EAA Events

APRIL 3RD – 5TH

The Regional Representative visited Kampala, Uganda, and whilst there, met the Deputy British High Commissioner, Representatives from the European Union, the Deputy Counsellor for Political and Economic Affairs at the US embassy, the Executive Director of the Uganda Investment Authority (UIA), the World Bank acting Country Manager/Senior Economist and the German Ambassador.

An EAA members’ breakfast meeting was held after these to brief them on the discussions held and on regional issues of interest and also to obtain feedback on their views on the current business environment in the country.

Concerns were expressed generally about the EA Community (EAC) “not working as it should” as a Common Market to increase cross-border trade and also about the current continuing very unstable situation in South Sudan, once Uganda’s largest export market. Much depends on President Museveni’s efforts to help to broker some form of peace agreement, together with other leaders from neighbouring countries and the international community.

On the domestic front, the mood amongst members of the private sector was “generally more positive” in outlook compared with the past two years, with economic growth of 5.5% forecast for 2018 and a “clearer picture emerging about future oil production and refinery” in the country. Some US$ 15 billion is projected to be expended on the infrastructure required to develop the oil sector, with “around 4 years” perhaps the optimistic timeline for this to be completed, including a heated pipeline through Tanzania through to Tanga.

There are some successful business sectors identified as boosting economic growth, notably financial and professional services, agriculture in general and property development. However, tax collections remain low, from a very narrow base still, and regulations need to be simplified. It was noted that the UIA had established a “One Stop Centre” to promote inward investment and to provide practical help.

APRIL 5TH/6TH

The Regional Representative visited Kigali, Rwanda and, whilst there, met the Deputy UK High Commissioner, Deputy German Chief of Mission, Political Officer at the US Embassy, acting Country Manager/Senior Economist at the World Bank, a representative of the Rwanda Development Board and the CEO of the Private Sector Federation. An EAA members’ meeting was also held.

As a visitor to Kigali, especially after the rather chaotic traffic congestion in Kampala, one cannot fail to be impressed by the sense of order and discipline on the roads in the capital, which means a good number of visits/meetings can be held in one day. Regional issues for this landlocked country are always of special interest to EAA members, as the economic mood domestically remains broadly positive, with a government very keen to encourage private sector investment.

The Continental Free Trade Area (CFTA) treaty was signed by over 40 African countries recently in Kigali under the AU Chairmanship of Rwanda’s President Kagame, with the others (notably South Africa and Nigeria, the two largest economies in sub-Sahara Africa) signing “Declarations of Intent”. The move to eliminate many tariffs and remove non-tariff barriers, notably long delays at borders, across the continent, is to be welcomed although many challenges regarding implementation lie ahead.

APRIL 11TH

The EAA hosted a farewell lunch in London for the outgoing Kenya High Commissioner, HE Lazarus Amayo, who has been promoted to become Kenya’s Ambassador to the UN in New York. The guests included the High Commissioners to the UK from Uganda and Tanzania, the Ethiopian Ambassador, a representative from the UK FCO and the recently-formed Institute for Free Trade, as well as the EAA Chairman and various invited members.

The EAA had established a very strong relationship with HE, who has provided much appreciated support for the Association’s activities during his time in the UK. Hopefully we will be able to build on these with his successor.

APRIL 16TH

The EAA Chairman and CEO attended a private meeting organised on our behalf by the Tanzania High Commissioner to the UK, with the Vice President of Tanzania, who was in the UK to attend the Commonwealth Heads of Government meeting (CHOGM).

Concerns about the current business environment in Tanzania from the private sector were raised and discussed.

APRIL 17TH

The EAA Chairman, CEO and various selected EAA members attended a Kenya Business Forum chaired by HE President Uhuru Kenyatta. At this private gathering, HE provided a very articulate briefing on the current business environment in the country following a period of political uncertainty, which he explained was now over and the government was in a position to focus on development issues, including a number of important infrastructure projects. These included new roads, railways, greater access to electricity, improved communications, healthcare and education reforms and efforts to increase the manufacturing contribution to GDP.

He advised that Kenya had improved in the latest World Bank “Doing Business Report” from 130th to 80th and “the target was to reach 60th by next year and to become the second best in Africa”. In his answers to various questions, many of which came from the EAA representatives, he gave very clear answers and was able to view things very much from a business viewpoint, in particular issues in arbitration under the judicial process, as some important legal reforms had been implemented and many processes had been simplified.

The recently-signed Continental Free Trade Area (CFTA) treaty had seen Kenya, and the President, playing a leading role, being amongst the first to sign. He painted a very positive picture of a stable country with his government keen to attract foreign direct investment in a number of sectors where he believed they could generate positive returns. Having previously visited the London Stock Exchange earlier in the day, he saw particular opportunities in financial services and for Kenya to be seen as a regional hub with well-established sea and air links. He also commented on the current security situation in the country, explaining that the government was working hard with international partners to tackle the threat of terrorism, “not just for Kenya, but the world” and was pleased to advise that tourist numbers “had stood up well and were on the rise”. It was overall a very informative and useful business meeting and one which the EAA will seek to build on in the future.

CHATHAM HOUSE

Later in the afternoon of April 17th, HE President Kenyatta was the guest speaker at Chatham House, where he gave a very eloquent and thoughtful speech to a packed house, that included many representatives from the media.

He focused mainly on the values of democracy, explaining that in Kenya, after two recent elections, this was “maturing”. He explained that his now famous and well-publicised handshake with his main political opponent, Raila Odinga, “was aimed at opening up a new front in Kenya” and that “he had reached out with the sole aim of uniting the country” which had “become divided along party and tribal lines”.

He explained further that “we cannot achieve the social and economic needs of our people in an environment of constant political bickering” and that “political leaders must rise above the noise and focus on an agenda to deliver development and a conducive environment for business”. At the beginning of the Commonwealth Heads of Government Meeting (CHOGM) in London, this was an eloquently-delivered message of hope and aspiration which will have gone down well with his fellow Heads of State who will be attending, as well as the wider international community.

 

The Chief Executive visited Tanzania, Ethiopia and Kenya recently, all of which are facing uncertain political times.

TANZANIA
He met the British High Commissioner in London prior to his departure and then the EU Head of Delegation, Indian High Commissioner, South African deputy High Commissioner, IMF Country Manager, Minister for Industry, Trade & Investment and the Executive Director of the Tanzania Investment Centre (TIC).

The diplomatic community are gravely concerned about the deteriorating political environment, issuing a public notice citing “politically-related violence and intimidation of the opposition in the country”. The opposition leader suffered an armed attack outside his home and is currently recovering in Brussels “with 18 military bullets in his body”.

The country is out of step with other EAC members over the EU Economic Partnership Agreement (EPA), which effectively means this will not be signed any time soon and Kenya, as the only non-LDC in the Community, will continue to receive a special extension to the existing tariff-free quotes.

The private sector is equally concerned about the deteriorating business environment, with harassment by the Revenue Authority and Immigration Department frequently cited. The IMF has reported that “the macroeconomic position in the country is generally stable and broadly in line with targets” but it cites “growing investor concerns over government policies, with some data pointing to weakening economic activity”. It also points out “a challenging business environment and a negative outlook due to an unpredictable policy environment” a view shared by most businesses operating in the country, with many either closing down or downsizing their activities. Tanzania has unfortunately become an increasingly difficult country for foreign investors and appears set to follow a socialist path, attracting a great deal of negative international media attention.

ETHIOPIA
Meetings were held with the British Ambassador, EU Head of Political and Economic Cooperation, World Bank senior economist, the Chairman of the EU-Ethiopian Business Group and the deputy-Commissioner of the Ethiopian Investment Commission (EIC). Further steps in the planning process for a proposed investment mission to the country from October 24th – 28th were also made although this very much depends on how the political situation in the country evolves.

The decision by the Prime Minister to resign had been expected but the timing of it came as something of a surprise. The immediate declaring of another State of Emergency meant that the country was once again facing uncertain political times and an announcement as a replacement was anticipated fairly soon afterwards to calm down the situation, with reports of continued civil unrest in parts of the country. The fact that this did not materialise, and that there was a further meeting of the ruling EPRDF coalition a week later, again with no definitive result, would suggest an internal power struggle is taking place between the different ethnic groups. The country is clearly at a political crossroads as many diplomats believe the State of Emergency declaration, with all its implications, was not really warranted. In many ways it is essentially counter-productive to the government’s stated goals of political reform and more inclusive governance and could further embolden those who believe violence is the best way to achieve fundamental changes to the democratic system. It also negates the national and international goodwill that was generated by the government’s unprecedented release of political prisoners, although they are not recognised as such, and some high profile opposition people who had been detained. There is now serious risk that the impressive achievements of the past could be negated by serious solid upheaval.

Meanwhile, the economy continues to grow impressively, expected to reach around 8% following a recovery in the agricultural sector after last year’s drought. Despite an official devaluation of 15% in October last year, the currency is still thought to seriously over-valued and a severe shortage of foreign exchange continues to be perhaps the main constraint for businesses operating in the country. Assuming it goes ahead, anyone interested in the Investment Mission the EAA is planning to organise and lead to the country from October 24th to 28th should contact either the Association’s UK or Nairobi office.

KENYA
Various meetings were held with members of the diplomatic community by the Regional Representative based in Nairobi prior to the CEO’s visit and the briefing provided to EAA members at a breakfast meeting reflected the uncertain political position the country was facing, with a rather serious stand-off between the President and main opposition leader, Mr Raila Odinga, the main focus of this. The government’s “nuzzling of the media and intimidation of the judiciary” attracted international condemnation, with the prospect of a seriously divided country continuing for some time.

However, just after his departure from the country, possibly due in part to pressure from the US (Secretary of State Rex Tillerson had just visited), reports and pictures of the two adversaries emerged shaking hands and saying they had held secret talks aimed at “ending the dangerous divisions to heal the nation”. Raila’s co-leaders were taken by surprise as they had been unaware such meetings had been taking place (as was the vice-President, apparently) but the agreement effectively sounds the death knell for the NASA opposition coalition of four parties. Hopefully the government can now look ahead and focus on the “Big 4” policies the President has announced, namely boosting manufacturing, enhancing food security, providing universal healthcare and making available more decent affordable housing, all by 2022. Little detail as to how these laudable aims will be funded has been provided. Even before this agreement was announced, the private sector outlook for 2018 is more positive than it was for the previous two years and the macroeconomic situation – apart from a deteriorating debt position – is generally “stable”. A US$ 2 billion bond has been raised on the London market, the IMF have just extended a US$ 1.5 billion standby loan and remittance from the Kenya Diaspora have reached record levels, all signs of growing confidence in the country and its future prospects.

 

PAST EVENTS

April 25th
EAA members’ breakfast meeting in Nairobi

The Regional Representative presented his usual political and economic briefing on Kenya, noting in particular that the climate of uncertainty that had gripped the country following two hotly-disputed Presidential elections during the second half of 2017 had eased very significantly after the two main protagonists had agreed “to bury the hatchet” with a widely publicised handshake and “to seek to heal the divided nation”.

This caught other opposition leaders off guard and surprised many people. However, events and attitudes since are now being shaped in a much more positive way, especially as President Kenyatta emphasised the theme of reconciliation in an address he gave at Chatham House in London where he was attending the Commonwealth Heads of Government Meeting (CHOGM). The message of hope and aspiration he presented has certainly gone down well with his fellow Heads of State, as well as the wider community.

The government will now focus on what it has described as its “Big4” policy objectives – universal health coverage, affordable housing, improvement in food security and efforts to increase the contribution from the manufacturing sector. The private sector was already more positive about business prospects for 2018 than it has been for the past two years but these recent political developments provide grounds for greater optimism, with GDP growth of 5.5% now being projected for this calendar year.

Kenya is at the geographical and economic heart of the East African region which recorded the best overall economic growth in 2017 across the continent. More recent surveys point to a further pick-up in confidence and the country’s resilient and broadly-based private sector is now back in business, looking forward and determined to make up lost ground.

There were also presentations at the meeting on topical legal matters, on new IT developments in the country and an analysis of the findings from a survey of views about the recent reconciliation between President Kenyatta and main opposition leader, Raila Odinga, following the now-famous (and very unexpected) “handshake”.

Prior to the meeting, the Regional Representative and members of the Local Advisory Committee held discussions with representatives from the donor and diplomatic communities, including the IMF, Heads of Mission from the US, EU, Netherlands, Italy, Canada and Turkey, Deputy High Commissioner from the UK as well as the CEO of DEG/KfW. These open and confidential exchanges provide much useful information for inclusion in the EAA newsletter report on Kenya and the region.

They also provide an opportunity to convey private sector views on the Kenya economy and business environment, as well as on regional issues.

April 26th
Meeting with the Founder and President of the Institute for Free Trade in London, Dan Hannan MEP. The Institute (there is some dispute as to whether the organisation qualifies to be called this) seeks “to make the intellectual and moral case for global free trade” and sees Britain’s withdrawal from the European Union (Brexit) as “a unique opportunity to revitalise the world trading system”.

It is managed by an Executive Board, and has an International Advisory Board, which includes former heads of government, trade ministers and business leaders.

The specific purpose of the meeting with Mr Hannan was to discuss the content and launch of a paper the Institute is currently preparing on post-Brexit UK-EA Community trade. The EAA is arranging to host this launch at some stage in London during the UK summer.

The European Union has been negotiating an “Economic Partnership Agreement” (EPA) with the EAC for over ten years but this has not been successfully concluded, due largely to vested interests getting in the way of an agreement. As the only non-Least Developed Country (LDC) in the EAC, Kenya has the most to lose potentially by no agreement being reached so a post-Brexit bilateral deal with the UK appears the most likely eventual outcome.

April 27th
Meeting between the UK EAA CEO and the Ethiopian Ambassador to the UK to discuss a proposed joint EU Investment Mission to Ethiopia in October.

The provisional programme for this mission is as follows:

DATES:
24/10/18 – 26/10/18
27/10/18 – 28/10/18 (OPTIONAL)

PROVISIONAL PROGRAMME:

WEDNESDAY 24/10

07.00-09.00
EAA members breakfast regional meeting in Nairobi (optional).

18.30
Evening introduction reception at Sapphire Addis Hotel

THURSDAY 25/10

9.00
Introductions and welcome
EAA CEO/EU Head of Delegation/Norwegian Ambassador

9.30
Political overview/QandA
British Ambassador

10.00
Economic Overview/QandA
World Bank Senior Economist

10.30
Tea/Coffee break

11.00
Doing Business in Ethiopia presentation/QandA
Zemedeneh Negatu
Fairfax Africa Fund

11.30
EIC presentation on business/investment opportunities/QandA
Deputy Commissioner Abebe Abebayehu Chekol & EIC staff

12.30
Ministerial overview
HE Dr Akilulu Hailemichael,
State Minister for Business Diplomacy and Trade

13.00
Networking lunch break, opportunity to engage with EIC staff

14.30
B2B meetings, market research, company visits organised by EIC

18.30
Evening cocktail reception hosted by EU Head of Delegation

21.00
Invitees from government, donor/diplomatic community and local business people

SOCIAL PROGRAMME:

FRIDAY 26/10

OPTIONS:
Trip round city of Addis Ababa/Lucy museum
Visit to Heineken brewery
Visit to Rift Valley vineyard

19.30
Cultural evening at Yod Abyssinia restaurant

SATURDAY 27/10
Visit to city of Gonder (one hour flight)

SUNDAY 28/10
Tourist rip round town (castle etc)
Hotel opening evening function
Dinner/reception hosted by Mayor of Gonder

EVENING 28/10
Return home

May 9th
UK Members’ meeting in London with guest speaker Jeremy Lefroy MP, UK Trade Envoy to Ethiopia and All Party Parliamentary Group Chairman for Kenya and Tanzania.

In a thoughtful presentation, Mr Lefroy mainly focused on the potential business opportunities in Ethiopia, particularly for British companies. The main sectors he identified included renewable energy – geothermal, solar, wind and hydro – infrastructure, especially relating to the new 4-runway airport that is being built as Ethiopia seeks to become a freight hub for Africa, agro- processing, with a particular emphasis on improving productivity through research, industrialisation, pointing out the government’s ambitious development of various Industrial Parks and the low cost of labour and power (although the lack of forex was noted as a major restraint), financial services, although currently restricted for foreign investors was identified as a key driver for future economic growth and telecommunications, also currently severely restricted for foreign investors, because of security concerns and still being a cash cow for the government.

Emphasis was placed on investment in the country, rather than simply trading, and also the importance of taking a long term view, particularly regarding creating employment opportunities for the growing population, estimated at 2 million per year. The strengthening relationship with Kenya was also noted as the two countries seek improve diplomatic and trade links.

Having lived and worked in Tanzania for eleven years there were serious concerns expressed about the closing down of political space in the country although the efforts to try to curb the rampant corruption there and improve administrative effectiveness were recognised. However, there were threats to the country’s future economic growth if the political situation continues to deteriorate, a view that the EAA has also fully recognised.

Comments were also made about the “catastrophe” that has unfolded in Burundi since 2015 and the apparent lack of any potential solution, which has meant the international community has effectively given up on a country that is now probably the poorest in the world.

UK Chairman and CEO meet the UK Minister of State for Africa, Hon Harriet Baldwin MP, to discuss the Association’s activities and services.

In addition to explaining the background to the EAA, what the Association does and the services provided to members, there were discussions about the various countries in the East African region.

Following the recent reconciliation between President Kenyatta and his main opposition rival, and some very positive comments made about a “maturing democracy” in Kenya during the recent Commonwealth Heads of government meeting in London by the President, relations between the UK and Kenya have become stronger and there was now considerable optimism expressed about the future and about an improving business environment. However, concerns were again expressed about the deteriorating political situation in Tanzania and the potential impact this could have on future economic growth. Of the neighbouring countries, South Sudan’s continued political impasse shows no sign of a solution any time soon, there was only limited progress being made in Somalia, which remains very unstable and insecure for businesses, despite considerable continued international efforts and Burundi is facing a terribly uncertain future given the current political situation there. Eritrea remains a pretty oppressive country and there is only very limited engagement by the British government although it was noted that efforts being made by the new Ethiopian Prime Minister to try to resolve long-standing border issues were very welcome.

 

FUTURE MEMBERS MEETINGS’ 2018

KENYA - NAIROBI
Wednesday (Breakfast) 31st January
Wednesday (Breakfast) 7th March
Wednesday (Breakfast) 25th April
Wednesday (Breakfast) 6th June
Wednesday (Breakfast) 25th July
Wednesday (Breakfast) 5th September
Wednesday (Breakfast) 24th October (Regional Meeting)
Wednesday (Breakfast) 5th December

UGANDA - KAMPALA
Thursday (Breakfast) 5th April
Wednesday (Breakfast) 17th October

TANZANIA - DAR-ES-SALAAM
Tuesday (Coctails) 27th February
Thursday (Coctails) 20th September

RWANDA - KIGALI
Friday (Lunch) 6th April
Friday (Lunch) 19th October

ETHIOPIA - ADDIS ABABA
Thursday - Sunday (Investment Mission) 25th - 28th October

UK - LONDON - AGM
Tuesday (Lunch) 12th June