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Region’s FDI hits $7b, boosted by flows into Kenya, Burundi

Saturday July 25 2015
fdi

The World Investment Report 2015 showed that the East African region had a combined total FDI inflow of $7.09 billion last year, up from $6.2 billion in 2013. TEA GRAPHIC

Kenya and Burundi’s 2014 foreign direct investment grew significantly, pushing the overall regional [FDI] inflows past the $7 billion mark.

This is according to the latest report released by the United Nations Conference on Trade and Development (UNCTAD).

Kenya’s inflows grew by 95.84 per cent to $989 million, from $505 million in 2013, while Burundi’s rose five fold to $32 million last year, up from $6 million.

The World Investment Report 2015showed that the East African region had a combined total FDI inflow of $7.09 billion last year, up from $6.2 billion in 2013, with Rwanda and Uganda registering $267.7 million and $1.14 billion respectively.

Tanzania remained the region’s highest recipient of FDI with 2.14 billion recorded last year, up from $2.13 billion in 2013.

“Kenya is developing as a favoured business hub, which is attracting investments in industrial production, transport, telecommunications and oil and gas exploration,” notes the report. “The country will further rise into a regional hub for energy, services and manufacturing as these explorations comes to fruition.”

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The report attributed Kenya’s impressive investment flows largely to the capital that went into the oil, gas and manufacturing industries.

Cabinet Secretary for Industrialisation and Enterprise Development Adan Mohammed said that Kenya almost achieved its 2014 target of increasing its FDI to $1 billion.

“The great growth of the securities markets, the energy sector and infrastructure improvement projects helped improve the FDI performance of the country,” said Mr Mohamed.

In Tanzania, gas discoveries helped to make the country the leading FDI destination in the East African Community.

BG Group, Ophir Energy Plc, Statoil of Norway and ExxonMobil have discovered about 50 trillion cubic feet of gas offshore of Tanzania. The firms are jointly expected to submit to the government plans for an onshore natural gas liquefaction plant and export terminal for liquefied natural gas.

Tanzania’s Minister for Investment and Empowerment Christopher Chiza said that the country’s FDI inflows represented their highest ever recorded level.
“We are proud that the growth has been brought about by the gas discoveries in the country,” said Mr Chiza.

Global good practices

The chairman of the Tanzania Investment Centre, Lucian Msambichaka, said that the organisation’s efforts at promoting and cutting restrictions on investments in the country were paying off.

“We are still working towards promoting global good practice in order to attract investment to other sectors such as manufacturing and agriculture that have the propensity to create jobs,” said Prof Msambichaka.

“We want to be at the level of Mozambique, which has been a star performer in attracting FDI in the Southern African Development Community region.”

Tanzania has proven reserves of 55 trillion cubic feet (tcf) that are expected to add about $4 billion to government coffers.

Major natural gas discoveries such as the Kamba and Fulusi prospects in October last year have placed Tanzania’s hydrocarbons potential firmly in the spotlight of international investors, pushing its FDI above its East African peers.

Felchesmi Mramba, managing director of the Tanzania Electric Supply Company said that they were working with investors to set up a $6 billion programme that will see the country triple its power output.

“We would like to roll out several energy projects so that we can stop relying on hydropower, and move to gas-based electricity,” said Mr Mramba.

In Uganda, government is undertaking several multibillion dollar projects in infrastructure, energy and oil, which led to a substantial rise in FDI.

The country is building the $2.1 billion Karuma and Isimba dam projects, on which the Treasury spent more than $300 million last year. Uganda is also increasingly taking a prominent position on investors’ radar, especially with a focus on consumer goods. There is also the oil pipeline project.

Crude oil pipeline

In November last year, Toyota Tsusho Corporation was awarded the tender to supervise the building of a 1,500 kilometre crude oil export pipeline from Hoima in western Uganda through Lokichar basin in northwestern Kenya to Lamu port on the coast.

The $4.5 billion pipeline is expected to be ready in 2018. The $620 million Sukuru Phosphate Project on the other hand is being undertaken by the Chinese.

Frank Sebbowa, the executive director of the Uganda Investment Authority, said that the government’s investment promotion efforts are beginning to pay off as the country is now witnessing larger investments in its oil, mining and energy sectors.

“We have seen an improved interest in our mining industry, especially by Chinese and Turkish firms; this proves our potential,” said Mr Sebbowa.

Rwanda, on the other hand, is aiming to increase its FDI this year, following a not so impressive performance in 2014, when it grew by $10 million.

READ: Rwanda attracts more FDIs despite security issues dogging region

The chief executive officer of the Rwanda Development Board, Francis Gatare, said that they did not perform very well mostly because of the global market conditions.

“We saw the global market trends make trading a little bit more expensive and thereby create a lot of uncertainty in the market,” said Mr Gatare.

Currently Rwanda is involved in several energy projects that include the $300 million 80MW from Rusumo Hydro Electric project to be constructed on Kagera River; the $450 million 147MW from Rusizi III hydro project, and a 200MW methane gas concession from Lake Kivu.

There are also investments in the hospitality industry with the building of the $200 million Century Park, the construction of the Marriot Hotel and the $22 million Protea hotel.

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