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EA economy fastest in continent – report

EAST African countries are performing well in economies, the bloc now becoming the fastest growing in the continent.

A report released by the United Nations Conference on Trade and Development (UNCTAD) and made available by the East African Business Council (EABC) indicated that the region received 7.6 billion US dollars in Foreign Direct Investment (FDI) last year.

It pointed out that the region was so growing in spite of the fact that there was a decline of three per cent in FDI compared to 2016.

Tanzania is doing well thanks to several factors, such as the strong gold price and a diversified productive structure.

“The strong gold price and a diversified productive structure contributed to FDI inflows worth $1.2 billion into the United Republic of Tanzania.

Facebook and Uber (both United States) expanded into that country while India’s Bharti Airtel continued to invest,” said the report.

As Tanzania wants to realise an increase in domestic ownership, foreign telecommunication companies in the country now must list at least a quarter of their equity on the local stock exchange.

In addition there is a ban on exports of unprocessed minerals and an increased openness on what foreigners extract in the country’s mineral deposits.

June last year, President John Magufuli ordered a review of the Mining Act, directing lawyers in the ministries of Energy and Minerals, as well as Justice and Constitutional Affairs, to work together to make important amendments that would help the country to benefit from the natural resources.

He said the country was endowed with a lot of natural resources but her people were still languishing in abject poverty because of some people who subordinate individual gains to national interests, blaming some officials who ignored potential investors who had shown interest to build smelters in the country.

The Head of State said the country needed investors who were ready for conducting business under win-win arrangements and not exploiters who had been siphoning the country's resources.

The Speaker of the National Assembly, Mr Job Ndugai, formed a special team to probe tanzanite mining while the President ordered construction of a wall around what is the only producing the gemstone in the world.

Construction of the wall paid instantly as the value of the gems has gone up by more than 100 per cent. By May this year, a gram of tanzanite was valued at 1.6m/- as opposed to last year’s value that was 800,000/-.

The Vice Chairman of Tanzania Mineral Dealers Association (Tamida), Mr Thomas Munisi, was quoted in May as saying that the new value was a record as the price had never shot to that amount ever.

He said the blue and violet variety of the mineral zoisite’s value had appreciated within and outside the country. UNCTAD indicated that on the other hand, Kenya saw FDI increase to 672 million US dollar, up 71 per cent, due to buoyant domestic demand and inflows into Information and Communications Technology (ICT) industries.

The Kenyan Government provided additional tax incentives to foreign investors as South African ICT investors Naspers, MTN and Intact Software continued to expand in the East African country “United States companies were also prominent tech-oriented investors, with Boeing, Microsoft and Oracle all investing in the country.

Significant consumer-facing investments by Diageo (United Kingdom) in beer and an American multinational medical devices, pharmaceutical and consumer packaged goods manufacturing company, Johnson & Johnson (United States), also bolstered FDI into the country.

Ethiopia absorbed nearly half of the amount channeled to the Eastern Africa, with 3.6 billion US dollars, down by 10 per cent and is now the second largest recipient of FDI in Africa.

Generally, UNCTAD says, FDI flows to Africa slumped to 42 billion US dollars last year, a 21 per cent decline from 2016.

Weak oil prices and harmful ongoing macroeconomic effects from the commodity bust saw flows contract in major host African economies.

“The beginnings of a commodity price recovery, as well as advances in interregional cooperation through the signing of the African Continental Free Trade Area agreement, could encourage stronger FDI flows to Africa in 2018, provided the global policy environment remains supportive,” UNCTAD Director, Division on Investment and Enterprise, James Zhan was quoted as saying.

FDI flows to North Africa were down by four per cent to 13 billion US dollars. Investment in Egypt was down, but the country continued to be the largest recipient in Africa.

FDI in Morocco was up by 23 per cent to 2.7 billion US dollars, including as a result of sizeable investments in the automotive sector.

Lingering effects from the commodity bust weighed on FDI to sub-Saharan Africa, with inflows declining by 28 per cent, to 28.5 billion US dollars.

FDI flows to Central Africa decreased by 22 percent to 5.7 billion US dollars. FDI to West Africa fell by 11 per cent to 11.3 billion US dollars, due to Nigeria’s economy remaining depressed.

FDI to Nigeria fell by 21 per cent to 3.5 billion US dollars.

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Author: DEUS NGOWI in Arusha

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