Energy infrastructure, competitiveness can help fast track EA's development

Rwanda is currently hosting the East African Business Summit which brings together the biggest number of industry leaders from across the region. The meeting, hosted by President Paul Kagame, and attended by his Kenyan counterpart, Uhuru Kenyatta, started yesterday. As the Business Summit is taking place, we should know that the daunting challenge facing the region is the yawning gap in power infrastructure faced by the five partner states as well as lack of competition in the region. As the various countries of the region undergo urbanisation and industrialisation, there is growing need for electricity in our rapidly growing towns and cities. Our towns and cities are not well connected to the rural areas where the vast majority of our people live. Neither are our skies connected. Besides the high cost of energy, our air transport is some of the most expensive in the world. The government, in conjunction with development partners, must build a more favourable business environment to facilitate growth. It should be recalled that the East African region has the lowest access to electrical power and smallest per capita generation compared to all other sub-regions on the African continent. Our government’s deliberate focus on energy development will no doubt provide a platform for both private and public sector participants to contribute. However, two of the restraints in development include the lack of investment and finance as well as limited private-sector participation. The private sector is definitely interested in investing; however, governments need to make firm commitments to deregulating markets in order to decrease the risk. Specific challenges in East Africa also include limited regulatory and institutional capacity as well as shortcomings in technical capacity and local resources. The need for external contractors and consultants to work on infrastructure projects leads to escalated costs. Furthermore, inadequate physical infrastructure is a major constraint in the growth of power infrastructure development in the region. Therefore, foreign investments in the East African energy sector will be vital to establish a platform for skills growth and knowledge transfer. Government’s focus on energy development will provide a platform for both private and public sector participants to contribute. One of the major opportunities in this region is the potential for intraregional energy and trade integrations. This opens up possibilities to reduce costs and ensure greater reliability and sustainability of power supply throughout the region. However, all the East African countries would need to invest significantly into cross-border interconnections in order to expand the electricity trade. One of the lessons we should learn from China is what they did in the 1970s and 1980s with regard to technology transfer. The East African governments should – without overpaying their hand – make technology transfer and value addition a condition in contract and concession negotiations with foreign firms. I see so many foreign firms visiting our region and signing contracts to roll out infrastructure, including energy and road networks. This is good but we need to ensure that enough due diligence is carried out as there are already murmurs of disconnect among the supposed beneficiaries of these initiatives. We must be more competitive in whatever we do. As long as countries succeed by making and selling things, governments can lower the cost of doing business as a policy priority. Transparency, the rule of law and improving regulatory oversight should be the hallmark for the East African nations. In Rwanda, we are on the right track when it comes to the cost of doing business. According to the World Bank 2014 report, globally, Rwanda ranks ninth in 189 economies on the ease of doing business. East Africa, as a region, should and can put in place policies that attract skills and expertise. While we keep crying of lack of capital, it is not actually the main problem, competitiveness is. As a region we need to prioritise. Our governments need to have capacity, efficiency and insight in key areas. Inefficient bureaucracy, cumbersome and costly overregulation, and too high barriers to trade and investment should not characterise our region. I am not oblivious of some of the attempts being made to overcome these barriers. These attempts need to be translated on the ground to benefit the people who, in the first place, should be the beneficiaries. Business summits like the East African Business Summit now concluding in Kigali are welcome gestures that we hope will go a long way in paving way for creating a good business environment for our region for the benefit of our people. The writer is a consultant and visiting lecturer at the RDF Senior Command and Staff College, Nyakinama.

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Energy infrastructure, competitiveness can help fast track EA's development