East Africans look to Somalia, DRC for expanded investment market

Saturday January 13 2024
drc street

This general view shows currency traders cabins at ‘Kintambo Magasin’ market in front of an electronic board displaying a slogan in Kinshasa, DRC on August 11, 2021. PHOTO | ARSENE MPIANA | AFP


Tourism, investments in renewable energy, oil, transport and logistics are set to drive business opportunities in the East African region this year, according to industry leaders.

And these will draw largely from Somalia’s entry into the East African Community and the re-election of President Felix Tshisekedi in the Democratic Republic of Congo - two factors that are expected to fuel trading opportunities especially in the services industry, financial services/banking, and logistics.

The now eight-member EAC, with an estimated population of 301.8 million citizens, of whom 30 percent are urban-based, is already seeing resurgence in tourism.

John Kalisa, chief executive of the East African Business Council, says the impact of visa removal by some countries in the bloc is likely to be felt in the tourism sector as well as transport.

Read: Kenya visa lift: Will it reduce Africa air ticket prices?

The services sector contributed almost half of the economic growth in 2022/23 fiscal year in the region.


The region's natural and cultural attractions draw tourists from around the world, creating a demand for services like accommodation, food, and entertainment.

Mr Kalisa also said that oil in Uganda, investment in renewable energy in Tanzania and Rwanda, and transport and logistics in the region will drive intra-EAC trade “and open up new opportunities.”

Somalia in EAC brings a population of 17 million, boosting the regional market to more than 300 million people.

Dr Elly Twineyo-Kamugisha, executive director of the Uganda Export Promotion Board, said there is bound to be increased foreign direct investment (FDI) in Somalia, which will benefit the entire region.

“Businesses within the EAC, including companies that are operational within the region but whose head offices are elsewhere – like multinational corporations – will create investment opportunities and joint ventures to spread their reach,” Dr Kamugisha said.

Read: Inside EAC’s expansion ambition

One of the main drivers of this growth is expected to be the development of Uganda’s oil sector, which continues to underpin investment growth, with projects such as the $10 billion Lake Albert Oil Project and the $5 billion East Africa Crude Oil Pipeline (Eacop) attracting significant investment inflows.

Uganda, which is rich in agriculture produce, is likely to benefit from peace within the Great Lakes region as it seeks to expand its market to DR Congo, and beyond Kenya to Somalia.

The country's real GDP growth is forecast to reach 5.8 percent in 2024, from 4.6 percent in 2023.

“Areas of investment will include services (such as travel, transport, banking and other financial services like insurance), human skills development, and more that will support the establishment of the more technical industry,” Dr Kamugisha said.

“We also envisage investments into the water and marine sectors, agriculture and accelerated agro industry.”

Uganda exported goods worth $67.6 million to Somalia during 2020, according to the United Nations Comtrade database on international trade.

The exports included aircraft, spacecraft, tobacco, beverages (spirits and vinegar), cereals (flour, starch) and milk.

Read: Ugandan coffee receipts close to the $1bn mark

“The joining of EAC by Somalia gives Uganda in particular and EAC in general, a very big opportunity to grow intra-EAC trade,” Dr Kamugisha said.

In the past two years, Tanzania exported $558,000 to Somalia. The main products were beauty products, fruit juice and petroleum jelly.

Data from the Central Bank of Kenya (CBK) shows that Kenya exported goods worth Ksh11.4 billion ($71.7 million) to Somalia in the first six months of 2023, a 76 percent growth from Ksh6.5 billion ($40.9 million) in the same half in 2022.

The increase saw Somalia become Kenya’s fifth largest export destination on the African continent, behind Uganda, Tanzania, Rwanda, and Egypt, and above DRC and Ethiopia, which previously used to rank above it.

Besides miraa (khat), Nairobi’s major exports to Mogadishu are tobacco, pharmaceutical products, soaps and lubricants, coffee, tea, and machinery, according to data from the Comtrade database.

Kenya’s leading banks, Equity and KCB, have also set up shop in DRC, expanding the service sector in the region.

Since DRC President Tshisekedi came to power in 2019 in the DRC, the Kenyan political class and private sector have made inroads there.

Kenya’s exports to DR Congo were $135.93 million during 2022, with iron and steel as top exports. Kenya also exports tobacco, sugars and sugar confectionery, soaps, lubricants, waxes, candles, modelling pastes and plastics.

DRC, the largest country in sub-Saharan Africa in land area, has untapped deposits of raw minerals estimated to be worth in excess of $24 billion.

It also has 70 percent of the world’s coltan, a third of its cobalt, among a range of high value minerals found there.

Tanzania’s agriculture, renewable energy and gas sub-sectors are also gearing up for investment in 2024.

Read: The dangers, opportunities in East Africa in 2024

The country has seen an increase in the use of productivity-enhancing technologies, including mechanisation, irrigation, fertiliser use, and improved seeds, which are critical to improving food and nutritional security.

“Tanzania has invested heavily in agriculture, especially in maize, beans and now sunflower,” said Dr Hussein Omar, deputy permanent secretary in the Ministry of Agriculture. In the financial year 2023/24, Tanzania produced 1.1 million tonnes of raw sunflower, which produced 377,432.79 litres of edible oils, he said.

Tanzania is expected to see six percent GDP growth by 2025 and has seen billions of dollars in investment in infrastructure, hydropower, gas and solar projects in recent years.

Arusha is set to host the Tanzania Energy Cooperation Summit 2024 (TECS24) from January 31 to February 1. Organised by EnergyNet, the TECS24 will look at future trade and generation projects poised to transform the country’s power sector in the region.

KPMG, in a survey in October 2023, ranked Tanzania as the third most preferred destination in sub-Saharan Africa, after South Africa and Nigeria, to acquire or invest in over the next two years.

The nation was cited for its strategic location to the east of the continent, its abundance of natural resources, and its recent investment spike, especially in the power sector.

A first on-grid 50MW solar power plant, a $300 million investment into hydropower, a $42 billion LNG project formed by Shell, Equinor and Exxon Mobil, and almost $7 billion injected into infrastructure, confirms its attractiveness both in Africa and globally.