EALA urges inclusive investment policies

The xenophobic violence currently taking place in South Africa could happen in East Africa if partner states don’t ensure inclusive policies to benefit citizens during the ongoing integration process, members of the East African Legislative Assembly (Eala) have warned.

The xenophobic violence currently taking place in South Africa could happen in East Africa if partner states don’t ensure inclusive policies to benefit citizens during the ongoing integration process, members of the East African Legislative Assembly (Eala) have warned.

‘‘South Africa is the most industrialised economy in Africa because of high investment levels but why are they experiencing xenophobic violence? Foreign investment levels in the whole of Africa have been growing but youth unemployment is worsening, why?” Tanzania’s Dr Kessy Nderakindo wondered.

Kenya’s delegate Nancy Abisai suggested that EAC should consider passing an anti-xenophobia law to avoid getting caught off guard.

“This is very important for the region, we should take xenophobia seriously,” she said.

Dr Nderakindo and Abisai are both members of the Eala Committee on Communication, Trade and Investment which is in Kigali for a two-day plenary session that kicked off yesterday and ends today.

The committee, chaired by Uganda’s MP Fred Mukasa Mbidde, is reviewing partner states’ national investment codes and policies with the view of harmonising them into a single regional investment code.

The debate on xenophobia was triggered by Fredrick Owiti, the Principal Economist on investment and private sector development at the EAC secretariat, who, while presenting the region’s investment strategy, noted that failure to sensitise and involve citizens in the integration process could lead to possible conflicts.

Representatives of the investment authorities from the five partner states presented highlights of their respective national investment policies.

But the general opinion expressed by the legislators was that the region is paying more attention to foreign investors and ignoring local entrepreneurs.

“Our regional investment strategy should actually focus on domestic investments to begin with because we can’t successfully lay down a strategy to attract foreign direct investment before we streamline our domestic policies,” said Kenya’s Joseph Ombasa Kiangoi.

Kiangoi lashed out at member states accusing them of looking at investment from the point of view of what foreigners are bringing to the region and not how to empower the region’s small start- ups and entrepreneurs to thrive.

“There’s reluctance among the policy makers in our region to ensure that they take steps to put down a legal framework to enable the common market protocol to be implemented, policies that exist in certain partner states are actually hampering investments by fellow East Africans, looking at them as foreigners yet we should by now have moved away from that,” he added.

The legislators emphasised that only inclusive investment policies that enable EAC citizens to enjoy the benefits of the integration can avert circumstances such as those in South Africa where locals have turned against ‘foreigners’ accusing them of dominating opportunities.

Ugandan representative Nusura Tiperu pointed out that the current business environment in the region seems to be more favourable to foreign investors than local investors which could alienate many of them from the integration process.

“As a result our people are suffering, they’re wondering what’s going on and nobody seems to be speaking for them as each country seems to be wanting to survive on its own and foreign investors are exploiting our nationalistic squabbles to their benefit,” said Tiperu.

Although Tiperu didn’t give details of the nature of ‘nationalistic squabbles’ among the partner states, members agreed that some foreign investors who have direct access to the heads of state have in the past obtained ‘presidential backed incentives’ which local entrepreneurs can’t get.

Rwanda’s Dr James Ndahiro said the region might continue being a net importer because no deliberate policies have been endorsed to promote local manufacturers to substitute imports.

“So we are spending all our so called meager resources to import even things that we have the capacity to make; we are importing eggs, tooth-picks, and tomatoes, are we mad?” Dr Ndahiro questioned.

The committee chairman Mbidde says they want to push for the creation of a single document that will be a reference point for all investment policies in the bloc.

“This is a serious committee, and all these submissions will yield tangible results,” he told The New Times.

Secretariat woes

Although regional integration is very much about the promotion of intra-regional trade and investment, there’s no strong evidence to that effect at the EAC secretariat in Arusha.

As the Principal Economist on investment and private sector development, its Fredrick Owiti’s responsibility to work on a regional investment policy to guide the five states; however, during his presentation yesterday, he cried to the legislators about under-funding of such a critical office.

“It’s a one man office and as I am in Kigali, it’s closed in Arusha,” said Owit.

Owiti presented the bloc’s current investment code which was passed in 2006 but needs up-dating since Rwanda and Burundi, which joined the EAC in 2007, didn’t contribute to its formulations.

The two countries are also currently formulating new investment codes. These codes, according to EALA, should be in harmony with the regional policy on investment.

But even for the three countries that contributed to the current EAC investment code, Kenya, Uganda and Tanzania, its contents are not binding on their national investment policies.

Owit also said, because of underfunding, his office doesn’t have fresh data on investment in the region which he said is very important to assess the effectiveness of the region’s efforts to reform its investment environment.

“But we are working on the first East African Investment report that is different from the East African Trade reports,” he told members.

According to Rwanda’s Minister for Trade and Industry, Francois Kanimba, who officially flagged off the committee’s business in Kigali, intra-EAC investment increased by almost 10 per cent to over US$ 235 in 2013 up from US$215 million in 2012.

editorial@newtimes.co.rw

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