Security concerns have done much to dent Kenya’s reputation as east Africa’s foremost tourism hub. Disparate attacks by Al-Qaeda affiliated Al-Shabaab in key tourist haunts, including Lamu and Mombasa, led tourist arrivals to drop by 69,000 in the first months of 2013, according to government estimates. Moreover, a spate of attacks in early July this year, which left 18 people dead in Lamu, further highlighted the country’s security challenges.
Amina Mohamed, the cabinet secretary for foreign affairs, insists that far from terrorism being a ‘Kenyan’ issue, the country’s security challenges are part of a wider international extremist problem, which needs globally coordinated solutions. “The war on terrorism is a global one,” she says.
“Terrorism has affected everybody – China, Russia, the US, the UK, Spain and France. Our problem in Kenya is that we are at the frontline of a war that we do not understand. Kenya has been targeted because we are friends of the West; this is not a war against Kenya – this is a world security problem, which requires the efforts and collaboration of everybody to solve it.”
Although Kenya’s hotels and tourist providers continue to record significant losses as a result of the terrorist attacks, the country’s financial services and construction sectors have enabled the country to maintain a steady economic growth rate. The fDi Report, fDi Intelligence’s annual review of greenfield FDI, ranked Kenya among the top 10 leading recipients of greenfield FDI in the Middle East and Africa region in 2013. The African Development Bank (AfDB) expects that the stability of the Kenyan shilling, coupled with governmental reforms in security and governance, will enable Kenya’s GDP to accelerate from 4.9% in 2013 to 5.7% in 2014. Moreover, the significant success of the country’s maiden $2bn Eurobond in June this year reveals that investor interest in the country remains strong.
“We have done a lot in a very short time, and we have met all our deadlines,” says Ms Mohamed. “The [new east African] railway which [is under construction] will join Mombasa and Nairobi in Kenya to Malaba and Kampala in Uganda and Kigali in Rwanda. This will enhance trade in Kenya and the East African Community [EAC]. We collectively engaged with the EAC in an infrastructure programme that reduced the cost of transporting a container from Mombasa to Kigali by about 40%, for example. An EAC monetary union is already in place and we have established a common market. East Africa’s prospects as a whole are looking good, and we are excited.”
Although the political fallout between South Sudan’s president, Salva Kiir Mayardit, and former vice-president, Riek Machar, in December 2013 dealt Africa’s youngest country a significant blow – with subsequent conflicts in the month causing more than 800,000 people to flee their homes – Rebecca Okwaci, the country's minister of telecommunications and postal services, says that excessive focus on these issues has detracted from game-changing developments in the country’s ICT sector.
“South Sudan is a new country – we got independence in 2011 – and in a short period we worked hard to catch up with the other parts of the world in terms of our ICT infrastructure,” she says. “We opened up the fibre-optic backbone in the country for external investment, and to-date we have developed our second- and third-generation networks for mobile phones.”
Although the country remains heavily reliant on its oil sector – the AfDB estimates that more than 70% of government revenues are derived from oil, and the industry contributes to more than 60% of South Sudan’s GDP in terms of direct exports – Ms Okwaci insists that the government’s proactive approach in developing its ICT sector has done much to diversify its sources of income.
Formed as part of the government’s official Transformational Agenda, Ms Okwaci maintains that her ministry’s efforts in opening its ICT sector to foreign investment has enabled it to experience success in attracting FDI from large telecommunications firms, including the Kuwaiti firm Zain Group and the South Africa-based MTN Group. Yet she is also keen to stress that promoting online and mobile-based educational platforms, through ICT, will also form a central aspect of South Sudan’s ICT strategy.
“We have a strategic plan, which we are in the process of implementing. Our vision is to have an empowered and technology-literate society, so we are re-educating our society,” says Ms Okwaci. “We are currently in the process of extending ICT services to our rural populations’ schools and health centres – in fact, I attended an MTN network launch in one of our villages a few months ago, which tackled this issue specifically. We are working in partnership with these large firms in order to combat illiteracy through rolling out our e-learning facilities, and increasing employment and for entrepreneurial young people. We have been successful so far, and I am very positive about these developments.”
The going has never been so good for Robert Sichinga, and it is not hard to see why. As minister of commerce, trade and industry for one of the world’s fastest growing countries in economic terms, the task of showcasing Zambia to prospective investors is a relatively easy one. While sub-Saharan Africa's economy as a whole grew by 5.5% in 2013, according to the International Monetary Fund, Zambia surpassed this, expanding by 6.5%. With a predicted growth rate of 7.1% in 2014, research agency the Economist Intelligence Unit expects the country will become the world’s 10th fastest growing economy by the end of this year.
While Zambia’s copper industry accounts for much of its business activity – the AfDB estimates that it contributes 70% of the government’s export earnings – Mr Sichinga says that the government’s successful efforts to steadily diversify the country’s sectors has also enabled Zambia to maintain its strong economic performance. “Zambia has consistently grown by more than 6% over the past five years,” says Mr Sichinga. “Although most of it is driven by mining, we are also witnessing a lot of non-traditional sectors attracting substantial investments.”
Pointing to the development of Zambia’s agricultural sector, Mr Sichinga maintains that this industry’s growth is largely down to FDI from Africa-based foreign investors. “Our major trading partner is Africa,” says Mr Sichinga. “We engaged in massive infrastructural projects in order to connect our roads to other countries such as Botswana and Namibia, and create additional corridors to neighbouring ports in the north-west such as the Democratic Republic of Congo. Being land-linked enabled us to expand trade in livestock, rice, soya beans, sunflower and water resources.”
Although the government’s extensive efforts to reduce inflation, as well as strengthen governance and democratic processes, significantly boosted investor confidence, the country’s economic performance has still not translated into economic gains for its wider population. While poverty remains stubbornly high at 60%, according to the AfDB, Mr Sichinga says the government is currently in the process of financing infrastructure projects, which will significantly boost employment among Zambians.
“We issued two Eurobonds: one in 2013 which was worth $750m, and another one earlier this year, and both were over subscribed,” says Mr Sichinga. “We are now planning to invest these funds into infrastructure and increasing our capacity to produce. We will also invest in special economic zones as we want to create business clusters; we want to start converting our local raw materials into high-value-added products. This will also encourage our people to participate in our economy.”
Although the Zimbabwean government’s decision at the start of this year to officially accept nine foreign currencies as legal tender has been interpreted by critics as a worrying sign of a faltering economy, Patrick Chinamasa, Zimbabwe’s minister of finance, argues that, on the contrary, the government’s decision to support a multi-currency regime has significantly reduced Zimbabwe’s inflation challenges and boosted investor confidence.
“Economically, we have been under siege for the past 18 months, but the indications are that we are coming out of the woods, and there is a light at the end of the tunnel,” says Mr Chinamasa. “It is important to note that although nine currencies are tradable in Zimbabwe, the reality is that there are only three dominant currencies, including the US dollar, the South African rand and the Botswana pula. We battled business confidence and our multi-currency regime was important as it stabilised our economy when we introduced it.”
While he concedes that Zimbabwe’s economic performance has significantly trailed other economies on the continent, Mr Chinamasa maintains that the government’s efforts in encouraging Zimbabwean’s economic participation through offering foreign investors incentives to partner with local businesses has boosted agricultural and mining activity. “We worked hard to promote inclusive growth and encourage local economic participation in tobacco production and we experienced success,” says Mr Chinamasa. “We went from recording just 130 million kilograms-worth of agricultural produce just a few years ago, to more than 200 million kilograms in recent years. Our policy in supporting local farmers means we were able to scale up our agricultural production, and more than 90,000 peasant farmers currently participate in this sector.”
Although Zimbabwe’s GDP is expected to accelerate from 3.7% in 2013 to 4% this year, according to the AfDB, the country faces formidable challenges. High external governmental debt, coupled with deindustrialisation and informalisation across key sectors including mining, means the country’s GDP growth will trail the regional average. Yet, Mr Chinamasa remains upbeat. Pointing to the government’s recent efforts to strengthen its ties with its international diaspora, he maintains that diaspora remittances will play a key role in financing upcoming infrastructure projects.
“We want to mobilise the diaspora and encourage [these people] to invest part of their remittances into infrastructure and we are [considering issuing] some bonds,” he says. “We are looking into the possibility of creating a special purpose vehicle to finance services such as our national grid, and I am confident about our future.”