Members of the East African Legislative Assembly (EALA) have called on the five East African Community (EAC) partner states to develop a joint mechanism on sharing information about investors coming to the region.
This is one of the 12 recommendations presented at the ongoing sitting of EALA in Kampala, on Tuesday by its committee on Communications Trade and Investment (CTI).
Presenting a report on investment promotion policies in the bloc, MP Mukasa Mbidde, the committee chairperson, said partner states should formulate and harmonise investment codes and regimes that promote industrialisation and pro-growth investments.
“A law to regulate investments in the bloc should be enacted. EAC Partner States should increase the budgetary allocations for investment incentives so as to attract more investors to the Community and also support SMEs to promote industrial development in the region,” Mbidde said.
“EAC should develop a mechanism on sharing information about investors that come to invest in the Community.
EAC should encourage specialisation in investments rather than member countries competing in every area.”
The report recommends that mechanisms be put in place to compel investors to “re-invest a certain percentage of profits” in the region rather than repatriating all the money.
The CTI’s report is an outcome of a related workshop on investment promotion policies conducted by the committee in Kigali, in April.
The committee recommended that: a financing window or portfolio should be established in the bloc’s development finance institution – the East African Development Bank (EADB) – to support small and medium enterprises in the region.
“The Council of Ministers should fast-track the Energy Master Plan and allocate resources for its implementation.
The EAC investment strategy should provide for domestic investment policies and measures to facilitate small and medium cross border investors in East Africa,” it added.
MP Nancy Abisai said: “We have good policies of investment in the Partner States, but they are disjointed. Let us look for a way to harmonise them. The point of disconnect is the failure to capture the business environment regionally.”
The committee’s counsel comes after lawmakers expressed conserns over EAC’s foreign direct investment (FDI) terrain.
They observed that: there is need to develop a comprehensive regional investment policy document to guide and articulate regional objectives for attracting investment to specific sub-regions or sectors; the region lacks a common investment policy; and that drastic short-term measures are required to ensure that the EAC has an effective investment promotion and facilitation regime.
They further observed that there is no established mechanism for investment partnerships between foreign and local investors; and that capital account liberalisation – easing restrictions on capital flows national borders – in the region is still weak and, therefore, movement of capital is slow.
Besides the negative impact of high-energy costs in the bloc, MPs also noted that the lack of transparency in EAC Partner States while attracting investments, unlike in COMESA where there is a regional investment agency which transmits information regarding all foreign investors to all investment promotion agencies in member states.
Besides a market of about 145 million people, one of the largest single-bloc regional markets in Africa, EAC has enormous economic potential and is considered a conducive and virgin area for trade and investment. The EAC market is made bigger by partnerships with other regional blocs such as COMESA and SADC, boasting a combined population well over 400 million.
In 2011, all the five EAC nations implemented reforms improving their business regulations for small and medium sized business.