TOP STORY: Regional body seeks solutions to financial crisis

Rwanda has confirmed it’s participation saying the country could benefit from the situation, since there is an increase in demand for products from developing countries The East African Business Council (EABC) is seeking for solutions to combat any possible effects of the global financial crisis on the region’s economy. The spills of the crisis will be under discussion in a meeting between EABC members and the regional business community scheduled for early next month in Arusha, Tanzania.
Some of the EAC business leaders meeting recently in Kigali. (File Photo)
Some of the EAC business leaders meeting recently in Kigali. (File Photo)

Rwanda has confirmed it’s participation saying the country could benefit from the situation, since there is an increase in demand for products from developing countries

The East African Business Council (EABC) is seeking for solutions to combat any possible effects of the global financial crisis on the region’s economy.

The spills of the crisis will be under discussion in a meeting between EABC members and the regional business community scheduled for early next month in Arusha, Tanzania.

The EABC brings together business leaders from Rwanda, Kenya, Tanzania, Uganda and Burundi. It is one of the organs of the East African Community (EAC).

Raj Rajendran, the Managing Director of Utexrwa, who is also one of the EABC Board Members of Rwanda, confirmed the country’s participation in the forum and its significance to the regional economy.

Rajendran, said that despite the crunch’s negative impact on government by reducing the financial inflows, it has provided some opportunities for the business community.

“There has been an increase in demand for products from the developing countries,” he stressed. 

The crisis with roots from the United States of America became prominently prevalent between September and December 2008 when many multi-national companies failed to pay off debts and laid off workers.

During the launch of East Africa’s Business Index at Novotel last week, Adrian Njau, the EABC Trade Economist, said that the East African region is not immune from the effects.

“This is because the region is strongly integrated into the world economy,” he explained, adding that effects might not be as severe as in the USA and Europe, but slight pinches have already been felt in EAC member states.

Citing an example of Tanzania, Njau said the largest East African country has reduced its cotton exports to the US and is now concentrating on adding value to entice domestic consumption as an alternative.

Njau observed that the situation could be no different in other regional bloc partner states though the magnitude may differ.

Similarly, a team of economic experts from the African Commission warned that the current global financial crisis will inevitably have unprecedented effects on the continent.

The Minister of Finance and Economic Planning, James Musoni said recently that Rwanda would be affected indirectly in several sectors.

According to Musoni the crisis is expected to reduce the inflow of investors into the country, especially from countries that have been hit most.

During last week’s East African Fines Coffee Conference and Exhibition held at Kigali Serena Hotel, Fortis Investment Research revealed that East Africa’s coffee prices have tumbled in recent months as the credit crisis forced investment funds to liquidate positions in a range of agricommodities in a seemingly indiscriminate rush to save failing businesses.

Fortis said that this situation has created a sense of despair among Rwandan coffee farmers. According to Fortis as global prices had risen sufficiently high to encourage Rwandan farmers to plan and prepare for a long-term perspective, Rwanda’s coffee prices fell by 23 per cent since September 2008.

While about 20 per cent of Rwandan coffee is exported to the US there are worries that a US slump will hit demand. The same developments have forced government of Rwanda to lower its forecasts for foreign revenue from the mining sector.

Meanwhile, the Multilateral Investment Guarantee Agency (MIGA), the political risk insurance arm of the World Bank Group, is to help facilitate up to $150 million of investments to small businesses in sub-Saharan Africa as part of its ongoing response to the global financial crisis.

Rwanda is also expected to benefit from this bail-out program.

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