing. Through the African Financial Market Initiative (AFMI), we are also stimulating the development of domestic bond markets, regional stock exchanges, and regional commodity markets on the continent. Africa’s growing number and size of pension funds represent a potential new source of funding to address the continent’s infrastructure deficit, although the current state of regulation and policy do not adequately reflect the increasing sophistication and ambition of the new financial resources available. New regulatory policies are therefore needed to assure investors of the long-term viability and sustainability of major infrastructure construction and improvement work. The African Development Bank is committed to the delivery of sustainable, inclusive infrastructure, and will focus on strengthening investment capacity and policy frameworks, developing new and innovative investment models, and on stronger publicprivate partnerships (PPPs). The Bank knows that getting infrastructure financing right is essential, for it underpins domestic economic development, contributes to inclusive growth, and enables regional integration, while also being a central factor in quality-of-life issues. Closing the funding gap quickly and decisively will help to achieve the High 5s and underpin the economic transformation of Africa.

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TRANSPORT AND LOGISTICS

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Enhanced trade and boosted economic growth are natural advantages of having a wellconnected country and region. As they work to improve transport links, COMESA member states are smoothing the passage of both goods and people, bringing broad benefits to the region

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•

ver the past few decades, Establishing a consensus-building Africa has evolved into platform with key stakeholders at both a globally competitive regional and national levels to develop commercial hub – yet there solutions in the aviation sector; are some areas along the way that are hindering further progress. To reap Hosting an investors’ conference to the benefits of higher volumes of trade and discuss opportunities for improved to boost their economies, COMESA member urban transport projects delivery; and states are working to improve their logistics networks and enhancing and building Establishing a unified tracking transport routes, which are essential for system that would see the movement of goods and people. implementation of a centralised In September 2016, the Infrastructure system to allow members to track Consortium for Africa (ICA) held a one-day transactions, exchange data in real workshop at the African Development Bank time and make electronic payments (AfDB) headquarters. Launched in 2005 at the G8 Gleneagles Summit, the ICA is tasked Officials attended from NEPAD (the with increasing finance from both public and African Union’s planning and coordinating private sources for sustainable infrastructure technical body) Regional Integration and development in Africa, with the aim of Trade Department, the Corporate Information improving the lives and economic well-being Management and Methods department, of the people of Africa. the Transport and ICT Department, the The ICA facilitates both Agriculture and Agro-Industries regional programme Department, and the private and country-specific sector. The purpose of the Djibouti initiatives, and this forum was to exchange workshop was based on ideas on the findings of the the travel time the theme of providing studies. ICA coordinator between support to the transport Mohammed Hassan sector. Specifically, the issued the closing remarks forum facilitated discussions to attendees, saying that Addis Ababa surrounding the findings of the most important thing three studies on opening up is “disseminating findings aviation services, urban transport of the three studies, sharing the development and trade facilitation. recommendations, but, most importantly, The first study shares insights into identifying investment opportunities in barriers standing in the way of expanding Africa’s transport sector. Our all-inclusive effective aviation services across the consultations will undoubtedly help to continent. The second, on urban transport fast-track project delivery within the development in sub-Saharan Africa, names bank, and improve coordination, which is specific investment opportunities that would key to success when we engage external improve urban transport and mobility in stakeholders and audiences.” five of Africa’s major cities: Accra, Ghana; The next step is acting on these Addis Ababa, Ethiopia; Dakar, Senegal; recommendations, and working to ensure Dar es Salaam, Tanzania; and Lagos, Nigeria. development across Africa’s transport and The study on trade facilitation gives an logistics sectors. To this end, the COMESA assessment of the current transport and region is seeing a number of projects take off. trade facilitation constraints in the West In September 2016, construction African Monetary Union, and offers of a Chinese-funded electric railway solutions to improve the situation in was completed in the region, linking the region. The three studies offer key the Ethiopian capital of Addis Ababa recommendations, including: with neighbouring Djibouti. The line gives landlocked Ethiopia much-needed A train on the Ethiopia-Djibouti railway during an operational test access to Djibouti’s Red Sea port, and the near Addis Ababa. Africa’s first contemporary electrified railway, built by Chinese firms, has recently become fully operational government is anticipating a direct

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boost to economic growth. The railway cost $4bn and was implemented by China Railway Engineering Corp and China Civil Engineering Construction Corp. It is expected to halve the travel time between Addis Ababa and Djibouti. This project follows the unveiling of a $425m China-built light railway, also in Addis Ababa, which is the first such electrified light transit system in sub-Saharan Africa. These projects come amid a wave of Chinese investment to the region, and are part of a $28bn Chinese-funded growth plan to overhaul Ethiopia’s infrastructure network by 2020. Potholed roads and dated railway facilities have long been cited as a major barrier to growth in the country, and it is hoped that investment would be behind a stronger economic performance in the coming months and years. Such transport projects could also act as a catalyst for similar construction efforts elsewhere in the region. Speaking to China’s Xinhua News Agency, Kenya’s former viceminister of transport, Gerishon Ikiara, said, “The launching of the Ethiopia-Djibouti standard gauge railway line is expected to spur similar efforts of Africa to link the continent more effectively with an efficient railway transport network, which could be what Africa needs for close integration and expansion of intra-Africa trade.”

Uganda Kenya Kisumu port at Lake Victoria. Tanzania and Uganda are working to revive transport on the African Great Lake

Tanzania

Lake Victoria

20% increase in volumes

TAKING TO THE SKIES Although home to 12% of the world’s population, Africa accounts for less than 1% of the global air-service market. The findings of a 2010 World Bank study revealed many African countries still restrict air-services markets to protect the share held by state-owned carriers, despite adopting the Yamoussoukro Decision back in 1999, which commits the 44 signatory countries to deregulate air services and promote regional markets. Implementation has been slow, but the landscape is changing. In mid 2016, COMESA announced it was tapping into the European Development Fund to provide a $9m grant for Africa’s Open Skies project, which aims to liberalise airspace and not only make air travel cheaper, faster and safer in the region, but also make airlines globally competitive. South Sudan, Kenya, Uganda and Rwanda

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JOERG BOETHLING / ALAMY STOCK PHOTO

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$9 million grant for Africa’s Open Skies project

last year held talks on creating an open sky policy, which would see airlines from the four countries operating as domestic carriers. As well as easing domestic travel, such agreements are expected to boost tourism within Africa and internationally.

RAIL AND WATER LINKS Improving logistics on the region’s water has not been overlooked. Tanzania and Uganda are working together to revive transport on Lake Victoria, one of the African Great Lakes which covers almost 70,000 sq km. According to a statement from the Tanzania Ports Authority in late 2016, Ugandan Minister of State for Transport Aggrey Bagiire said the countries are committed to raising volumes going through the lake to 20% in the next two years. To do so, they would work to improve ship operations, and enhance port and rail infrastructure at Port Bell and the new port of Bukasa, which will be built in Kampala. “It is a directive from Uganda higher authorities that people and goods need to move quickly and cheaply to reduce the costs of doing business,” said Bagiire. He also called for the activation of a rail route between Dar es Salaam and Mwanza within Tanzania. According to the minister, the route would boost the amount of cargo being transported through this central corridor. Good transport links are essential for countries looking to grow their economies. With strategic transport plans and projects under way or in the pipeline, foreign investment could be the key to unlocking even greater opportunities in COMESA’s transport and logistics sectors.

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MANUFACTURING COMESA member states are competing for the prestigious title of ‘regional manufacturing hub’ – but first they must address the areas that are hindering progress

XINHUA/ALAMY STOCK PHOTO

he COMESA member states possess enormous untapped potential for manufacturing – an essential sector in supporting economic development, employment and export revenue, and facilitating the activities of other industries. But, according to COMESA Secretary General Sindiso Ngwenya, “One cannot ignore the various practices that defy the common vision of improving the business competitiveness in Africa.” He cites the growth of illicit trade in the region as an impediment on the sector’s success, referencing a value of $330m of

A production line in Bidco’s factory near Nairobi, Kenya. In 2015, Chinese entrepreneurs visited Bidco, one of Kenya’s largest manufacturing facilities, as part of plans to enhance Sino-Africa ties

manufacturing revenue lost in the East African region – an estimate provided by Global Financial Integrity, a non-profit research advisory and advocacy organisation. On top of this, a number of manufacturing companies lose up to 70% of their market share to counterfeit or substandard products. In addition to addressing lost revenue and illicit trade, Africa needs to expand its manufacturing base if it is to compete in world markets. According to the World Bank, 30% of China’s GDP came from manufacturing in 2014. Compare that figure with 12% in Kenya and just 7% in Zambia, and it’s clear that by developing their

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manufacturing base, these countries could grow closer to meeting both domestic and international demand. Once manufactured for global consumption, Africa-made products need a strong selling platform: as reported by the United Nations Commission for Trade and Development (UNCTAD), manufactured goods account for less than 13% of African trade with the rest of the world. These losses are being addressed at a regional level. The 10th COMESA Business Dialogue in March 2015 focused on how to take action on illicit trade and improve industrial competitiveness; a regional anti-illicit trade law is now in the pipeline. Strong enforcement met with enhanced consumer awareness could be the key to unlocking the potential of the region’s manufacturing sector.

IN ADE

KEN

GREATER COMPETITIVENESS Improving the competitiveness of COMESA’s industries is central to the region’s development policies as it seeks to industrialise its economies and pursue its vision of inclusive and sustainable industrialisation. To this end, in 2015 COMESA finalised the development of its industrial policy. The region had the advantage of establishing this policy after Africa’s other Regional Economic Communities (RECs), and as such it was able to use and learn from the experiences of its neighbours. As a result, the COMESA industrial policy uses to its benefit the rapid progress seen in the technology sector, as it leapfrogs over the era of pollutant-heavy industrialisation towards contemporary economies with excellent digital infrastructure. However, there are still challenges to overcome. Enhancing productivity could go a long way towards augmenting the benefits of low labour rates in many African countries, and using appropriate tools to scale up production could enable member states to compete with those excelling in global markets, such as many Asian manufacturers. Developing the skill base of countries through education and training would also go some way to boosting the sector. Such development is already taking place in some areas, with skills development central to growth plans. The bloc is widely expected to succeed in effectively developing

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Increase towards GDP

7 % 15 %

Increase in share of products in regional markets

its manufacturing base and plugging trade gaps – partly thanks to its dual-pronged approach of seeking both public and private investment. Welcoming capital from a variety of sources is a fundamental step in fostering an environment in which manufacturing can grow and flourish. Indeed, in some areas, success is evident. Some countries are already excelling in this area, standing out as leaders in the manufacturing sector. One such country is Kenya, which has long been a popular destination for foreign investors looking to operate in the manufacturing sector. Investors from Asia and China are active in the country, having arrived seeking access to the COMESA region’s lucrative markets. Manufacturing plays a central role in Kenya’s Vision 2030 development plan. It is intended to create employment and wealth, and the government plans to increase the sector’s contribution to GDP by at least 10% annually. To make Kenya globally competitive and prosperous through manufacturing, the government is strengthening the capacity and local content of domestically manufactured goods; increasing the generation and utilisation of research and development data; increasing the share of products in regional markets from 7% to 15%; and developing niche products for existing and new markets. Key target areas include developing the iron and steel industry; the development of small and mediumsized enterprise parks, industrial and technology parks, and industrial manufacturing clusters; skills development; and attracting strategic investors in strategic sectors. Though there has been some stagnation – partly due to high production costs and competition from cheap Chinese and Indian imports – growth is still forecast for Kenya’s manufacturing sector. However, the country needs to work hard if it is to emerge from Ethiopia’s shadow.

MADE IN ETHIOPIA Ethiopia is on track to become an industrial powerhouse, and is set to overtake Kenya as the leading manufacturing hub for foreign companies. The country’s consistently high growth rates have been attributed to

JENNY VAUGHAN/AFP/GETTYIMAGES

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a construction boom and greater agricultural productivity, with manufacturing playing a leading role in this success story. The sector has grown 11% each year, and manufacturing exports have increased elevenfold – impressive growth that can be attributed to the expansion of the country’s footwear and apparel industries. In September 2016, production managers from global brands including Aldo and Calvin Klein arrived in Ethiopia’s thriving capital, Addis Ababa, where Made by Ethiopia was hosting a footwear business summit. The event was aimed at enabling the country’s footwear manufacturers to gain market share in the United States. Ethiopia’s huge manufacturing potential and skilled, costcompetitive labour force have proved to be a draw for members of the Footwear Distributors and Retailers of America (FDRA) trade association, many of whom arrived seeking partnerships with local companies. Ethiopia could soon catch up with global leaders such as China and Vietnam in lowtech manufacturing industries. The country’s five-year Growth and Transformation Plan to 2015 can be attributed with the industry’s recent success. The plan designated priority manufacturing industries based on factors including the availability of resources, labour intensity and export potential, naming apparel and textiles and leather and leather products among its areas of focus. Credit is provided by state-owned banks to firms in these industries.

Huajian shoe factory in Ethiopia is one of six Chinese factories operating in the Chinese-built Eastern Industry Zone

In Ethiopia’s current development plan to 2020, apparel and textile sectors remain priority manufacturing industries. The government has invited foreign investors to provide investment capital and technological resources, which is expected to lead Ethiopia’s manufacturing sector to international success. A raft of incentives are available to attract foreign investors, including credit schemes and tax breaks, and they are working. The country has welcomed investors from the United Kingdom, India and Turkey, who have channelled billions of dollars into textile and apparel industries.

— Ethiopia could soon catch up with China and Vietnam in low-tech manufacturing Ethiopia should be considered a prime example of how government is coming together with investors, businesses, communities and labour unions in order to develop and sustain productive economic clusters. Developments such as these can be mirrored in other member states of the COMESA region. Meeting local demand is a stepping stone to competing internationally, and there is certainly significant scope for COMESA member states to make their successful debuts in the global arena.

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AGRIBUSINESS Productivity and sustainability are buzzwords of the agriculture sector, and investors are being invited to tap into the enormous potential of COMESAâ&#x20AC;&#x2122;s farming and agribusiness industries griculture accounts for a large chunk of GDP in some COMESA member states, providing gainful employment opportunities and driving the evolution of farming practices throughout the region. Products such as tobacco, sugar and beverages account for significant turnover in the agribusiness sector, and with countries looking to expand these industries, there is enormous potential for investment. In the countries of East Africa, almost 30% of GDP is generated by agricultural activities, and staple foods represent around 75% of total agricultural products traded. More than 60% of the population in the region is employed in the sector. Based on annual average values of the contribution of agriculture to GDP from 2003-2012, Egypt has the largest share of agriculture GDP in the

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COMESA region, followed by Sudan and the Democratic Republic of the Congo (DRC). The Seychelles has the smallest share, at 0.06%. Sitting in the middle of the rankings are countries including Madagascar, Zambia and Uganda.

BILATERAL PARTNERSHIP In late 2014, the first Uganda-France agribusiness forum took place in Kampala, during which the French ambassador emphasised the countryâ&#x20AC;&#x2122;s commitment to developing productive and sustainable agriculture in Uganda. Agriculture plays a significant role in the economies of both countries, creating a fertile environment for mutually beneficial partnerships. The event was attended by representatives from Ugandan companies and business associations including Private Sector Foundation Uganda. The French delegation

Around

75% of total agricultural products traded

STEPHAN GLADIEU / WORLD BANK

At least

60%

of the population in the region is employed in the sector

attended under the umbrella of Adepta, the Association for Development of International Exchanges in Agricultural and Agri-food products and Techniques. French companies in attendance were seeking business opportunities in agriculture and agro-processing, with the long-term view of creating a platform for knowledgesharing and investing in or creating partnerships with Ugandan companies in related industries. French Ambassador Sophie Makame said at the time that boosting agricultural productivity would contribute to employment and enhance livelihoods in rural areas as well as satisfy Uganda’s food and nutrition requirements. “Seventy per cent of Ugandans depend on agriculture. The sector is the first of three growth opportunities prioritised in the National Development Plan,” she said, going on

Closing Uganda’s 13% gender gap in agricultural productivity could increase agricultural GDP by $58m

to describe Uganda as the “breadbasket of eastern Africa”. Further to this, the chairperson of Private Sector Foundation Uganda said that the forum came about as a result of exchange visits to France, during which the French business community was invited to invest in Uganda. One of the main selling points is Uganda’s location; although the country is landlocked, it has good access links to the neighbouring COMESA markets of Burundi, the DRC, Rwanda and South Sudan. Another is Uganda’s macroeconomic stability, which is underpinned by more than two decades of sound economic policies. Today, agricultural production and processing remain two of the most promising growth sectors in Uganda’s economy.

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MARCIN S SADURSKI / ALAMY

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This trend of agricultural development can be seen across the COMESA region, and private investment opportunities are opening up as a result. Knowing the importance of agriculture, public sources are also providing capital for development. In October 2016, COMESA signed an agreement with the United States Agency for International Development (USAID) aimed at strengthening regional development. The $77m deal will go some way towards enhancing collaborative partnership between the two organisations and implementing regional trade, investment and development programmes.

— The COMESA Social Charter underscores youth empowerment Speaking at the signing of the agreement, US Ambassador to Zambia and Special Representative to COMESA Eric Schultz said, “Through economic diversification, attracting more foreign investment and reducing existing trade barriers, we can build upon our successes to date. I am confident that the new agreement will help us bolster growth and unlock economic potential among the COMESA member states.” Supporting the coordination of agricultural policies is central to the agreement. Last year, COMESA Secretary General Sindiso Ngwenya called for the introduction

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The provision of irrigation infrastructure is contributing to climate resilience in Africa’s agriculture sectors

of measures that would help women and young people gain access to markets as they engage in agricultural activities. In a speech on his behalf to more than 500 leaders from more than 40 countries, Ngwenya said that such an approach will spur the growth of associated industries and improve food security, incomes and create new employment opportunities. “Agriculture is the sector upon which the success of the region’s ambition for steady economic growth rests,” he said. “The growth in the agriculture sector is twice as effective in reducing poverty as growth in other sectors.” To achieve this goal, the region needs to overcome challenges such as the lack of specialised training and knowledge. There is underinvestment in agricultural initiatives such as research and development, which support productivity, develop agricultural capacity and address environmental challenges, such as climate change. To tackle these issues, the COMESA Social Charter has a component on youth empowerment. This includes programmes aimed at reducing poverty and fostering inclusive, sustainable development, as well as social and political stability and peace and security. To do so, COMESA member states need to work together. Speaking at the meeting, Vice President of Zambia Inonge Wina urged participants to build partnerships that would help attract agriculture investment to the region. “Countries in COMESA should not work in isolation but should create linkages with neighbours, the private sector, nations

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and the region and form strong bonds which will open up bigger markets for goods produced in the individual countries,” she said. To bring more women and young people into the sector, measures have been implemented that complement the work of the Comprehensive African Agriculture Development Programme (CAADP).

POSITIVE POLICY-MAKING This is just one element of efforts under way throughout the COMESA region to boost agricultural productivity. In July 2016, COMESA handed over a Climate Smart Agriculture (CSA) pilot project to the Government of Swaziland. Supported by the European Union, the UK Department for

We appreciate and continue to request your support for the success of this and similar projects. I am highly optimistic that the life of farmers will change significantly, [and] so will the local economy and the contribution of agriculture to GDP.”

Djibouti 0.27%

SEEING RESULTS Similar projects have been implemented in other COMESA member states, including Madagascar, Uganda, Seychelles and Zimbabwe, and these countries are already witnessing good results such as increased crop yields. Other member states such as Burundi, Comoros, the DRC, Kenya and Sudan are also receiving support to bring climate-change impact measures into

DRC 2.95% Comoros 0.14% Burundi 0.45%

Zimbabwe 1.95% Zambia 3.02% Uganda 3.99% Seychelles 0.37% Swaziland 0.97% Rwanda 1.14% Mauritius 2.51% Malawi 1.10% Madagascar 1.94%

Share of total COMESA agricultural GDP by country,

Egypt 37.18%

based on 2003-12 annual average values

Libya 17.51% International Development and the Norwegian Ministry of Foreign Affairs, the project helps smallholder farmers in the region, providing irrigation infrastructure and helping to build technical capacity. It is aimed at fostering resilience to the adverse effects of climate change, which are having an impact on food security and incomes among smallholder farmers. During the handover, Ngwenya said that the practices implemented through the project would transform agricultural policies and systems, increasing food productivity and enhancing food security as a result, while preserving the environment. After thanking COMESA for its ongoing support, Swaziland’s minister of agriculture said, “Agriculture is the backbone of our economy, and it is the vehicle that will transport rural areas into vibrant economic hubs.

Eritrea 0.38% Ethiopia 5.79% Kenya 7.5%

their national policies, and such initiatives to integrate smallholder farmers into national and regional markets bring greater food security to countries. COMESA member states are keen to attract investment to their agriculture sectors, and are already seeing success in some areas. In Egypt, Bayt El Khebra Consultancy plans to offer advisory services to attract investments worth $2.6bn to the country by the end of 2018, and agriculture is one of its target sectors, putting the sector on track for an economic boost. In Rwanda, a consortium of 12 investors has been leased land to carry out commercial cattle farming and beef production, and the project is expected to surpass the government target for meat production of 230,000 tonnes by 2018.

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SPONSORED FEATURE

EMPOWERING AFRICA’S FARMERS TO FEED THE WORLD Karim Lotfi Senhadji, Chief Executive Officer, OCP AFRICA ur world is growing rapidly. The global population is nearing 10 billion, and every day, access to sufficient or affordable food is daunting for nearly 795 million people and growing. A sustainable food supply for our planet is an urgent, complex imperative that will only intensify. However, population growth is not the only strain on agriculture – a 76% increase in meat consumption by a growing global middle class is also placing rising demand on limited land. When combined with increased restraints on land and water use, the United Nations Food and Agriculture Organization (FAO) predicts that

food production will need to increase by an astounding 70% by 2050 to meet this demand1. Today, there are organisations all over the world working to solve this challenge, conscious of our collective responsibility to secure resources for future generations. At OCP Africa, a subsidiary of OCP, we believe the solution may be found right here, within Africa. As one of the leading providers of phosphate – the crucial ingredient in fertilizer – we have applied nearly a century of experience to the development and evolution of sustainable agriculture, leading the way for Africa to feed the world. While some may dispute its potential, the African continent holds the necessary and unique resources to meet the critical demands of global food security: it is home to more than 65% of the world’s unexploited arable lands; nearly 70% of the African population is under the age of 30;

— The African continent holds the necessary and unique resources to meet the critical demands of global food security

and agriculture represents more than 24% of the continent’s GDP, a figure that doubles in subSaharan Africa. In this context, the transformation of agriculture, and in particular African agriculture, should be considered an essential tool in keeping up with global food demands. With roots firmly planted in Africa, OCP Africa is dedicated to transforming African farming by harnessing African resources and equipping African farmers with products and services that will enhance the continent’s prosperity. And that starts with our commitment to the research and development of programmes aimed at tackling soil degradation. Through extensive soil mapping processes that enable farmers to know which nutrients their specific soil needs, which then require

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OCP AFRICA STRATEGY 1. AGRONOMY Contributing to the development of sustainable and precision farming through products adapted to local soils and crops. 2. PRODUCTION Building production units close to consumer markets and producing competitive fertilizers adapted to African soils. 3. LOGISTICS Providing farmers with the right products at the right time, in sufficient quantity and at an affordable price. 4. MARKETING AND DISTRIBUTION Delivering the best service for the end customer.

the application of correct and affordable supplements to boost crop yields, we are increasing overall production while respecting natural resources. This ensures that current food security needs can be met – as well as the needs of future generations – and that Africa will, in fact, stand as a major driving force behind the development and success of global agriculture. Using the most suitable fertilizer is a critical ingredient to achieving success while simultaneously protecting Africa’s most precious resource – its land. Africa’s arable lands are fragile and at risk of further depletion over the next decade, a threat that is exacerbated by the combined effects of climate change and the rising costs of fertilizers. OCP Africa understands this challenge and firmly believes that using the right

fertilizer at the right time in the right quantity is one of the most effective and responsible ways to protect soils and substantially increase crop yields. Our yearly agricultural caravans programme is designed to help meet this commitment by providing soil testing, introducing new formulas, identifying the best fertilizers and helping farmers adapt their farming practices. Of course, we can’t do it alone – and fertilizer is only one part of the solution. To truly transform the agriculture industry, OCP works hand in hand with African

farmers and local experts to develop solutions for adapting feeds, irrigation technology, mechanisation and financing. At OCP Africa, we believe in the potential of our continent to help address the global food supply challenge, and we also know that for us to be effective and efficient we need to partner with those closest to the field. Together, we can ensure a better future for the next generation. 1. www.fao.org/news/story/en/ item/35571/icode/

Address: 2-4, rue Al Abtal, Hay Erraha, 20200, Casablanca, Maroc Tel: +212 5 22 23.00.25 – 23.01.25 – 23.10.25 – 23.20.25 Web: www.ocpgroup.ma Email: contact@ocpgroup.ma

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BANKING AND FINANCIAL SERVICES Rapid innovation is taking place within Africaâ&#x20AC;&#x2122;s banking systems, bringing greater access to financial services for the largely unbanked

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f you knew nothing about innovative financial services products, you might assume that Africa was behind the curve. In fact, the COMESA region has rapidly become the go-to location for technologists seeking examples of innovation that are making a massive difference to the lives of millions of people. With a large unbanked population that has little or no experience of bricks and mortar banking, the region is home to a number of novel schemes aimed at providing bottomof-the-pyramid (BOTP) consumers with greater access to financial services. These are also developing into broader platforms targeted at the region’s emerging middle class, as well as its poorer citizens. In 2016, Kenya topped the rankings for financial inclusion in the Brookings Financial and Digital Inclusion Project (FDIP) report, thanks largely to the growth of its mobile money market. The report assesses the financial inclusion ecosystems of 26 countries based on four dimensions of financial inclusion: country commitment, mobile capacity, regulatory environment, and adoption of selected traditional and digital financial services. It reveals that Kenya notched up 89% for country commitment; 83% for mobile capacity; 94% for regulatory environment and 78% for adoption. Other countries in the region that ranked well included Rwanda, which came seventh with 94%, 83%, 100% and 50%.

A LONG TRACK RECORD Kenya’s position at the top of the rankings is no surprise for Africa watchers. Its mobile money market has been making global headlines ever since the 2007 launch of M-Pesa by the nation’s biggest telecoms company, Safaricom, which is 40% owned by Vodafone. M-Pesa has since become a ubiquitous part of the daily lives of Kenyans, who frequently remark that they don’t know how they coped before it existed. Citizens from all levels of society use the service for money deposit and withdrawal, remittance delivery, bill payment and microcredit provision. It has also become key to the development of small business in the country, with many small companies relying on Mobile money service M-Pesa has become so successful in Kenya that traditional banks now view it as a serious competitor

M-Pesa for a significant percentage of transactions, or even providing a service that is a derivative of the platform. It has become so successful that traditional banks now see it as a serious competitor. Rather than seeking tighter regulation by the government, they are increasingly offering mobile banking services that aim to disrupt M-Pesa’s market dominance. As a result, although mobile money development has been typically led by the telecommunications companies, several partnerships between mobile network operators (MNOs) and financial services providers are now taking off, such as M-Shwari in Kenya. These offer loans and interest-bearing savings accounts via the M-Pesa mobile money platform and are provided by Commercial Bank of Africa.

2016 Brookings FDIP scores

Kenya (1)

84%

Uganda (5)

78%

TECHNOLOGY LEAPFROG M-Pesa – along with similar schemes throughout COMESA – has leapfrogged the legacy financial services systems found in other parts of the world. In turn, these platforms have enabled consumers to use the latest mobile-based technologies to access basic low-cost financial products, such as international and domestic remittances, savings, credit, insurance and securities. They have become popular because they are easy to use and overcome some of the traditional difficulties associated with banks and cash in Africa: many people in rural areas don’t use banks and don’t like cash because the nearest bank branch is often too far away, they are charged hefty fees for services, and cash is easily stolen, lost, damaged or wasted on unnecessary things. According to the Consultative Group to Assist the Poor (CGAP), Kenya is one of the most successful countries for mobile financial services globally, with 26 million active mobile money accounts in 2014. The M-Pesa revolution has been the precursor to a raft of other mobile money initiatives in the COMESA region, such as M-TIBA, a mobile health wallet that can be used to pay for medical cover. It is not an insurance policy, so it can be used to pay for anyone at an M-TIBA facility, and only covers the medical bill to the extent of the amount loaded on the mobile health wallet. Another scheme is the KCB M-Pesa savings and microcredit platform, which was launched

Rwanda (7)

76%

Zambia (18)

67%

Malawi (21)

61% Ethiopia (25)

53%

Egypt (26)

49% SOURCE: THE BROOKINGS INSTITUTION

VODAFONE

INVEST IN THE COMESA REGION 2017 /

PRIORITY INVESTMENT SECTORS

MICHAEL KAPPELER/DPA/PA IMAGES

securely send money transfers to any Airtel Money account in the country. Malawians in the diaspora can send remittances to friends and family in the country, without needing to make expensive journeys to pick up cash from money transfer agents. Developments in mobile money have also helped create opportunities in the micro insurance market. Using the mobile network, micro insurers can cost-effectively receive premiums and settle claims with customers. One example of this is the Kilimo Salama weather index micro insurance, targeted at protecting Kenyan farmers against weatherrelated risks, such as drought and rain.

INTEROPERABILITY CHALLENGE in 2014. It gives customers the opportunity to save up to one million Kenyan shillings (KSh) and to earn up to 6% interest. Account holders can also access up to KSh one million in instant loans, which are vital to driving the financial inclusion agenda. This option has proved popular, with Safaricom revealing in August 2016 that KCB M-Pesa had advanced Ksh10.3 billion in loans since inception. Rwanda has also started making inroads into the mobile money market, with offerings including MTN’s Mobile Money Services, which can be used to deposit, send and withdraw money; buy airtime, power, water and fuel; and pay school fees. According to CGAP, digitising payment streams that are currently cash-based is a significant opportunity for mobile money growth in the country. For example, its research shows that, of the 71% of adults in Rwanda who pay for insurance, only 0.1% pay via mobile money, and because customers are already in the habit of paying bills with mobile money, with an improved mobile network, digitising additional payment streams presents a significant opportunity. Mobile money is also gaining traction in Malawi. For example, digital money-transfer service WorldRemit has launched its instant Mobile Money account for customers to

MTN’s Mobile Money services have become popular in Rwanda

71%

of adults in Rwanda who pay for insurance

0.1%

pay via mobile money

— One of the biggest challenges for stakeholders has been platform interoperability 60 / INVEST IN THE COMESA REGION 2017

Although the market is continuing to expand, one of the biggest challenges for stakeholders over the past 10 years has been platform interoperability, both cross-border and across networks. However, progress is being made at the regulatory level as well as by individual companies. For example, it is now possible for customers of Tigo in Tanzania to make payments to Tigo customers in Rwanda. Meanwhile, Vodacom has joined other networks to drive cross-network interoperability. And in the second half of 2016, Visa partnered with several Kenyan banks to launch its own mobile money platform in the country. Seen as a potential challenger to M-Pesa, the mVisa app allows people to send money to each other’s accounts, and pay for goods and services without a point of sale machine, regardless of the network operator being used. Visa aims to sign up additional banks in Kenya as well as expand into other African countries, such as Uganda and Rwanda, in the next year. These developments are, in turn, providing more opportunities for international investors to enter the COMESA region’s financial services market from a number of different sectors. As consumers become familiar with increasingly sophisticated financial services offerings, there are opportunities for international technology providers and major regional banks looking to enter African markets. Likewise, there are national providers that want to meet with local, regional and international partners that can increase their market share in the continent.

BANK OF THE FUTURE Owned by some 18,000 domestic and international shareholders, with over 500,000 customers, SBM Holdings Ltd is a leading financial holding company listed on the Stock Exchange of Mauritius. Besides Mauritius, SBM Group is present in Madagascar and India, with a representative office in Myanmar, and expanding into the region mainly the Indian Ocean Islands and East Africa. In line with its expansion plans, the Group has recently been granted a banking licence in Seychelles subject to conditions which it has undertaken to fulfil. Its portfolio of services covers banking, non-banking financial services and nonfinancial investments. Innovation, flexibility, accessibility and reliability are at the root of the SBM reputation and brand. Established in 1973 as its banking entity in Mauritius, SBM Bank (Mauritius) Ltd is the Groupâ&#x20AC;&#x2122;s flagship. With a domestic market share of over 20%, the Bank delivers solutions for its diverse customer base: Consumer, SME, Corporate, International and Financial Institutions. SBMâ&#x20AC;&#x2122;s major products and services are: * Global Business & International Banking * Investment Solutions * Treasury Services * Cross Border Financing * E-commerce * Trade Finance * Wealth Management To tap the potential of emerging markets, the Group is gearing up for further expansion plans in the East African, Indian and Asian regions, thus further strengthening the existing continental links with Mauritius.

T: (230) 202 1111 E: sbm@sbmgroup.mu www.sbmgroup.mu

PRIORITY INVESTMENT SECTORS

How banks and finance houses could increase economic growth

Jennifer Theuri Chief Executive at the Integrated Payments Services Limited (IPSL)

The next development phase in the East Africa region among COMESA’s economic markets will be an interesting period to watch if current outcomes are anything to go by. On many fronts, the region – and Kenya especially – has provided a development showcase, particularly within information and communication technology (ICT) sectors. The relationship between ICT and national development in member states has been a marvel to witness. In Kenya, the analogy between Silicon Valley and Kenya’s own national exploits in ICT development has seen the emergence of the aptly named Silicon Savannah. The Silicon Savannah phenomena has been so encouraging that financial technology solutions – otherwise known as fintech – are now widely acknowledged as enablers of development. The vast penetration of ICT solutions – particularly GSM (Global System for Mobile communication) technologies – across the economic spectrum has helped to foster a level of digital consciousness not seen in many parts of the world.

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Mobile technologies have been integrated into local economies to provide solutions to local challenges. For example, mobile money transfer options on all mobile networks across the East Africa region have served to enhance efforts to deepen financial inclusivity. In the banking sector, we have also enjoyed an easier market entry for mobile-based banking solutions, which has occurred because of rich mobile phone penetration and better coverage across both urban and rural settings. Founded on a complementary perspective, banking institutions have joined forces with mobile network operators to deliver services. Locally, the cash-lite concept is much more pronounced on mobile platforms than on any other channel. The role of banks cannot be gainsaid; banking services play a facilitative role in advancing economic interests and enhancing regional integration. On the macro- and microeconomic levels, banking services are playing a key role in securing livelihoods. Like never before, the demand for banking services, increased regulation and competition from non-traditional banking players, as well as related stakeholder attention, has inspired a step change from traditional to contemporary banking. To survive through the turbulent times, players in Kenya are now embracing innovative banking models including agency, mobile and internet banking delivery channels. These developments present more opportunities to engage with emerging innovations for strategic alliances, ultimately delivering a better payments ecosystem. The immense benefits brought about by such contemporary models – particularly fintech – allows lenders the flexibility to costeffectively reach the unbanked masses, further deepening financial inclusion. We acknowledge a point raised by the World Bank, opining that fintech solutions have the potential to significantly enhance efficiencies, reduce costs and expand access to financial services. This potential will be useful in helping developing nations accelerate their poverty alleviation programmes.

BENEDICTE DESRUS / ALAMY STOCK PHOTO

PRIORITY INVESTMENT SECTORS

Kenya Bankers Association (KBA) made the first move to embrace the rapidly changing market opportunities. As part of the commitment to enhance banking services penetration while boosting financial inclusion, KBA recently established a fintech solutions firm known as Integrated Payments Services Limited (IPSL). IPSL was formed to address the challenge of integrating retail payments in the country and providing tailor-made fintech solutions to our members for the benefit of the banking public. Today, IPSL is providing a secure, fast and efficient money-transfer system by tapping into the latest technological advances. The interbanking money transfer service, PesaLink, allows customers to send money from one bank account to another in real time on all bank retail payment channels including mobile, ATM, internet banking, agency, bank branches and point of sale. IPSL aims to create value for the industry, banks and customers through innovation and interoperability. PesaLink, an always-on solution, has been developed as a complementary tool to existing mobile money transfer and related wallets. As

a complementary tool, it is not out to compete with any other existing mobile money wallet or transfer product.

A NEW ERA OF BANKING Through PesaLink, KBA is literally rewriting the playbook that will define the shape of the payments ecosystem in Kenya and the wider COMESA region. We have joined other players including mobile network operators in the payments industry on this journey to create a cashless Kenya, and in the same vein we are open to partnerships with other switches and mobile network operators locally and in the region, as we are all working towards a common goal. At IPSL, we remain keenly aware that banking and financial solutions providers have a key role to play in advancing national development interests.

Jennifer Theuri is chief executive at the Integrated Payments Services Limited (IPSL). Email: info@ipsl.co.ke

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PRIORITY INVESTMENT SECTORS

ICT The fast uptake of new technologies is helping COMESA countries move closer towards becoming knowledge economies, but with this development comes the need for clever security strategies to protect networks and users ITU/ J. MARCHAND

igital infrastructure is expanding in the COMESA region, with countries such as Kenya and Rwanda leading the charge towards faster access to data. The improvement of digital networks is benefitting businesses and governments, and bringing opportunities for entrepreneurs and investors alike. COMESA is behind several initiatives to boost ICT. Its priority is to promote the use and awareness of ICT to drive the information society and contribute to socio-economic integration. It has partnered with the Kenyan government to deliver eLearning and has also developed a regional framework and portal to help harmonise eGovernment efforts. It is also working in partnership with the United Nations Public Administration Network (UNPAN) to implement eGovernment. The organisation has already developed eLegislation guidelines for member states to

COMESA is boosting ICT to drive the information society

64 / INVEST IN THE COMESA REGION 2017

ensure the harmonisation of regional laws to enable the introduction of eTrade. Major names such as Facebook, SAP, IBM, Microsoft and Uber are expanding across the region. Over the next three years, SAP plans to invest up to $500m in upskilling local talent and driving innovation and growth in Africa. In 2015, Microsoft signed an MoU with COMESA. This sets out how the company and the COMESA Business Council plan to collaborate on improving access to technology, developing relevant skills and fostering innovation in member states. This is in line with the Microsoft 4Afrika Initiativeâ&#x20AC;&#x2122;s three core focus areas: world-class skills, access and innovation. The MoU promotes access to technology based on Trusted Cloud infrastructure that focuses on the secure deployment of modern IT operations. This collaboration is expected to accelerate the adoption of innovative high-speed, lowcost connectivity initiatives, including

MICROSOFT

PRIORITY INVESTMENT SECTORS

Upskilling local talent is a core focus of many companies investing in COMESA’s ICT sector

through new policy approaches to spectrum management, such as dynamic spectrum access. It will also encourage the use of cloud technologies through the adoption of important enabling policies in the areas of cybersecurity, data privacy and protection. A key area is promoting the value of protecting intellectual property. Developing eGovernment solutions that will facilitate, simplify and stimulate investment across the region is high on the agenda. The intention is to make it quicker and cheaper to comply with business governance and regulations. Venture capital funding for smaller ventures is also taking off. For example, East Africa Capital Partners supports the region’s media and technology companies as well as telecommunications ventures, such as Wananchi Group and SimbaNet. Africa Media Ventures Fund is investing in start-ups such as Shimba Technologies and Mobileon, while the eVentures Africa (eVA) Fund is focusing on SMEs in digital media. It is behind companies including Dot Com Zambia and MoboFree. Internet usage has increased significantly across the region, and most governements have recognised the potential of ICT in meeting development targets. In Rwanda, the government has allocated an ICT budget that, as a percentage of GDP, is on a par with OECD countries. Opportunities for growth include eCommerce and eServices, mobile technologies, applications development and automation as well as the training of ICT professionals and research. The One Laptop Per Child association operates in the country. It says that Rwanda is the location of its fastest-growing project in Africa.

Kenya has also been building a reputation for ICT expertise and is dubbed ‘Silicon Savannah’, thanks to a growing mix of entrepreneurs, start-ups and innovation centres. The take-off of mobile money (M-Pesa) since 2007; the launch of the Ushahidi tool to digitally map demographic events; its government’s commitment to promoting ICT; and the development of tech incubators and more affordable 3G internet connections have all helped the country to build a global reputation in this sector. Since its inception in 2010, Nairobi’s iHub has been commanding international attention as a centre for African innovation that can shape future global technology. It has also been heralded as a model for other tech hubs across the continent. It is part open-access community space, part location for investors and VCs, and part incubator, and is positioning itself as a place that lowers the barriers to entry for young, would-be entrepreneurs by providing a space in which innovators and start-ups can think through ideas and develop solutions.

ENHANCING CAPACITY Developing sufficient capacity is central to the success of COMESA’s ICT sector, and work in this area is under way. In 2009, the East African Marine System (Teams), a 5,000 km undersea fibre-optic cable linking Kenya’s coastal town of Mombasa with Fujairah in the United Arab Emirates, went live. The Teams cable is connected to Kenya’s national fibre backbone network and other major backhaul providers, extending the gigabit submarine capacity to Uganda, Rwanda, Burundi and Tanzania through cross-border connectivity. However, in spite of the developments in certain parts of the region, there is still a long way to go. According to the World Economic Forum’s Global Competitiveness Rankings, Mauritius is the highest ranking COMESA member for ICT use (68th), followed by Seychelles (73rd), Egypt (90th), Zimbabwe (99th) and Kenya (104th), with Burundi, Ethiopia and Madagascar sitting at the bottom of the table (137th jointly). To plug the gaps, governments are working together to build their ICT capability. For example, in 2013 the presidents of Uganda, Rwanda, Kenya and South Sudan agreed to include ICT as a strategic area of cooperation as part of the Northern

Percentage of individuals using the internet

Burundi

2000

0.08% 2010

1% 2015

4.87%

Egypt

2000

0.64% 2010

21.6% 2015

35.9%

Kenya

2000

0.32% 2010

14% 2015

45.62%

INVEST IN THE COMESA REGION 2017 /

Percentage of individuals using the internet

KLAB RWANDA

PRIORITY INVESTMENT SECTORS

Rwanda

2000

0.06%

Rwanda’s internet capacity has increased thanks to the East African Marine System – an undersea fibre-optic cable

address regional gaps in broadband provision. In addition, a cybersecurity MoU has been developed and approved by the partner states. This defines a collaborative framework for them to jointly tackle any cybercrime and establish regional implementation of cybersecurity initiatives – an increasingly prominent global issue. Kenya, Rwanda and Uganda have also harmonised a regulatory framework for the integration of national databases for national identity and SIM cards. Furthermore, partner states have started developing a framework for interoperable mobile money platforms in collaboration with their respective central banks.

2010

8% 2015

18%

Uganda

2000

0.16% 2010

12.5% 2015

19.22%

Seychelles

2000

7.4% 2010

41% 2015

58.12%

Corridor Integration Projects (NCIP) initiative. Coordinated by Uganda, the ICT ministers of the countries identified areas of focus: ICT policy, infrastructure implementation and broadband connectivity

• •

Roaming charges and termination rates

•

Harmonisation of SIM registration regime

•

Cybersecurity

•

Mainstreaming of ICT in integration projects

•

eServices

•

ICT skills and human capital development

•

Digital migration

•

Support for the development of policy and a regulatory framework for South Sudan

Since 2013, the ICT cluster has operated the One Network Area for voice, where all calls in the NCIP region are charged at a uniform rate. Call costs in the region have dropped by more than 50% and lead to significant growth in voice traffic in all partner states. Progress has also been made with the implementation of the National Backbone Infrastructure (NBI) interconnection. An overarching regional broadband strategy has been developed to

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TACKLING CYBERCRIME The Kenya Cyber Security Report 2015 from Serianu and the United States International University highlights an increase in Africabased cybercrime, particularly in Nigeria, Rwanda and Kenya. It documents recent cyberattacks in the country and its findings suggest an urgent need to respond with better security strategies as well as more skilled people. The Kenyan report lays bare the sheer scale of the problem: it estimates that there is only one security professional for every 200,000 internet users in the country. There is also a need to get to grips with malware programmes such as the Faketoken and Marcher banking trojans, as well as the spread of ransomware. These are attacking mobile banking – an issue of big concern to this rapidly expanding sector. In a 2016 presentation to delegates at the ITU-ATU (African Telecommunications Union) workshop on cybersecurity strategy, a representative of the ATU highlighted the scale of the problem: cybercrime costs Kenya’s economy $36m a year; several commercial banks in Zambia were robbed of more than $4m in the first half of 2013 as a result of sophisticated cybercrime collaborations between Zambians and foreigners; and a 2011 Deloitte Touche survey found that financial institutions in Kenya, Rwanda, Uganda, Tanzania and Zambia had registered losses of up to $245m due to cyber fraud. That year, COMESA established a model cybercrime bill to guide the development of a general framework to facilitate international cooperation, extradition and mutual assistance, and to support the establishment of national 24/7 points of contact.

PRIORITY INVESTMENT SECTORS

Working together in developing innovative ICT solutions to transform the region

Andrew Rugege Regional Director for Africa, International Telecommunication Union (ITU)

Let me start by commending COMESA and its leadership for the progress made in the region in establishing the largest trading unit and spearheading sustainable social and economic development since 2005. COMESA has recognized the cross-cutting role of Information and Communication Technology (ICT) in the development of the region and the improvement of the quality of life of its citizens. They have created an enabling environment where technology innovation is thriving, light-touch and participatory Regulatory Frameworks are in place, broadband connectivity is no longer a critical issue, security of networks is being addressed and the region is on the way to establishing Smart Cities and many more. COMESA is on “digital fire” and it is catching the investor’s eye! I am proud that ITU, through the Regional Office for Africa is working hand-in-hand with and accompanying its members in the region to find local ICT solutions to everyday challenges. Innovation is key not only to development but to youth employment and entrepreneurship. ITU in collaboration with UNIDO is currently conducting ICT-Centric Innovation Ecosystem Country Reviews in the region that will

mainstream ICTs into National agendas and use innovation in the transformation of both Public and Private Sectors. It is in the COMESA Region that through the Smart Africa initiative by Heads of State and with the assistance of ITU, the One Africa Network eliminating mobile roaming charges and facilitating trade across the region was first implemented. The One Africa Network is now operational in 12 of the 21 members of Smart Africa with the intention of taking it across the whole continent. Again in the region, I was privileged to witness the launch of the Africa Smart Sustainable Cities Blueprint which took place at the Transform Africa Summit in Kigali, Rwanda last month. The Blueprint serves as a guide for policymakers to develop National Smart Cities’ strategies and outlines building blocks including Business Enablers for Smart Cities, Smart City Domains, Policy and Governance and Financing options. Rwanda also launched its Smart Sustainable Cities Strategic Plan at the same occasion. The first-moving region is now considering how such trending technologies as the Internet of Things (IoT) and Big Data can impact development and their citizens positively. Following the Standards Recommendations made by ITU, the countries of Rwanda and Kenya are leading innovative pioneering work on IoT and Big Data respectively. It is noteworthy that ITU already employed Big Data technologies in Disaster Management and successfully facilitating the fight against Ebola in West Africa. Having mitigated the issues of connectivity pricing, the region is now addressing the challenge of affordability of mobile smart devices and local content, as well as local e-applications. The home of the now renowned Mobile Money, the region is continuing to tackle issues of Digital Financial Inclusion, as well as addressing the issues of cybersecurity, largely with ITU’s technical assistance in establishing Computer Incident Response Teams (CIRT). COMESA is on “Digital Fire” and I am happy to be fuelling it.

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PRIORITY INVESTMENT SECTORS

HEALTHCARE COMESA’s healthcare market is expanding and patient outcomes are improving, and this growth calls for investment in infrastructure, service provision and training

here is a strong investment climate in COMESA’s healthcare sector as the region seeks to make major improvements in the health of its citizens. Key development areas include infrastructure, drug provision, training, mobile services and telematics. By some performance metrics, patient outcomes have improved significantly in the region in recent years, since African Union countries pledged to set a target of

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allocating at least 15% of their annual budgets to improve the health sector in the 2001 Abuja Declaration. But there is still a long way to go, particularly as this target remains an ambition, rather than a reality. Levels of infectious diseases such as malaria, HIV, leprosy, hepatitis and tuberculosis remain high. There has also been an increase in non-communicable diseases – such as heart disease and diabetes – as people live longer. In response, stakeholders from across the public, private and international

PRIORITY INVESTMENT SECTORS

GE HEALTHCARE

donor sectors are collaborating on a series of projects aimed at improving healthcare in states throughout the COMESA region. The statistics show that some aspects of the regionâ&#x20AC;&#x2122;s healthcare are improving. For example, according to World Health Organization (WHO) data, maternal mortality in Uganda dropped by half between 1990 and 2015, and the annual number of deaths from malaria in Rwanda has fallen from 3,167 in 2002 to 496 in 2014. USAID figures show that Rwanda, Malawi and Madagascar

are among the top 10 countries with the greatest percentage decline in their underfive mortality rates over the period 19902011, decreasing by 65.4%, 63.6% and 61.8% respectively. However, in spite of these promising figures, sub-Saharan Africa has the highest risk of death in the first month of life and infant mortality remains higher than elsewhere in the world. The healthcare sector is still in clear need of greater participation from both the public and private sectors. More hospitals and

Easily transportable technologies, such as ultrasound equipment, mean that people in rural locations now have greate access to medical services

INVEST IN THE COMESA REGION 2017 /

PRIORITY INVESTMENT SECTORS

Greatest % decline in under-five mortality rates (1990-2011) Rwanda

65.4% Malawi

63.6% Madagascar

61.8%

primary healthcare centres are also needed in the region as governments work to improve hospital-to-patient ratios. The region’s emerging middle class is willing to pay for better treatment, and this has created opportunities for private-sector involvement. Strong demand in parts of the region for high-quality, internationalstandard healthcare from this segment, as well as from expat workers, governments and health insurers, is driving the growth of private specialist hospitals. For example, African Medical Investments already operates a number of private facilities in three African countries, including Zimbabwe, and is looking to expand into other markets. Infrastructure investment in dispensaries and health centres that can provide a range of services such as basic consultations, diagnostics and care for routine conditions, as well as more advanced treatments, is an ongoing requirement. However, financing and constructing these facilities is just part

use them. One solution is to go down the managed equipment services route, something that is popular in parts of Europe and Canada and marks a shift away from traditional large Capex (capital expenditure) upfront costs towards Opex (operating expense) payments. This type of publicprivate partnership combines the supply of equipment with service and maintenance agreements, as well as user training. With more than 70% of the population of some COMESA nations living in rural areas, the focus is on serving patients in these communities and removing the need to travel for care. Novartis, IBM and Vodacom are involved in a project outside COMESA in South Africa to establish a Foundation for Chronic Disease Management (FCDM). This links public-sector community health workers and private physicians to bring costeffective, high-quality care to people’s homes using mobile technologies. Similar schemes could be rolled out within the region.

— Mobile healthcare is an important way of extending access to medical practitioners of the challenge. Investment is required to provide medical supplies and skilled staff, as well as electricity and clean water. Ethiopia is a leading example of a country with improving primary healthcare. According to an October 2015 report from its Ministry of Health, over the past 20 years the country has expanded and rehabilitated its primary healthcare facilities, constructing 16,440 health posts, 3,547 health centres and 311 hospitals. Its latest Health Sector Transformation Plan is the first phase of the government’s plans to achieve universal health coverage through strengthening primary healthcare, and is part of Ethiopia’s second Growth and Transformation Plan. Plans for healthcare infrastructure modernisation and enhancement are being rolled out throughout COMESA with varying degrees of success. While procurement is important, getting the right agreement in place is essential if diagnostic equipment, such as CT scanners and X-ray machines, is not to end up sitting idle because nobody knows how to service, maintain or even

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Mobile healthcare is proving to be an important way of extending access to medical practitioners. This uses traditional means supported by newer digital technology. For example, health workers with basic medical supplies visit unserved villages once a week, with call centres staffed by skilled medical practitioners providing them with support by mobile phone. Additionally, portable technologies, such as ultrasound equipment, can be used in these locations to tackle high maternal and infant mortality rates. As well as supporting standard callcentre-based services, mobile technology is being used to improve drug and equipment supply chains. Health workers in Uganda already use the mTRAC mobile health system to report on medicine stocks across the country, while the SMS for Life programme uses mobile technology in countries such as Zambia to expand access to medicines in the most remote areas. COMESA’s citizens would also benefit from technology being used to record data on

ARNE HOEL / WORLD BANK

PRIORITY INVESTMENT SECTORS

patients seen and conditions treated, manage operations in individual practices, and deliver eLearning to develop the skills of midwives, nurses, radiologists and other healthcare professionals. There is an additional need for systems that can transmit images to hubs globally for analysis by diagnostic specialists. There are growing opportunities in the area of telemedicine, enabling remote healthcare workers to confer with specialists in tertiary medical facilities to confirm diagnoses and agree on treatment. There are already a number of ambitious projects in this field, such as in Egypt and Mauritius, where two regional hospitals are linked to specialist facilities in India as part of the pan-African eNetwork project. The region needs platforms combining SMS with speech recognition to enable rural health workers to schedule appointments, record patient data and access low-cost diagnostics applications. Investments in areas such as nanotechnology are beginning to achieve results, enabling patients to monitor conditions such as diabetes at

home and making it easier for those living in rural areas to manage their treatment. However, for all opportunities to take off across the region, mobile broadband provision needs to be improved, service-level agreements need to be harmonised and lesseducated workers need to be trained to use the technology. The need for training lends itself to opportunities for companies to establish centres for skills development in all areas of healthcare. For example, GE has set up the GE Healthcare Institute to train radiographers, radiologists and biomedical engineers. There are a number of opportunities in the pharmaceutical sector, too, particularly in research manufacturing and the provision of more affordable medical products. In Kenya, for instance, there are opportunities for the manufacture of disposable products, such as gloves; the commercial processing of traditional medicines based on the countryâ&#x20AC;&#x2122;s diverse flora; extraction and processing of products for pharmaceutical use; and manufacture of medical supplies.

In Uganda, the healthcare sector has adopted mobile systems to report on medicine stocks

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PRIORITY INVESTMENT SECTORS

ENVIRONMENT Moving towards a greener environment is a priority across Africa, and the continent is taking lessons from industrialised countries to establish development plans that are more environmentally friendly than those of the past

nvironmental challenges and the threats posed by climate change are two of the major development hurdles of this century. In order to achieve sustainable development, governments must protect its poorest people from the worst effects of climate change, and strike a balance between the management and conservation of natural resources – no small task for economies that rely on such resources. Environmental challenges in the COMESA region number many. Land degradation, loss of forest landscapes, loss of biodiversity, pollution of freshwater sources and atmospheric pollution driven by urban and industrial activity are all issues that are present in East Africa.

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Preserving ecosystems and halting the destruction of natural resources and landscapes has become a more prominent priority since the signing of the landmark climate agreement at COP21 in Paris in 2015. The Paris Agreement brings the focus of all nations towards a common cause: to undertake ambitious efforts to combat climate change and adapt to its effects. Developing countries – which generally experience the worst effects of climate change due to poor infrastructure – would be given a helping hand, and the global response to climate change will be strengthened. Most importantly, signatories of the agreement agreed to keep global temperature rises below two degrees Celsius above pre-industrial levels, and to pursue efforts that will limit the temperature increase even further to 1.5°C.

Renewable energy sources are being utilised to improve access to electricity in rural areas

In line with this agreement and to build carbon development strategy. This on progress being made globally, Uganda is would go some way to helping Uganda working with the private sector to increase meet its expressed aim of doubling its its levels of renewable energy. In May 2016, renewable energy output in line with it was announced that the country is being the COP21 agreement. supported by French NGO ACTED to bring electricity to thousands of rural households ENVIRONMENTAL INITIATIVE in northern Uganda. Around 75% of Uganda’s Such activity falls in line with the population living in rural areas have no African Renewable Energy Initiative access to electricity, and 94% of households (AREI), which aims to produce 300 rely on wood or charcoal for their gigawatts (GW) of electricity for the energy needs – both of which are highcontinent by 2030. The initiative was polluting sources of energy. ACTED launched as part of the continent’s has partnered with private corporation contribution to climate action agreed Dream Shuttle to develop sustainable at COP21 in Paris, and its goals renewable energy projects in the are to help achieve sustainable country’s rural regions. One development, and enhance wellof its innovative initiatives being and sound economic Around is producing green energy development by ensuring through biomass gasification, universal access to sufficient a process in which solid biomass amounts of clean, appropriate fuel – in this case, agricultural and affordable energy. In waste – is converted into a clean, addition, it aims to assist African combustible gas that powers countries move towards of Ugandians engines to produce electricity. renewable energy systems that living in rural areas France is also working with would support their low-carbon have no access to Uganda on rural electrification, development strategies. electricity with two out of three financing The African Development agreements signed between Bank (AfDB) is a lead sponsor the countries in December 2015 aimed at of the initiative, and President of the extending the national grid towards rural AfDB Akinwumi Adesina said the communities. The total financing amounts to bank will triple its financing to climate $57m, which would be targeted at feasibility change initiatives by 2020, dedicating studies and capacity-building for a low40% of the bank’s resources to

75%

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MORGANA WINGARD/POWER AFRICA

PRIORITY INVESTMENT SECTORS

LAKE TURKANA WIND POWER

PRIORITY INVESTMENT SECTORS

40,000 acres

of wind turbines

power around

1.5

million homes

15% of Kenya’s total daily electricity load

The Lake Turkana Wind Power project occupies 40,000 acres on the south-east shore of Lake Turkana, northern Kenya

these efforts. At the launch of the initiative, Kenya’s Environment Cabinet Secretary Judi Wakhungu, who represented President Uhuru Kenyatta at the meeting, said, “Clean energy is important and its production and utilisation will reduce the carbon emission[s] and save the environment. Kenya welcomes the AfDB initiative and we are ready to engage in massive solar and wind energy production to attain 100% electricity reach for our people.” Kenya is, in fact, leading the charge when it comes to green energy initiatives in East Africa and the COMESA region. Africa’s largest wind farm is situated in the rocky landscape of north-west Kenya, within Kenya’s stretch of East Africa’s Great Rift Valley. In October 2016, Vestas Wind Systems installed the 154th turbine at the Lake Turkana Wind Power project, which occupies a vast 40,000 acres on the south-east shore of Lake Turkana. Scheduled for completion this year, the wind farm will power 1.5 million homes, accounting for approximately 15% of Kenya’s total daily electricity load. Crucially, the wind farm will offset 16 million tonnes of greenhouse gas emissions annually, playing a significant role in helping Kenya meet its development and climate goals. According to Achim Steiner, former executive director of the UN Environment Programme, the project demonstrates how investment in renewable energy is not just an option for the future, but for now. “We have moved well beyond the pilot-scale projects that used to define Africa’s role in cleanenergy development. We are now talking about projects in the hundreds of megawatts coming online across the continent,” he said.

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Ethiopia is another COMESA country harnessing the winds of the Great Rift Valley, with the country expected to expand its wind energy capacity to up to 800 MW by 2020. Such environmentally friendly activity does not come without challenges. Financial constraints, coupled with poor infrastructure and other issues, have hindered progress in some countries, but experts note that there is positive momentum. This is stirring up interest among some of the world’s major investors. In October 2015, Google announced plans to purchase a 12.5% stake in the Lake Turkana project upon its completion – the company’s second major investment in Africa’s renewable energy market following its $12m commitment to South Africa’s Jasper Solar Power Project in 2013.

LONG-TERM ACTION Countries in the COMESA bloc have been concerned with environmental changes and their impact for some time now. Back in 2014, the Union of Comoros sought to integrate recommendations from the World Parks Congress into national development plans. Vice President Fouad Mohadji promised to increase the number of terrestrial parks in the Union of Comoros by 18% and the number of marine parks by 5% over the four years to 2018. The government has placed conservation efforts at the heart of development plans, believing that by safeguarding the country’s diverse ecosystems food and water security can be maintained, and this will go some way to protecting the island nation from the damaging effects of climate change. The environmental challenges present in the COMESA region are reflected around the world, with poor nations particularly vulnerable to damage from unpredictable weather conditions and stress from food and water scarcity. It is crucial for investors to come together with environment ministries and conservation organisations to protect the environment in a way that is economically sound and manageable for communities. With the global population rising, land is becoming an increasingly vital asset, and given its position as a rapidly developing bloc, COMESA is well placed to implement policies and practices that will protect the environment and vulnerable communities in the years ahead.

PRIORITY INVESTMENT SECTORS

WATER From opportunities in developing training in the management of land and groundwater resources to fostering partnerships that support water security, COMESA’s water sectors are open to productive investment

THE WORLD BANK

ccess to safe water is not just a basic human right – it is crucial to poverty reduction and fostering prosperity in nations, and it is a priority shared by the COMESA governments. Yet a combination of population growth, poor coordination in the development of water services and low levels of investment in poor areas has led to a reported reduction in water security in many parts of East Africa over the past few decades. Together, these factors have contributed to hikes in the price of water as demand increases while supply stagnates or dwindles. In areas where there is insufficient water infrastructure, people are forced to

In 1990, just 60% of Rwanda’s population had access to clean water. This improved to 71% by 2013

purchase water – often from unregulated vendors, who have been known to charge up to six times the official rate. It is a cycle of poverty that can be difficult to escape, and there are other factors at play; for example, climate shocks. In 2011, Djibouti, Ethiopia and Kenya, along with non-COMESA state Somalia, were hit by severe drought. Big variations in rainfall are extremely difficult for governments and the general population to plan for, and climate-related expenses quickly stack up. Investment in technologies that mitigate the negative impact of climate change could make a big difference to COMESA’s rural and farming communities. Progress in delivering water security has been painfully slow in some regions,

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PRIORITY INVESTMENT SECTORS

In Kenya

despite expanding pools of knowledge and local plans to improve the situation. In Kenya, for example, the proportion of rural land covered by piped water has increased from 10% to just 14% in the past 25 years. As well as affecting people on a day-to-day basis, water scarcity poses a significant threat to the overall security of states. Lack of water can lead to conflicts, and so-called ‘hydro-diplomacy’ is becoming more common as leaders target peacekeeping efforts in at-risk regions. In November 2016, the United Nations Security Council highlighted threats to such peacekeeping efforts amid discussions on water, peace and security. Establishing wider cooperation with regional organisations was a prominent theme, and the Council is seeking a more structured partnership with the African Union (AU), which will have implications for all of Africa’s regional trade blocs. Later that month, the Council hosted it open debate on

investment and enhance profitability. This is where foreign investors could thrive, and COMESA has also identified the need to close the technological gap through capacitybuilding, institutional restructuring, research, extension and training.

AGRICULTURE-LED DEVELOPMENT Water and agriculture are closely bound, and developing water infrastructure is part of the AU’s Comprehensive Africa Agriculture Development Programme (CAADP). Endorsed in 2003 by the AU Heads of State, the goal of the CAADP is to “help African countries reach a higher path of economic growth through agriculture-led development, which eliminates hunger, reduces poverty and food insecurity, and enables expansion of exports”. Though the programme primarily targets agricultural development, its success partly rests on the establishment of reliable water and water-control systems, as well

14% Proportion of rural land covered by piped land

In Rwanda water and its security implications. On the agenda was that fact that water scarcity is generating conflicts around the world, and both state and non-state actors are using water as a weapon of war. From 11 to 14 November, Council members visited Africa’s Great Lakes region. Within COMESA, member states are committed to fostering and maintaining a reputation as a peaceful trading bloc, and its governments are working with a number of partners in order to achieve water security in all senses.

EXPANDING IRRIGATION Delivering water where it is needed most is part of COMESA’s strategic plan. Irrigation in particular is being targeted as the region considers how to increase food production. The total land under irrigation within the COMESA bloc is estimated at around five million hectares, or 5.5% of the total cultivated area. Though there is significant potential for irrigation expansion, a number of areas need to be addressed before growth can be achieved. One key focus area is the need to develop policies to promote irrigation

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1990 2013

Population access to clean water

71% 60% as improved rural infrastructure. Strengthening the governance of water resources and ensuring their sound management is crucial, as well as establishing comprehensive coverage and easy access to these resources. To achieve the water security so desperately needed, COMESA is working with a number of international partners, and has been doing so for some time. In 2011, leaders from the United Arab Emirates (UAE) expressed interest in working with COMESA to secure its commodities. On 23-24 March 2011, the COMESA Investment Forum, Dubai to Africa, Unlocking the Markets of the Future, took place, where parties agreed to

JAKE LYELL / ALAMY

PRIORITY INVESTMENT SECTORS

benefit from their combined experience and secure resources such as water. One country that is striding ahead in terms of delivering safe water to those most in need is Kenya. Within its Vision 2030 development plan the Kenyan government is prioritising the improvement of water supply services and related infrastructure, and county governors have committed to improving water services ahead of the upcoming elections in 2017. In 2016, global research programme REACH organised a conference to bring together experts to discuss how to improve water access in Africa, as well as in South Asia. The subsequent report on Kenya pinpoints the leading causes of water insecurity in the country, and suggests ways in which the situation can be improved. The three main drivers identified were lack of coordination in development activities; climate shocks and droughts; and persistent poverty and inequality.

PRIVATE-SECTOR INVOLVEMENT In a strategic move, the Kenyan government devolved key water and sanitation facilities to county level, and governors have made access to water a priority. Such action is expected to encourage flexible solutions and market-based models to the water sector. To this end, in Kenya and elsewhere in the COMESA region, private companies are being welcomed as part of the solution to water-supply challenges.

For example, FundiFix provides maintenance services for rural water infrastructure in Kenya, guaranteeing the repair of broken hand-pumps within three days. Electronic transmitters are fitted to the pumps and communicate information that enables the company to identify broken pumps. Kenya is a regional leader when it comes to mobile innovations, and using technology to help solve water insecurity issues is a model that can and should be replicated elsewhere. In order to do so, investment is essential.

Water services in Kenya are improving with the Vision 2030 development plan

IMPROVING ACCESS Rwanda has also come a long way in bringing water security and sanitation to larger swathes of its population over the past few decades. In 1990, just 60% of the countryâ&#x20AC;&#x2122;s population had access to clean water; by 2013, that had increased to 71%. Now Rwanda is leading the charge with the Kigali Action Plan, which seeks to improve access to drinking water, sanitation and hygiene. The plan was agreed on the sidelines of the 23rd African Union (AU) Summit in 2014, and it focuses on community-level action to ensure rural household access to water supply and sanitation in 10 African countries. COMESA countries targeted in the action plan are Rwanda, Burundi, Madagascar and South Sudan. Worth $55.4m, the plan aims to make water and sanitation programmes a higher priority in national spending across Africa.

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Tourism is one of the largest contributors to national economies around the world, and as demand in East Africa continues unabated, the region must develop its offerings in line with consumer trends 78 / INVEST IN THE COMESA REGION 2017

ALAMY

TOURISM

PRIORITY INVESTMENT SECTORS

ourism is booming across the African continent as globalisation opens up travel opportunities, giving rise to a proliferation of new hotels, resorts and leisure activities. In its 2014 report, Tourism Towards 2030, the United Nations World Tourism Organization (UNWTO) predicts that by 2030, tourism arrivals in Africa will reach 134 million – more than double the 2014 level of 65 million. That year, Egypt experienced the strongest tourism growth in Africa, seeing 454,000 more international arrivals than in 2013 – an increase of 5% in just one year, as reported by Africa Tourism Monitor. This report is produced by the African Development Bank (AfDB), and in 2015 the bank worked jointly with New York University’s Africa House and the Africa Travel Association to produce Africa Tourism Monitor for the third year in a row. The October 2015 report focused on unlocking Africa’s tourism potential, and covered issues including investment, conservation, product development and partnerships, and how to fuel economic growth and make the most of opportunities in the sector. As well as measuring how successful Africa’s tourism sectors are, the report examined issues such as trade policy and regional integration; regional visa cooperation and facilitation; the development of hotel chains; the value of wildlife tourism; engaging local citizens; knowledge and skills transfer; and tapping into the online travel marketplace. Significantly, it also considered how to present an authentic Africa to visitors. The facts and figures within the report tell the story of how tourism is evolving across the continent. In the year to October 2015, Africa saw 1.133 billion global tourist arrivals – a 4.3% increase over the 12-month period. According to Dr Charles Leyeka Lufumpa, director of the AfDB’s statistics department, “Worldwide tourism activity has been at its highest level to date. Africa welcomed 65.3 million arrivals in 2014, which represents 5.8% of the total international arrivals figure. International tourism receipts rose to their highest level in 2014 at $1,245bn. With $43.6bn in receipts, Africa holds 3.5% of this global market share.” He attributes this growth in part to the influx of visitors from emerging economies in Asia and Central and Eastern Europe. To ensure that benefits are drawn from the trends and data being observed and collected, the AfDB created the Open Data platform. This portal was developed in response to rising demand for statistical data and indicators on African countries, and it informs decisions and policy implementation that impact the tourism sector. The data is also used for projections. Of the COMESA countries, Zimbabwe joined Egypt in the top five African countries for international tourist arrivals

in 2014, and Kenya is expected to soon join its neighbours in the top rankings. The travel and tourism industry accounts for a significant proportion of employment. Egypt and Ethiopia are among those African countries with the highest numbers of both direct and indirect tourism employment. The Seychelles comes first in rankings of African countries with the highest total tourism employment as a percentage of total employment, at 57.3%. The country has seen such rapid tourism growth that it is building a new international airport to keep pace with demand. Madagascar comes fifth, with tourism employment accounting for 16.5% of total employment. Globally, the travel and tourism sector represents 9% of GDP and accounts for one in every 11 jobs. The sector is growing faster than any other in the global economy, and the AfDB reports that the sector’s potential led to the adoption of the NEPAD (New Partnership for Africa’s Development) Tourism Action Plan. The plan was formulated to foster the development of tourism across the continent, with the sector identified as a key driver of socio-economic growth. The plan seeks to harness Africa’s assets – from rich, unique cultures and urban playgrounds to valleys and jungles.

LOW-IMPACT TRAVEL One area that is proving particularly popular in the COMESA region, and indeed across the continent, is ecotourism. This sub-brand of tourism is designed to protect natural landscapes, support conservation efforts and observe wildlife in natural habitats. As well as promoting a greater understanding of and appreciation for nature, ecotourism supports local communities

Top 10 African countries for total employment (direct, indirect, induced) in the tourism industry COUNTRY

‘000 JOBS

Egypt

2,944.0

Ethiopia

2,291.5

Nigeria

2,198.5

Morocco

1,740.5

South Africa

1,497.5

Tanzania

1,337.0

Madagascar

882.5

Mozambique

710.5

Algeria

660.0

Uganda

592.5

Source: World Travel and Tourism Council

Tourists in the Karnak Temple, Karnak, Luxor, Egypt. It is part of the monumental ancient city of Thebes

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BOBBUSHPHOTO/ISTOCK

PRIORITY INVESTMENT SECTORS

Botswana-based Wilderness Safaris is spearheading the rise in foreign ecotourism

In the year to October 2015,

1.133

billion

global tourists visited Africa

and is considered a more responsible way to travel. As the popularity of ecotourism rises, businesses and investors are taking a keen interest in this low-impact travel option. In October 2016, it was reported that Botswana-based multinational ecotourism company Wilderness Safaris had raised a $35m loan to buy a new ecotourism company in Kenya and for further expansion across Africa. Wilderness Safaris already operates just under 40 safari camps in eight African countries, and as one of Africa’s premier ecotourism companies it is popular with foreign tourists. The company intends to invest in luxury ecotourism to build sustainable conservation economies,

Kenya is certainly blazing a tourism trail. Its 2016 Magical Kenya Tourism Expo welcomed industry players to discuss all things travel and to highlight Kenya as a prime destination. As a regional leader, Kenya could be responsible for drawing more tourists to the wider COMESA bloc. Najib Balala, Kenya’s tourism Cabinet Secretary, said that East African countries should not consider one another as competitors, but rather as friends complementing each other. This notion is being carried forward as COMESA states seek to expand tourism. For example, Rwanda, Uganda and Kenya are part of a tripartite agreement that enables tourists to visit all three countries on one multiple-entry visa. In 2014, the Seychelles and Zambia signed a memorandum of understanding (MoU) to advance transboundary tourism. The agreement marked the start of ongoing discussions between their tourism industries on how to promote twin packages in both countries, with industry experts noting how Zambia’s wildlife and landscape could prove even more popular when combined with trips to the Seychelles’ exotic island retreats. Sustainable tourism was brought up during discussions, with director of Seychelles

— With the popularity of ecotourism on a rapid rise, businesses and investors are taking a keen interest

57.3%

of employment in the Seychelles is in tourism

of GDP

from the travel and tourism sector

delivering environmental benefits and sharing its success with rural communities. Keith Vincent, Wilderness Safaris’ chief executive, says that reinvestment and expansion is “in line with our group strategic vision, which is to invest in African tourism markets which offer authentic wildlife and safari experiences and where we feel our specific ecotourism model can have positive conservation and community impacts”. The loan was led by Stanbic Bank Botswana, and the transaction represents one of Botswana’s largest corporate deals in 2016. Elsewhere in Kenya, the tourism board is drafting plans to involve local communities in development plans, with the intention of creating more diverse travel options for visitors, while bringing economic benefits to communities along the tourist trail. And

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Tourism Office David Germain noting the importance of preserving the environment. This is being reflected elsewhere in the region, with COMESA states developing in line with the COMESA Sustainable Tourism Development Framework. In Ethiopia, the Sustainable Tourism Master Plan 2015-25 is partly aimed at tackling regional challenges that impede growth. In Libya, UNWTO backs strategic development through institutionbuilding and governance, sustainable development, marketing, and human resource development. In Eritrea, efforts are under way to preserve and protect ancient Asmara City by registering the site on the UNESCO World Heritage list. Overall, such activity is widely expected to boost tourism receipts, bringing benefits to individual member states and the region as a whole.

PRIORITY INVESTMENT SECTORS

AWF

How tourism can drive Africa’s economic development

Kaddu Sebunya President, African Wildlife Foundation

Driven by strong raw material trade, the past decade and a half has seen many countries in Africa sustain growth rates of 5% and above. But fortunes have changed, as dependence on commodities has turned from being an asset into a liability. Africans are rightly beginning to question the extent to which our continent’s growth is dependent on commodity exports. We are increasingly seeing that countries with a diversified economy are more resilient than those dependent on a single industry – much less an industry that harvests our rich natural resources. Tourism is emerging as a top foreign earner in many countries. Africa boasts an expansive protected area network that anchors our natural heritage – more than 1,100 national parks and reserves can be found in the sub-Saharan region alone. With protected area coverage across the continent having increased over the past 50 years, today protected areas encompass some 20% of Southern Africa, 13% of East Africa (including the Horn), 11% of Central Africa and 9% of West Africa. Africa must therefore consider tourism as a crucial building block for economic diversification and future growth. The African Wildlife Foundation (AWF) believes that tourism can be a force for

biodiversity conservation and an engine for rural economic development, simultaneously protecting the continent’s much-needed natural resources while also leveraging those riches for sustainable economic growth. By building alliances between local communities, governments and the private sector, tourism has the potential to directly support the protection of critical ecosystems and vulnerable species, while also improving the welfare of the people and driving national economies. In Rwanda, for example, the iconic mountain gorilla had been rendered critically endangered due to habitat loss, poaching, disease and war. AWF partnered with the government and private sector to help save this species by investing in the tourism opportunities around the species. We saw multiple potential benefits in building a community-owned tourism enterprise, Sabyinyo Silverback Lodge. We structured a $250,000 loan at 0% interest from a private investor, which was repaid in fewer than 5 years and generated an internal rate of return of more than 20%. In under 10 years, there has been a yield of more than $2.5m accruing to local host communities, with additional revenues to fund the conservation of these gorilla habitats. Perhaps most importantly, the returns have been instrumental in educating the wider world on the plight of the mountain gorilla. Revenue has also funded an impressive array of health, education, infrastructure and economic empowerment projects. In most areas where AWF works, tourism has been growing and is increasingly linked to the undisturbed natural environments found in these areas. By linking tourism with biodiversity conservation and the well-being of local communities, we can develop strategies that both conserve Africa’s ecosystems and make a significant contribution to Africa’s economic development at the same time. In fact, with a good business plan and sound governance structures, Africa’s protected area estate has the potential to create a new annual economy worth $40bn per year. Yes, many challenges lie ahead in making this economy a reality – but so, too, do many great opportunities.

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COMESA – COUNTRY BY COUNTRY

Burundi The Republic of Burundi is a landlocked country situated in the Great Lakes region of East Africa. The mountainous country is located on the northeastern GDP shoreline of Lake Tanganyika, the world’s second oldest freshwater lake, second largest by volume, and second deepest. Other significant lakes in the country bn include the Cohaha and Rweru, while major rivers running through Burundi include the Kanyaru, Malagarasi, Rusizi and Ruvubu. POPULATION: After German colonisation before the First World War and by Belgium when million Germany ceded the territory after its defeat in the war, Burundi regained independence in 1962. The country was structured beneath a monarchy, but a series of coups led to LANGUAGE: Kirundi, French and English the establishment of a republic in 1966. Burundi has experienced ethnic conflict and instability since then, and the country has suffered in terms of development. CURRENCY: Burundian Franc Burundi joined COMESA in 2004. Its membership means the country can enjoy duty- and quota-free terms for goods originating within its territory into fellow EASE OF DOING BUSINESS RANK: 157/189 free-trade area countries. Speaking at the 16th Meeting of the COMESA Council of Ministers in December 2003, ahead of Burundi joining the bloc, then COMESA CENTRAL BANK: Bank of the Republic of Burundi Secretary General Erastus Mwencha said that the free-trade area has contributed to a diversified product range in intra-COMESA trade, as well as increased competition. INVESTMENT AGENCY: www.investburundi.bi “These benefits are assisting member states to enhance competitiveness and empower citizens economically. The most important thing as regards the FTA [free trade agreement] is to consolidate operations and bring on board more member states,” he said. Burundi’s economy relies heavily on agriculture, which supplies more than 40% of its income and employs the majority of its population. Its primary exports are tea and coffee, which account for 90% of foreign exchange earnings. Burundi is home to 6% of the world’s nickel reserves and the government plans to expand the extractive sector, which already mines tin, tungsten, tantalum and gold. Other growing sectors include technology, media and communications, with the country’s independent industry regulator committed to fostering competition within the mobile sector. Tourism is another sector with huge growth potential. Burundi’s dramatic landscape and abundant wildlife have plenty to offer tourists, but broad sector development is needed to attract Members of the famous drummers and Dancers of Gitega in Burundi, Africa increased numbers of visitors. CAPITAL CITY:

Bujumbura

$3.085

GUENTER GUNI/ISTOCK

11.18

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COMESA – COUNTRY BY COUNTRY

CAPITAL CITY:

Moroni GDP:

$623.7m POPULATION:

788,474 LANGUAGE:

Comorian, Arabic and French CURRENCY:

Comorian Franc EASE OF DOING BUSINESS RANK:

153/189

CENTRAL BANK:

Central Bank of the Comoros INVESTMENT AGENCY:

www.invest-comoros.com

The Union of Comoros is a volcanic archipelago off Africa’s east coast, comprising three major islands – Ngazidja (Grande Comore), Mwali (Mohéli) and Nzwani (Anjouan) – as well as numerous islets. Formerly part of the French colonial empire, the islands declared independence in 1975. There is, in fact, a fourth island, Mayotte, that makes up the archipelago, but at independence it retained links with France and became a full French department in 2011. Although this was ruled to be illegal in international law by the United Nations General Assembly, Mayotte now enjoys European The Union of Comoros’ dhow port and Old Friday Mosque healthcare, education and welfare. Since independence, the Union of Comoros has experienced a number of attempted coups and assassinations of heads of state, but today relative peace and prosperity reigns. Mayotte’s separation from the rest of the country has led to stark inequalities, and in 1997 Anjouan and Mohéli called for reattachment to France. The two major islands declared unilateral independence, and political instability continues today – despite the ratification of a redrafted constitution in 2002, which seeks to avoid the marginalisation of the nation’s smaller islands. In May 2016, President Azali Assoumani was sworn in following peaceful presidential elections. In his inauguration speech, the president reaffirmed his commitment to the peace, stability and security of the nation, and to sustainable development. He also said that the Union of Comoros would continue supporting the various programmes being implemented in the COMESA bloc to deepen regional integration. It is hoped that the coming years will see better employment opportunities and higher GDP growth than in recent times. In 2014, GDP stood at $623.7m. In the World Bank’s Ease of Doing Business rankings, the Union of Comoros ranks 153 out of 189 countries, and 161 for starting a business. The country has three official languages – Comorian, Arabic and French – and its relatively small population of 788,474 uses the Comorian Franc. The capital city of Moroni is a port city on the eastern shores of Grande Comore. The country joined the COMESA free-trade area in 2006. The country’s economy relies heavily on fishing and subsistence agriculture, which employs around 80% of the population and accounts for 40% of total GDP. Comoros is the world’s leading perfume of the popular perfume ingredient ylangylang and is also a major producer of vanilla.

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INSULARIS/ISTOCK

Union of Comoros

COMESA – COUNTRY BY COUNTRY

Democratic Republic of the Congo CAPITAL CITY:

Kinshasa GDP:

$35.238bn POPULATION:

77.3 million LANGUAGE:

French

CURRENCY:

Congolese Franc EASE OF DOING BUSINESS RANK:

177/189

CENTRAL BANK:

Central Bank of the Congo INVESTMENT AGENCY:

MTCURADO/ISTOCK

www.investindrc.cd/en

The Democratic Republic of the Congo (DRC) is a huge country – the size of Western Europe, in fact – situated in Central Africa. Formerly known as Zaire, and before that the Belgian Congo, the DRC assumed its current name in 1997. It borders the Central African Republic and South Sudan to the north; Burundi, Rwanda, Tanzania and Uganda to the east; Angola and Zambia to the south; the Republic of the Congo to the west; and the Atlantic Ocean to the south-west. Home to vast economic resources, the country has experienced war fuelled by mineral wealth and politics. It is potentially one of the richest countries in the world, but colonial occupation led to circumstances that have rendered the DRC unable to harness these resources for the good of its people and the economy. The DRC has access to vast supplies of water from the world’s second-largest river, the Congo. The country has swathes of land with rich, fertile soil, and beneath that lies bountiful deposits of minerals including copper, diamonds, gold, manganese, cobalt, coltan – a vital material for the production of mobile phones – tin, lead and zinc. Its energy resources include coal, uranium and oil. Kinshasa, the DRC’s capital city, sits beside the Congo river. It has grown into an urban area with a massive population, although no recent census means guesswork is relied upon when stating how many people live here. The city faces Brazzaville, capital of the neighbouring Republic of the Congo. In 2014, the DRC committed to depositing its instruments of access to the COMESA free-trade area, which was launched in October 2000. The DRC joined the COMESA bloc in early 2016, a move expected to boost the flow of regional trade. Speaking at the time, COMESA Secretary General, Sindiso Ngwenya, said the DRC was committed to a phased tariff-reduction scheme, starting with an immediate tariff reduction of 40%, which would be followed by two equal cuts of 30%.

Skyline of the DRC’s Kinshasa central business district

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COMESA – COUNTRY BY COUNTRY

Djibouti DEREJEB/ISTOCK

CAPITAL CITY:

Djibouti City GDP:

$1.589bn POPULATION:

887,861 LANGUAGE:

French and Arabic CURRENCY:

Djiboutian franc

With its access to the Indian Ocean and Red Sea, Djibouti serves as the import and export route for neighbouring Ethiopia

EASE OF DOING BUSINESS RANK:

171/189

CENTRAL BANK:

Banque Nationale de Djibouti INVESTMENT AGENCY:

www.djiboutinvest.com

Situated in the Horn of Africa, Djibouti is a multi-ethnic nation. Bordered by Eritrea to the north, Ethiopia to the south and west, Somalia to the south-east and the Red Sea and the Gulf of Aden in the east, this relatively small country is home to just under 900,000 people. Throughout its history, Djibouti has been absorbed by other territories. It wasn’t until 1977 that the people of Djibouti voted for independence – a move that officially marked the establishment of the Republic of Djibouti, named after its capital city. The country joined the United Nations that same year, on 20 September 1977. Today, it is mostly French- and Arabic-speaking, but also counts Somali and Afar as national languages. Strategically located near some of the world’s busiest shipping lanes, Djibouti has access to the Red Sea and the Indian Ocean. The country serves as the main maritime port for imports and exports to landlocked Ethiopia, and because of its location it is home to a number of foreign military bases, as well the Intergovernmental Authority on Development (IGAD) regional body, which has its headquarters in Djibouti City. The country’s location has also leant itself to determining the structure of the economy. Being connected to the Red Sea and the Gulf of Aden has led to Djibouti’s economy being dominated by the services sector, providing port and transit services for regional and international shipments. Djibouti’s transport facilities are used by several landlocked countries for the export of goods, through which the country earns transit taxes and harbour fees that form the bulk of government revenue. The country is also a refuelling centre. Djibouti’s civil war ended in 1994, and since then it has enjoyed political stability. Macroeconomic stability has significantly improved, and annual GDP is $1.589bn. Despite this, unemployment is high and there is widespread poverty. This is in part due to the country’s barren landscape, where there is little potential for development in the agricultural and industrial sectors. Djibouti was one of the nine COMESA member states that formed a free-trade area in 2000. By means of attracting investment, there are a number of incentives on offer for foreign investors.

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COMESA – COUNTRY BY COUNTRY

CAPITAL CITY:

Cairo GDP:

$330.779bn POPULATION:

91.5 million LANGUAGE:

Arabic

CURRENCY:

Egyptian pound EASE OF DOING BUSINESS RANK:

122/189

CENTRAL BANK:

Central Bank of Egypt INVESTMENT AGENCY:

www.gafi.gov.eg

Situated in Africa’s north-east, the transcontinental country of Egypt links the African continent to the Middle East. It is bordered by the Gaza Strip and Israel to the north-east, the Gulf of Aqaba to the east, the Red Sea to the east and south, Sudan to the south, and Libya to the west. Egypt is considered a cradle of civilisation, with one of the longest histories of any contemporary country. As such, it has a rich cultural heritage and is The TV tower near the Nile River in Cairo, Egypt an area of significant international interest. Today, Egypt is the most populous country in North Africa and the Arab world, home to 91.5 million people. Most of the country’s territory is taken up by the vast Sahara desert. The majority of Egyptians live near the banks of the Nile river, and around half of the country’s residents live in urban areas. The most densely populated centres include Cairo, the sprawling capital city that sits along the Nile; Alexandria, the second-largest city and an economic hub; and other major cities in the Nile delta, which leads to the Mediterranean Sea. Though Egypt’s GDP growth is expected to slow for full-year 2016, it is projected to rebound afterwards. In the past few decades, the country’s economy has shifted from one focused on import substitution to a more market-oriented economy, which has led to an increase in foreign investment. Structural reforms and new policies have strengthened annual macroeconomic growth. However, Egypt’s economy today faces long-standing structural challenges, and the International Monetary Fund is stepping in with a $12bn loan to support the government’s comprehensive economic reform plan, which seeks to restore macroeconomic stability and promote growth and employment. With a dynamic and young population, large market size, favourable location and access to important markets, Egypt represents a good opportunity for foreign investors. The country has implemented measures to indicate it is open for business, and there are a number of incentives available in specific economic sectors. Egypt joined COMESA in 1998 and began applying customs exemptions to imports from other member states in 1999.

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GIVAGA/ISTOCK

Egypt

COMESA – COUNTRY BY COUNTRY

Eritrea CAPITAL CITY:

Asmara GDP:

$2.608bn POPULATION:

4.79 million LANGUAGE:

Tigrinya and Arabic. English and Italian are also widely spoken, as well as a number of other languages CURRENCY:

Eritrean nakfa EASE OF DOING BUSINESS RANK:

189/189

CENTRAL BANK:

Bank of Eritrea INVESTMENT AGENCY:

HUGY/ISTOCK

www.eritrean-embassy.se/ invest-in-eritrea

Situated in the Horn of Africa, Eritrea is bordered by Djibouti in the south-east, Ethiopia in the south and Sudan in the west. The north-east and eastern regions of the country have vast stretches of coastline along the Red Sea. The capital city of Asmara is home to around 800,000 of the country’s 4.8 million people. Its architecture harks back to its days under Italian colonisation, when then-prime minister Benito Mussolini sought to create the ‘next Roman Empire’. Mussolini saw Asmara as the heart of his new empire, and named the city ‘La Piccola Roma’ – Africa’s little Rome. The Italians departed Eritrea in 1941, but they left behind the Modernist masterpiece that is Asmara. The city remains an attractive urban playground. Italian occupation was followed by British occupation until 1952. That year, the United Nations established Eritrea as an autonomous region within Ethiopia, whose annexation of the country led to a war that lasted 30 years. In 1993, Eritrea won the vote for independence. In recent years, Eritrea has been striving for economic change through structural reforms and even a new currency – in January 2016, the government announced that the current currency, the nakfa, would be replaced by an as-yet-unnamed one. This is being done to enable tighter control of monetary policy. These measures are part of steps being taken towards a more open, liberal economy and sincere efforts to create economic opportunities. Support is being increased for the mining sector – one of the country’s biggest sectors – and international investment in this area is on the rise. In addition, a number of global oil companies have negotiated with the government to prospect for hydrocarbons. Around 80% of Eritreans depend on agriculture, but a lack of wider development is hindering progress in this sector. Establishing economic, social and political institutions is one of the biggest hurdles faced by the country. In a joint report, the African Development Bank and the United Nations Development Programme say that Eritrea’s outlook is promising if the country exploits all opportunities for trade and opens up to foreign investment in all sectors.

Asmara, Eritrea’s capital city, which is renowned for its Modernist Italian architecture

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COMESA – COUNTRY BY COUNTRY

Ethiopia Sharing a border with Eritrea to the north and north-east, Djibouti and Somalia to the east, Kenya to the south and Sudan and South Sudan to the west, Ethiopia is a GDP: large country situated in the Horn of Africa. It covers an area of a million square kilometres, and since Eritrea’s declaration of independence in May 1993, Ethiopia bn has been landlocked. In fact, it is the most populous landlocked country in the POPULATION: world, with a population of 99.39 million, according to the World Bank. It is the second-most populous nation on the African continent. million Most of the country’s population resides in rural areas, and rapid population LANGUAGE: growth is putting increasing pressure on land resources. Agriculture accounts for Amharic, but there are 88 almost half of the country’s total GDP and 85% of all employment. The country has individual languages of Ethiopia one of the world’s fastest-growing economies and a number of sectors have been CURRENCY: pinpointed for strategic development. These include telecommunications, financial Ethiopian birr and insurance services, retail and transport services. Ethiopia’s population is young, EASE OF DOING BUSINESS RANK: with almost half under the age of 18, and job creation needs to be accelerated in 159/189 order to provide gainful employment opportunities. CENTRAL BANK: Ethiopia has taken huge developmental strides over the past few decades. Just National Bank of Ethiopia over 30 years ago, it was known as a place rife with famine and suffering from civil INVESTMENT AGENCY: war and drought. But the country has moved on, and over the past decade it averaged www.investethiopia.gov.et an economic growth rate of just over 10%. Some observers have called this progress an economic miracle, and buoyed by this success the government continues to focus on a high-growth strategy. It aims to make Ethiopia a middle-income country by 2025. Yet the country has also come under fire for perceived abuses of power in the quest for economic growth – land grabs have been ongoing as the government leases large swathes of land to big agribusiness companies, and the resettling and displacement of local populations has led to discontent among the people living in such areas. In October 2016, a six-month state of emergency was declared following antigovernment protests. March 2017 saw some of the restrictions lifted. The situation is developing, but divestments are regularly being announced. This comes after sincere efforts to attract foreign investment. There are a number of incentives available including custom duties exemptions and socalled income tax holidays. International observers are watching the current situation closely. Ethiopia joined the COMESA trade bloc in 2015, resulting in more market opportunities for domestic industries, the increased efficiency of local industries and access to cheaper and higher-quality products for consumers. The country is multilingual, with 88 languages spoken here. Amharic is the official language of Ethiopia, spoken by around nine million people. English is the most widely spoken foreign language, and is used in classes at secondary schools and universities. Ethiopia’s capital city of Addis Ababa The Church of St George, a UNESCO World Heritage Site in Lalibela, Ethiopia is home to the African Union headquarters. CAPITAL CITY:

Addis Ababa

$61.537

DMITRY CHULOV/ISTOCK

99.39

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COMESA – COUNTRY BY COUNTRY

CAPITAL CITY:

Nairobi GDP:

$63.398bn POPULATION:

46 million LANGUAGE:

Bantu Swahili and English CURRENCY:

Kenyan shilling EASE OF DOING BUSINESS RANK:

92/189

CENTRAL BANK:

Central Bank of Kenya INVESTMENT AGENCY:

www.investmentkenya.com

Kenya is home to varied and dramatic topography, encompassing savannah, mountain highlands and the Great Rift Valley. The country has a vast array of wildlife, and is a popular destination for safaris that visit the Maasai Mara Reserve and Amboseli National Park, which offers views of neighbouring Tanzania’s Mount Kilimanjaro. The country’s other neighbours are Uganda to the west, South Sudan to the north-west, Ethiopia to the north and Somalia to the north-east. Kenyans studying at school. Kenya’s global growth is improving A recent World Bank report puts Kenya among the world’s improved growth-performers, yet the country remains at risk from terrorism. This is affecting economic sectors including tourism, although the sector remains the country’s largest earner of foreign exchange. Kenya’s economy is still expected to continue expanding at a steady pace. This growth would be largely driven by private consumption and investment in public infrastructure. The country is a big commodity importer and continues to benefit from low oil prices that, according to the report, have helped to stabilise the Kenyan shilling and keep inflation within target. Kenya has a market-based economy, and is widely considered to be a hub for Africa’s financial, communication and transportation services. Major industries here include agriculture, forestry and fishing, which accounts for more than 50% of the country’s export earnings; mining and minerals; energy; industrial manufacturing; financial services; and tourism. The country is generally investment friendly, and the government has enacted a number of reforms to ease the process of both local and foreign investment. Such measures include the creation of an exportprocessing zone, which is expected to grow rapidly as a result of foreign direct investment. The country boasts well-developed social and physical infrastructure, particularly when compared with some of its regional neighbours, and this has given rise to good economic prospects for Kenya. For investors, Kenya offers incentives including deduction allowances in the mining sector; import duty set off; and export processing zones, where incentives include a 10-year tax holiday, exemptions from stamp duty and non-liability on income tax for non-resident employees. Kenya’s GDP stands at $63.398bn, and the country is home to just over 46 million people. The two official languages spoken are Bantu Swahili and English, which was inherited from colonial rule. Goods here are paid for using the Kenyan shilling.

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BARTOSZ HADYNIAK/ISTOCK

Kenya

COMESA – COUNTRY BY COUNTRY

CAPITAL CITY:

Tripoli GDP:

$29.153bn POPULATION:

6.28 million LANGUAGE:

Arabic

CURRENCY:

Libyan dinar EASE OF DOING BUSINESS RANK:

188/189

CENTRAL BANK:

Libya’s Central Bank INVESTMENT AGENCY:

www.lia.com.mt/en

Libya occupies a stretch of coastline belonging to the Mediterranean Sea. Egypt sits to the east, Algeria to the west, Tunisia to the north-west, Niger and Chad to the south, and Sudan to the south-east. The country is fourth-largest of all the African continent’s countries. At the time of its independence, Libya was a poor desert state, but it occupied an important strategic position within easy reach of major European nations. It also links the Arab countries of North Africa with those of the Middle East. Soon after independence in 1951, oil discoveries earned the country significant wealth. Yet the end of foreign rule signalled a new era for Libya; it was the start of the 42-year rule of the late Colonel Muammar Gaddafi – a controversial and divisive world figure. He was commended for his support for pan-Africanism, but condemned as a dictator. It was in 2011 than an anti-Gaddafi uprising came about amid the Arab Spring, which led to the Libyan Civil War and the death of Gaddafi. The ongoing civil war has torn apart Libya’s economy, and today it is in a precarious position. The World Bank has said the economy is near collapse, and global figureheads are stepping up to encourage the enactment of drastic reforms. Yet this is proving difficult in a country where three administrations are vying for power. The economy of Libya depends primarily on revenue from the petroleum sector, which accounts for almost all export earnings and more than half of GDP. The country’s oil reserves are the largest in Africa – accounting for 38% of the continent’s total reserves – and the ninth-largest proven reserves globally. In 2012, oil accounted for 98% of government revenue. However, oil production has plunged by more than 90% since the outbreak of civil war. Today, the World Bank puts Libya’s GDP at $29.153bn. The country is home to more than six million people, and the official language is Arabic. Libya joined the COMESA trade bloc in 2005. Foreign investment in the country is regulated by the Libyan Foreign Investment Board, which has identified key sectors for foreign investment. These include health and related infrastructure; transportation; a wide range of industrial activities; education; agriculture and maritime; tourism; public utilities; and oil and gas. Libya’s strategic location as a link between Africa and the rest of the world is one clear benefit of investing in the country, along with investment incentives such as exemption from custom duties and tax on reinvested earnings. Statues and pillars in the desert plains of Libya

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DJGUNNER/ISTOCK

Libya

COMESA – COUNTRY BY COUNTRY

CAPITAL CITY:

Antananarivo GDP:

$9.981bn POPULATION:

24 million LANGUAGE:

Malagasy and French CURRENCY:

Malagasy ariary EASE OF DOING BUSINESS RANK:

167/189

CENTRAL BANK:

Central Bank of Madagascar INVESTMENT AGENCY:

www.edbm.gov.mg

Situated off the south-east coast of Africa in the Indian Ocean, Madagascar is home to some of the most diverse landscapes and the island is teeming with wildlife. It is the world’s fourth-largest island and renowned for its unique biodiversity; in fact, 5% of all known animal and plant species can be found here, and here alone. The country’s isolation means than most of its mammals, half of its birds and the majority of its plant life exist nowhere else in the world. The former Kingdom of Madagascar was absorbed into the French colonial empire in 1897, and it wasn’t until 1960 that the island gained independence. Despite its wealth of natural resources and a tourism sector that has significant growth potential, the country remains one of the poorest in the world and relies on foreign aid. Its political situation is fragile, following a coup in 2009 that gave rise to years of political standstill. According to estimates by the World Bank, more than 90% of Madagascar’s 24 million people live on less than $2 a day. Agriculture is the mainstay of the country’s market economy, and in Antananarivo, the capital and most populous city of Madagascar, access to land is guaranteed and protected by law for residents of the city. Antananarivo has been the island’s most populous area since the 18th century Industry accounts for roughly 13% of GDP, and is mostly concentrated in the capital city. Industries include food and tobacco processing; leather manufacturing; and soap production, and such activity provides employment for around 5.5% of the workforce. Antananarivo is Madagascar’s hub for large businesses, but formal-sector job growth has failed to keep pace with population growth. This means that a large proportion of the population relies on informal work to earn a living. Foreign investment to the country picked up in 2014 following the resumption of elections early that year. A number of activities are eligible for special tax and/or customs regimes, and incentives are on offer for companies investing in renewable energy, tourism, industrial, civil work and construction, and transformation. Such companies can benefit from a tax reduction equal to the tax calculated on 50% of the amount of investment that they realised during the related tax year. Big-investment mining is also eligible for tax breaks. Madagascar hosted the 19th COMESA summit in 2016. The country has been campaigning to strengthen cooperation within the bloc, and it adopted the theme of inter-regional trade and inclusive industrialisation. “The main goal is to assert ourselves more as a region and as a continent in economic globalisation where Africa is still struggling to impose itself with 2% market shares in the international market,” said Madagascar’s President Hery Rajaonarimampianina.

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DENNISVDW/ISTOCK

Madagascar

COMESA – COUNTRY BY COUNTRY

CAPITAL CITY:

Lilongwe GDP:

$6.565bn POPULATION:

17.2 million LANGUAGE:

Chewa and English CURRENCY:

Malawian Kwacha EASE OF DOING BUSINESS RANK:

133/189

CENTRAL BANK:

Reserve Bank of Malawi INVESTMENT AGENCY:

www.mitc.mw

Malawi is a landlocked country in south-eastern Africa, sharing its borders with Mozambique to the south and south-east, Zambia to the west and Tanzania to the north and north-east. The country’s economy is largely dependant on agriculture. An agricultural development agenda came to completion in 2015, which targeted the diversification of food production and improved food security and nutrition. It also sought to increase the agricultural incomes of rural people, and agriculture was pinpointed as a priority investment area for the country. In 2016, the United States sent Malawi an additional $23m in food assistance in response to the Malawi Vulnerability Assessment Committee’s report, which found that 6.5 million Malawians required humanitarian food assistance to alleviate suffering through to March 2017. Of this sum, $5m was earmarked to purchase ready-to-use therapeutic food for HIV patients who are currently being treated with antiretroviral therapy. HIV and Aids have had a massive impact in Malawi, and the conditions continue to claim tens of thousands of lives every year. A programme to tackle HIV and Aids was launched in 2004. Malawi enjoys a stable and democratic government. In 2014, real GDP grew by 5.7%, according to the World Bank, but this slowed to 2.8% in 2015 when the country suffered adverse weather conditions coupled St Michael and All Angels Church, Blantyre, Malawi’s centre of finance with macroeconomic instability. Flooding was followed by countrywide drought – a huge problem for a nation that largely relies on subsistence farming. Malawi was one of COMESA’s founding member states, and in 1994 the COMESA agreement was ratified in Lilongwe, the country’s largest and capital city. Around 90% of Malawi’s 17.2 million people lives in rural areas. The country’s GDP sits at $6.565bn, and it is seeking to diversify the economy for greater stability and prosperity. In order to boost employment opportunities, university graduates are being encouraged to become job creators, rather than just job occupiers. Comments along these lines were made by President Peter Mutharika, who said that the country requires graduates to become entrepreneurs and future business leaders. “We need graduates who can aggressively participate in our direct investment programme. We are mobilising investors because we need to expand the private sector and create more jobs,” he said. For investors keen to be pioneers in Malawi’s new economic structure, incentives are on offer. These include tax breaks, no restrictions on the remittance of foreign investment funds, and access to export processing zones, among others.

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MTCURADO/ISTOCK

Malawi

COMESA – COUNTRY BY COUNTRY

Mauritius The island nation of Mauritius is situated in the Indian Ocean, around 2,000 kilometres off Africa’s south-east coast and some 500 miles east of Madagascar. Port Louis The country declared independence from its British colonisers in 1968, though GDP: the modern-day use of English as the country’s main language serves as a reminder of the island’s colonial past. bn Mauritius has been hailed as one of Africa’s success stories, having established POPULATION: itself as a stable and prosperous economy in the region. With a good governance record, a long history of political stability and an open, flexible regulatory system, in million 2015 Mauritius overtook South Africa to become Africa’s most competitive economy. LANGUAGE: According to the 2015 World Economic Forum Global Competitiveness Report, Creole, but a number of Mauritius benefits from relatively strong and transparent public institutions, with languages including English and clear property rights, strong judicial independence and an efficient government. French are widely spoken It goes on to say that the country’s private institutions are rated as highly accountable, CURRENCY: with effective auditing and accounting standards and strong investor protection. Mauritian rupee Slated against regional standards, Mauritius boasts well-developed infrastructure EASE OF DOING BUSINESS RANK: with good transport options. 49/189 Its economy is becoming increasingly competitive, and all of this makes for CENTRAL BANK: an attractive investment destination. In fact, Mauritius boasts the best business Bank of Mauritius environment in Africa, ranking first in the continent for ease of doing business. INVESTMENT AGENCY: The country’s 2,070 square kilometres are home to 1.26 million people – a www.boimauritius.com diverse mix of Indian, African, Chinese and French heritage. Its natural beauty is a huge draw for visitors, and spectacular coral reefs, sugar cane fields and the laid-back atmosphere attract almost a million tourists each year. The tourism sector is growing rapidly, and this is bringing an important contribution to foreign exchange earnings. As of 2015, the country’s GDP was at $11.511bn. Although more than 50% of its land is arable, Mauritius has successfully diversified its economy to include industrial processing and manufacturing. Financial and business services also account for a large chunk of economic output. The country is keen to attract foreign investment, and investment incentives are in place for various industries. Low corporate tax, zero capital-gains tax, no tax on dividends and 50% relief on personal income tax for two expatriate staff are just some of the incentives on offer for foreign companies operating Prosperous Mauritius is a major tourism hub in Mauritius. CAPITAL CITY:

$11.511

XAVIERARNAU/ISTOCK

1.26

INVEST IN THE COMESA REGION 2017 /

COMESA – COUNTRY BY COUNTRY

Rwanda The small, landlocked country of Rwanda is recovering from a turbulent past of ethnic tension and genocide. Efforts to rebuild the economy are now paying GDP: off, with the World Bank praising the country’s recent “remarkable development successes”, which it says have helped reduce inequality and poverty among the bn 11.6 million people living here. Two decades on from the Rwandan genocide, the POPULATION: country’s economy has come a long way. Its people are living healthier and richer lives and it is home to one of the fastest-growing economies in Central Africa. million Between 2001 and 2014, Rwanda’s GDP growth stood at around 8% each year. LANGUAGE: Despite slowing growth, the International Monetary Fund (IMF) expects the Kinyarwanda, English and economy to pick up in 2018. Growth for 2016 was 5.9%, compared with 6.9% in French 2015. According to the IMF, Rwanda’s growth in 2015 was driven by agriculture, CURRENCY: services, manufacturing and construction. Agriculture is a mainstay of the Rwandan Franc economy here, and more than 80% of the population lives in rural areas. More than EASE OF DOING BUSINESS RANK: 70% of Rwandan people work in subsistence farming, but the government is 56/189 working to change this. Its long-term plan is to transform Rwanda from a lowCENTRAL BANK: income agriculture-based economy to one that is knowledge-based and serviceNational Bank of Rwanda oriented. Significantly, the government intends to establish Rwanda as a middleINVESTMENT AGENCY: income country by 2020. www.rdb.rw/home.html Bordered by Uganda, Tanzania, Burundi and the Democratic Republic of the Congo, Rwanda is situated in Africa’s Great Lakes region. Its geography comprises mountains and savannah, and the country experiences two rainy seasons and two dry seasons every year. In recent years, life expectancy, literacy rates, school enrolment and healthcare spending have all increased. Rwanda is also making progress towards gender parity, and Rwandan women have greater access to economic opportunities than ever before. One major step forward is in the fact that women can now own land in Rwanda and girls can inherit from their parents. For foreign investors, modern Rwanda is an attractive destination. Sustained high economic growth, robust governance, an investor-friendly climate and good access to markets are all appealing factors, and there are opportunities in a range of industry sectors. Infrastructure development is one such area, along with energy and power generation. The tourism sector also has major development potential. Radical reforms have made it easier for businesses to operate in Rwanda, and the country has climbed the World Bank’s doing business rankings. Today, Rwanda is the world’s second-most Colourful hillside homes in Rwanda, a mountainous country in the Great Lakes region reformed country. CAPITAL CITY:

Kigali

$8.096

GRAUY/ISTOCK

11.6

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COMESA – COUNTRY BY COUNTRY

Rwanda is the investment hub of East Africa One of Africa’s fastest-growing economies and poised to become the preferred investment hub in East Africa, Rwanda is rising. Over the past decade, the country has experienced a period of remarkable sustained economic performance, where annual GDP growth averaged 8% and foreign direct investment multiplied from less than 1% to nearly 4% of GDP. Building on this progress, Rwanda has a clear long-term vision to become a knowledge-based, services-driven middleincome country by 2020. Positioned centrally with access to large, growing regional markets – 430 million people in COMESA and more than 160 million people in the East African Community alone – Rwanda is increasingly recognised as home to an attractive investment climate. The World Bank highlights Rwanda as the second-easiest place to do business in Africa in their 2017 Doing Business Report, while the World Economic Forum (WEF) ranks Rwanda the third-most competitive economy in Africa in their 2017 Global Competitiveness Index. Rwanda continues to drive social and economic transformation through good governance and strong institutions, infrastructure development and, most importantly, investment in human capital. Progress on health and education has been impressive; Rwanda’s national health insurance programme now covers over 90% of the population, helping drive huge gains in life expectancy. Near-universal primary school enrolment (97%) has contributed to literacy rates above 75%. Since 2006, more than one million people in Rwanda have exited poverty to join Rwanda’s large and growing middle class. Such gains enable Rwanda to take advantage of the demographic dividend as a growing, healthy, educated, working-age population provides the foundation for the transition to a knowledge-based economy. Advances in information and communications technology (ICT) and tourism offer tangible examples of Rwanda’s investment potential. Widespread mobile phone penetration (around 80%) together with new ICT infrastructure that delivers 4GLTE wireless

broadband coverage across 70% of the country eases market access for international investors, streamlines local business operations and creates opportunities to leapfrog outdated technologies. The establishment of Kigali Innovation City, a special economic zone where domestic and international ICT companies can deliver products and services for global markets, and home to world-renowned universities such as Carnegie Mellon, demonstrates Rwanda’s promise as a hub for innovation in Africa. Rwandan tourism is flourishing as well. Beyond the unique natural wonders in the country’s national parks, Rwanda is becoming a destination for regional and international conferences. The WEF ranked Rwanda in the top 10 globally for safety and security in its 2017 Travel & Tourism Competitiveness Report. Safety, together with improved regional and global connectivity through the national airline, RwandAir, plays a significant role in encouraging tourism as well as a more business-friendly environment for investors to drive economic growth and create more jobs. Behind the focus on private-sector investment is the Rwanda Development Board (RDB), the apex government institution with the mandate to fast-track economic development in the country. The RDB serves as the onestop centre for investors, presenting business opportunities in infrastructure, agriculture, energy, tourism, ICT, financial services, mining and real estate, among other sectors. Understanding the private-sector mindset, the RDB provides fast, high-quality investor services: registering a new business requires just six hours, and RDB’s bespoke aftercare support ensures the smooth running of local business operations in the country post-investment. All these exciting developments highlight the country’s unique political will to drive sustainable economic development and shift collectively to a knowledge-based economy.

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COMESA – COUNTRY BY COUNTRY

CAPITAL CITY:

Victoria GDP:

$1.438bn POPULATION:

92,900 LANGUAGE:

Seselwa, French and English CURRENCY:

Seychellois rupee EASE OF DOING BUSINESS RANK:

93/189

CENTRAL BANK:

Central Bank of Seychelles INVESTMENT AGENCY:

www.sib.gov.sc

Lauded as the most beautiful islands on earth, the Seychelles is an archipelago in the Indian Ocean comprising 115 islands. The country managed to overcome a difficult post-independence period and today enjoys stability and prosperity – not to mention a booming tourism industry. In a place where white-sand beaches are lapped by turquoise waves and vast stretches of lush hills reach towards the horizon, it is little wonder that the Seychelles is such a popular destination for holidaymakers and adventurers. The tourism sector is a major engine of growth in Seychelles, having become a key industry after the opening of an international airport in 1971. It overtook plantations as the country’s main industry, joining fishing to become one of the two major industries here. Today, tourism plays a major role in economic expansion, employing around 30% of the labour force and acting as a magnet for foreign investment, which facilitates the expansion of hotels and other related services. Numerous luxury resorts have sprung up across the islands in recent years, and ecotourism is gaining in popularity. But it is the waters that really draw visitors – with coral gardens teeming with life to shipwrecks and other-worldly terrain, diving and snorkelling are among the most popular activities here. In 2015, the Seychelles came 10th in a ranking of countries with the fastest-growing visitor numbers, up 18.7%. However, the government is keen to reduce dependence on the tourism sector, and is promoting the development of farming, fishing, small-scale manufacturing and the offshore sector to further support the economy. A Hindu temple in the Seychelles. Hinduism is the Challenges in the country include high second-largest religion on the archipelago youth unemployment – particularly among females – and skills mismatches, which is acting as a barrier to the creation of high-quality jobs. In addition, although the country has low poverty rates, inequality is substantial. To diversify the economy and create employment opportunities, the government has drawn up a range of legislative measures offering concessions to businesses operating in various sectors of the economy. For example, concessions are granted on business tax and trades tax, and the country’s fiscal policy places emphasis on transparency, responsibility, fairness and efficiency. For all kinds of investment, the government stresses the importance of working in an environmentally sound and sustainable manner. The country’s GDP stands at $1.438bn and it ranks 93 out of 189 countries in the World Bank’s ease of doing business rankings. The Seychelles joined the COMESA trading bloc in 2001.

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ELENASEYCHELLES/ISTOCK

Seychelles

COMESA – COUNTRY BY COUNTRY

CAPITAL CITY:

Khartoum GDP:

$84.067bn POPULATION:

40.23 million LANGUAGE:

Arabic

CURRENCY:

Sudanese pound EASE OF DOING BUSINESS RANK:

168/189

CENTRAL BANK:

Central Bank of Sudan INVESTMENT AGENCY:

www.sudaninvest.org

Up until 2011, Sudan was one of Africa’s largest and most diverse states, but in July of that year the south voted for independence, leading to the division of the country into Sudan and South Sudan. Although the government of Sudan gave its blessing for an independent South Sudan, tensions remain over issues such as oil revenues and the exact border. Conflict has long been present in the country, with the civil war in the Darfur region seen as one of the worst in recent history. Sudan’s pyramids of Meroë, part of an ancient city close to the Nile The country is working under a ceasefire agreement and pursuing peace, but political instability has undermined the economy’s ability to promote development and attract long-term investment. The private sector has seen a slight expansion, but the informal economy remains the key source of production and employment. Agricultural production is one of Sudan’s most important sectors, employing a large proportion of the workforce and contributing a significant sum of GDP. Gold and livestock are two attractive export possibilities for the country. In its latest Country Economic Memorandum for Sudan, the World Bank says it is essential that Sudan undertakes a combination of institutional, macroeconomic and sectoral reforms to embark on a more stable growth path. Such diversification is high on the government’s agenda, and there has been some success in reducing inflation and recovering from the negative growth rates of recent years. Recommendations for expanding and boosting Sudan’s economy include removing exchange restrictions in order to unify rates on the official and black markets; increasing agricultural productivity through key policy changes; better management of natural resources rents; tackling constraints and barriers in the business environment; and building human capital to support structural change. The World Bank has plans to launch several initiatives, including providing support for public-private partnerships in Sudan. The government is working to attract higher levels of foreign investment, and efforts include simplifying investment procedures; better promotion of investment opportunities and benefits; training and capacity-building to better handle the requirements of investors; and greater participation in regional and global conferences and forums.

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MARTCHAN/ISTOCK

Sudan

COMESA – COUNTRY BY COUNTRY

Swaziland CAPITAL CITY:

Mbabane and Lobamba GDP:

$4.06bn POPULATION:

1.3 million LANGUAGE:

English, Swati and South African English CURRENCY:

Swazi lilangeni EASE OF DOING BUSINESS RANK:

111/189

CENTRAL BANK:

Central Bank of Swaziland INVESTMENT AGENCY:

GIL.K/SHUTTERSTOCK

www.sipa.org.sz

The Kingdom of Swaziland is one of Africa’s smallest countries, neighboured by Mozambique to the east and South Africa in all other directions. With rivers and streams traversing the entire country, Swaziland is one of the best watered areas in southern Africa. Despite its small size, the country has a diverse climate and topography, from the cool Lebombo Mountains stretching to the hot, dry lowveld – the area where a 180-million-year-old failed rift valley cuts into the central plateau of southern Africa. Swaziland is known for its wildlife and wilderness reserves and regular festivals that showcase the traditional Swazi culture. The country is an absolute monarchy, ruled by King Mswati III since 1986. He is Africa’s last absolute monarch, with the power to choose the country’s prime minister and other top leadership positions. He holds virtually all state powers. The country won independence from Britain in 1968, and today is home to 1.3 million people. As a developing country, Swaziland’s economy is small. In 2015, GDP stood at $4.06bn. Its main local trading partner is South Africa and its currency, the lilangeni, is pegged to the South African rand. The country has two capital cities – Lobamba is the traditional, spiritual, legislative and royal capital and the seat of parliament, while Mbabane is the administrative capital and largest city of Swaziland. Economic growth in the country has been slowing since 2013. For 2016, the growth rate is projected at 1.3%, down from 1.7% the year before. Ongoing drought and a tough external environment – particularly in South Africa – are partly responsible for the economy’s downward trend. Swaziland also faces difficult development challenges, and needs to overcome the high rates of poverty and inequality. The World Bank has reported that more than 60% of the population lives below the poverty line, and almost 30% lives below the extreme poverty line. The country also has one of the highest rates of HIV infections and life expectancy has fallen to below the age of 50. In order to progress, growth needs to be supported by investments in human capital and measures to tackle pervasive poverty. Swaziland has made improvements in the overall ease of doing business, and it hopes to attract investment in technology and education, among other areas. Repatriation of profits and duty exemptions are among a number of incentives available to foreign investors.

Traditional Swazi dancing, a popular form of storytelling in the country

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COMESA – COUNTRY BY COUNTRY

CAPITAL CITY:

Kampala GDP:

$26.369bn POPULATION:

39 million LANGUAGE:

English and Swahili CURRENCY:

Ugandan shilling EASE OF DOING BUSINESS RANK:

115/189

CENTRAL BANK:

Bank of Uganda INVESTMENT AGENCY:

www.ugandainvest.go.ug

The landlocked country of Uganda enjoys a diverse landscape, encompassing snowcapped mountains and the vast Lake Victoria. Uganda is bordered by Kenya to the east, Tanzania to the south, Rwanda to the southwest, the Democratic Republic of the Congo to the west, and Sudan to the north. It is the world’s second-most populous landlocked country, with Ethiopia as the first. After declaring independence from the United Kingdom in 1962, the country suffered years of conflict and dictatorship, but in The Uganda equator is one of the country’s best-known landmarks, recent times it has undergone a marking a meeting point between the Earth’s north and south transformation. Today, the country enjoys relative stability and prosperity. Uganda became a member of COMESA in November 1993, when 16 countries signed the COMESA Treaty in its capital city Kampala. In 2015, Uganda’s GDP was $26.369bn. Since the 1980s, the government of Uganda has pursued stabilisation strategies and pro-market structural reforms. Such measures have led to macroeconomic stability and greater investment interest from the international community. Following an election in February 2016, private-sector economic activity is expected to resume and a considerable public investment programme is under way. Although Uganda surpassed the Millennium Development Goal to halve poverty by 2015 and made significant progress on other targets, much of the country’s population is at risk of falling back below the poverty line. Uganda is rich with natural resources, and the economy has much potential to expand rapidly. Agriculture products account for most for Uganda’s foreign exchange earnings and the country is Africa’s second-largest producer of coffee. Other main exports include food produce, apparel, vanilla, tea and tobacco. Uganda’s mineral resources include gold, tungsten, tin, beryl, tantalite, clay, copper, iron, limestone and granite. Incentives and exemptions are available for investors in Uganda. Stipulations on who qualifies for such concessions vary, but they include income tax exemptions, exemption of tax on international payments, general deductions, export-based and import-based incentives, and double taxation agreements. Uganda has been the recipient of rising foreign direct investment in recent years, and top investment sectors include construction, services and logistics, and agribusiness. Attractions include the country’s highly liberalised economy and the free movement of capital to and from Uganda.

INVEST IN THE COMESA REGION 2017 /

TRAVEL STOCK/SHUTTERSTOCK

Uganda

COMESA – COUNTRY BY COUNTRY

FRANKVANDENBERGH/ISTOCK

Investing in Uganda, the Pearl of Africa

Uganda is located at the heart of sub-Saharan Africa within the East African region and astride the equator. This land-linked position gives the country a strategic commanding base to be a regional hub for trade and investment. Uganda enjoys pivotal trade partnerships that create a viable market for business. A potential investor considering investing in Uganda will find a well-regulated, highly liberalised economy in which all sectors are open for investment and there is free movement of capital to and from the country. The 2017 Africa Attractiveness Index by Ernst & Young ranks Uganda sixth out of 46 African countries, making Uganda the second most attractive location for investment in the East African region after Tanzania. Current economic activity in the nascent oil and gas sector has placed Uganda firmly on the investor map, according to the same report. The business operating environment allows the full repatriation of profits after the mandatory taxes have been paid, as well as 100% foreign ownership of private investments.

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The incentive regime is structurally embedded in the country’s tax laws, making them nondiscriminatory and accessible to both domestic and foreign investment depending on the sector and level of investment. The minimum capital investment required for a foreign investor to be eligible to invest in the country in virtually any sector, apart from those that may compromise the country’s security, is US$100,000. With stable economic growth averaging between five and 7%, inflation has now stabilised to 6.6%. The country’s political and economic environment has been consistently improving and stable since 1986. This secure environment has enabled business to thrive. Security of investment is guaranteed under the Constitution of Uganda and the Investment Code 1991, as well as the major international investmentrelated agreements and treaties to which Uganda is a signatory. In order to provide a conducive environment for doing business in Uganda, the Uganda Investment Authority (UIA) has been transformed into a One-Stop Centre offering free services where investors can register their businesses and get all relevant licenses under one roof. This has been coupled with the electronic One-Stop Centre (www.ebiz.go.ug), which can be accessed online. A potential investor can now apply to register their business and apply for an investment license without visiting the UIA. The breathtaking scenery, favourable climate, welcoming people and lifestyle make Uganda not only a viable location for business, but a leisure destination and pleasurable place to stay. www.ugandainvest.go.ug

COMESA – COUNTRY BY COUNTRY

CAPITAL CITY:

Lusaka GDP:

$21.2bn POPULATION:

16.2 million LANGUAGE:

English

CURRENCY:

Zambian kwacha EASE OF DOING BUSINESS RANK:

98/189

CENTRAL BANK:

Bank of Zambia INVESTMENT AGENCY:

www.zda.org.zm

The landlocked country of Zambia is bordered by the Democratic Republic of the Congo to the north, Tanzania to the north-east, Malawi to the east, Mozambique, Zimbabwe, Botswana and Namibia to the south, and Angola to the west. In contrast with many of its neighbours, Zambia enjoyed political stability during Africa’s post-colonial period, which has contributed to rapid economic growth and high levels of investment, particularly from China. The country is famed for its wildlife, and in 2015 more than one million tourists arrived here. Visitors can explore remote wilderness that is home to a diversity of wildlife, traverse raging rapids, and take in the spectacular Victoria Falls, which has been described by CNN as one of the seven natural wonders of the world. Though landlocked, three major rivers flow through Zambia, making it one of the most water-rich countries in Africa. The Kafue and the Luangwa Rivers attract an abundance of wildlife in the Kafue and Luangwa national parks, with hippos, waterbirds and game all gathering to drink. Zambia gained independence from the United Kingdom in October 1964. Kenneth Kaunda came to power as president and played a central role in regional diplomacy. He was succeeded by Frederick Chiluba, whose social-democratic party was behind a period of rapid socio-economic growth. Levy Mwanawasa, Chiluba’s chosen successor, was in power from January 2002 until his death in August 2008, and is credited with campaigns to improve the standard of living in Zambia and reduce corruption. In 2010, the World Bank named Zambia as one of the world’s fastest economically reformed countries. Zambia was one of the founding member states of COMESA, and the country’s capital city Lusaka is home to the COMESA headquarters. In November 1965, a ministerial meeting was held in Lusaka for the consideration of organisation proposals, and Lusaka bore witness in 1981 to the signing of a treaty to establish a preferential trade area for eastern and southern Africa. In 2015 and 2016, Zambia’s economy has felt the strain from external and domestic pressures, with GDP slowing and a power crisis affecting all economic sectors. Poor agricultural performance led to reduced incomes and higher food prices in 2015. Historically, the Zambian economy has relied on the copper-mining industry, and China has been a major investor in this area. Copper accounts for a large percentage of the country’s exports. Diversification is needed to protect the economy from changes in international copper prices. To do so, the Zambia Development Agency has established a number of incentives in different sectors for investors. Zambia’s Victoria Falls, considered to be one of the seven natural wonders of the world

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101

BOBBUSHPHOTO/ISTOCK

Zambia

COMESA – COUNTRY BY COUNTRY

Zimbabwe ULRICH MUELLER/SHUTTERSTOCK

CAPITAL CITY:

Harare GDP:

$13.9bn POPULATION:

15.6 million LANGUAGE:

English, Ndebele and Shona CURRENCY:

US dollar

EASE OF DOING BUSINESS RANK:

161/189

CENTRAL BANK:

Reserve Bank of Zimbabwe INVESTMENT AGENCY:

www.investzim.com

Harare, the capital and most populous city of Zimbabwe.

The southern African country of Zimbabwe is bordered by Zambia to the north, Mozambique to the east, South Africa to the south and Botswana to the west. It enjoys a tropical climate, although this is moderated significantly by altitude. Zimbabwe has a rainy season and a dry season, the latter of which includes a short cool season from May to September. Heavy rains are usually experienced from December to March, with more rainfall to the north. Although Zimbabwe does not border Namibia, the two countries are separated by just 200 metres of the Zambezi River. The 1990s saw a decline in the country’s economy, but after the turn of the millennium it began to stabilise. Today, agriculture and mining are the mainstays of Zimbabwe’s economy. In the agricultural industry, tobacco, cotton and sugar are key exports and account for a significant portion of the country’s export revenue earnings. In the mining sector, gold, platinum and other metal alloys, as well as diamonds, are increasingly contributing to Zimbabwe’s economic make-up. Coal is also mined and used to produce electricity. Other natural resources present in the country include nickel, copper, iron ore, lithium and tin. Zimbabwe’s main export products from the mining sector include precious stones, precious metals and ores. The motor industry is another productive economic area. In March, Willowvale Motor Industries reopened following a joint venture with a Chinese firm to build a new range of pick-up trucks. The move will create more than 5,000 jobs. The World Bank states that Zimbabwe has vast potential for sustained growth and poverty reduction given its significant endowment of natural resources, existing stock of public infrastructure and relatively skilled human resources.

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COMESA national investment agencies Burundi Investment Promotion Agency www.investburundi.bi

Union of Comoros www.invest-comoros.com

Democratic Republic of the Congo www.investindrc.cd/en

Djibouti www.djiboutinvest.com

Egypt www.gafi.gov.eg

Eritrea www.eritrean-embassy.se/invest-in-eritrea

Ethiopia www.investethiopia.gov.et

Kenya www.investmentkenya.com

Libya www.lia.com.mt/en

Malawi www.mitc.mw

Mauritius www.boimauritius.com

Rwanda www.rdb.rw/home.html

Sudan www.sudaninvest.org

Swaziland www.sipa.org.sz

Seychelles www.sib.gov.sc

Uganda www.ugandainvest.go.ug

Zambia www.zda.org.zm

Zimbabwe www.investzim.com

Madagascar www.edbm.gov.mg

Index of advertisers Bank of Uganda.................................................................................................................................................................................................. 34 OCP Group.................................................................................................................................................................................................56 & 104 OMNIS.....................................................................................................................................................................................................................12 SBM................................................................................................................................................................................................................. 02 & 61

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