Oil pipeline battles and how East Africa’s markets are heating up
Shikana Group
Leading investment and advisory firm specialized in foreign investments in Africa.
Introduction
Thank you for joining us for this week’s edition of our newsletter, where we provide expert insights into East Africa’s evolving trade, finance, and investment environment. As the region continues to navigate economic transformations, key developments this week highlight both challenges and promising prospects for investors.
The East African Community (EAC) remains divided over Kenya’s Economic Partnership Agreement (EPA) with the EU, raising questions about regional trade integration and economic alignment. Meanwhile, Tanzania’s evolving labor market, Kenya’s tightening banking regulations, and Uganda overcoming legal hurdles to advance regional oil pipeline. Rwanda’s USD 10 billion AfCFTA Adjustment Fund, Burundi’s Netherlands-backed trade initiative, and Somalia’s strengthened cross-border agreements with Kenya present new growth avenues, while the Democratic Republic of Congo’s cobalt export suspension is set to impact global mineral markets. In this newsletter, we break down these critical developments, analyze their implications for businesses and investors, and explore the opportunities emerging from East Africa’s dynamic economic environment.
Trend of the week
EAC divided over Kenya EU deal as investment opportunities emerge
Tanzania’s demand for a comprehensive study on the Economic Partnership Agreement (EPA) between the East African Community (EAC) and the European Union (EU) is set to influence regional trade policies and foreign investment dynamics. The call for analysis stems from concerns that the agreement, signed by Kenya and Rwanda, could create trade imbalances, limit industrial growth, and expose EAC economies to unilateral EU trade sanctions as seen with Burundi. For foreign investors, the uncertainty surrounding the EPA presents both risks and opportunities. If the agreement is ratified as a bloc, it could open up more predictable and stable trade conditions allowing investors to benefit from preferential access to EU markets. Sectors such as agriculture, manufacturing, and logistics stand to gain from streamlined trade regulations and reduced tariffs. However, Tanzania’s hesitation raises concerns about regional unity and any delays in finalizing the agreement may discourage investment due to inconsistent trade policies across EAC countries.
Kenya’s decision to move forward with the EPA independently signals a shift in regional trade alignment, potentially making the country a more attractive destination for investors seeking direct EU market access. Meanwhile, Tanzania’s push for a cost-benefit analysis highlights its priority of protecting local industries from competition with EU imports, a stance that could shape future foreign investment policies in the region. Ultimately, the outcome of this debate will determine the level of trade stability and investment appeal within the EAC. If a consensus is reached, it could enhance East Africa’s global trade positioning, providing foreign investors with a clearer regulatory framework and a more integrated market.
Tanzania
Tanzania’s economy grows as labor market evolves
Tanzania is at a critical stage in balancing job preservation with economic modernization. As one of East Africa’s fastest-growing economies, the country is attracting increased foreign investment particularly in infrastructure, energy, agriculture, and technology. However these economic shifts present challenges in job security, wage structures, and labor market dynamics. A significant challenge is the high youth unemployment rate, with more than 60% of the population under the age of 25. While many Tanzanians are employed in traditional sectors like agriculture, there is a growing demand for skilled workers in industries such as ICT, manufacturing, and financial services. Unfortunately, the gap between job availability and workforce readiness remains a pressing issue.
The Tanzanian government has implemented strict labor laws to protect local workers, ensuring fair wages, job security, and restrictions on foreign labor. Employers must adhere to local employment quotas, prioritizing Tanzanians in senior positions, while obtaining work permits for expatriates remains a challenge. Meanwhile, over 70% of the workforce is engaged in the informal sector, where job security and fair wages are uncertain. For investors, understanding these employment dynamics is key to navigating the market successfully. The government is addressing these challenges through various initiatives, such as the Industrialization Strategy 2025, aimed at expanding the manufacturing sector and creating stable employment opportunities. Additionally, the National Skills Development Strategy seeks to bridge the skills gap by equipping young people with vocational and technical expertise suited to market needs. Tanzania has also established Special Economic Zones (SEZs), which offer tax incentives, reduced bureaucracy, and improved infrastructure. These zones create opportunities in industries such as logistics, pharmaceuticals, and agro-processing. Investors can benefit from venturing into manufacturing and value-addition industries, particularly in agriculture, where Tanzania is a leading producer of cashews, coffee, and tea. The ICT sector also presents vast potential as fintech, digital payments, and e-commerce continue to expand. Moreover, the country’s growing infrastructure and renewable energy needs provide investment opportunities in large-scale projects.
Tanzania’s labor market is evolving, requiring a careful balance between job security and economic competitiveness. For foreign investors, success lies in understanding labor regulations, engaging in skills development initiatives, and leveraging government incentives. By adapting to these dynamics, investors can create sustainable businesses while contributing to Tanzania’s long-term economic growth.
Kenya
Opportunity for foreign investment in the banking sector as stronger banking regulations in Kenya create safer investment environment
Kenya's new capital regulations are set to strengthen the banking sector by reducing bad loans and enhancing financial stability. Under these rules banks are required to hold higher capital reserves ensuring they can better absorb economic shocks. This move aligns with international standards such as Basel III, which promotes safer banking practices and reduces systemic risks.
These changes present significant advantages to foreign investors. A more resilient banking system means reduced risks for investments, as financial institutions will be better equipped to manage defaults and economic downturns. Additionally, increased capital requirements will encourage responsible lending, reducing the chances of economic instability caused by excessive non-performing loans. The new regulations also enhance transparency in banking operations, making Kenya’s financial sector more predictable and investor-friendly. Furthermore, the Central Bank of Kenya (CBK) is actively working to strengthen risk management in financial institutions. By ensuring banks maintain sufficient capital buffers, the CBK aims to stabilize interest rates and credit availability which is crucial for investors seeking long-term returns. With banks required to adhere to stricter credit assessment procedures, foreign investors can expect more prudent lending practices that lower financial risks across different sectors. The changes also align with Kenya’s broader economic vision of becoming a regional financial hub. By enforcing these capital rules, the country positions itself as a reliable and attractive investment destination. As banks improve their financial health they will be better able to support sectors such as infrastructure, real estate, and manufacturing, which are key areas of interest for international investors.
Additionally, these reforms may open up new opportunities in Kenya’s banking sector itself. With higher capital requirements, smaller banks may seek partnerships, mergers, or acquisitions, creating potential entry points for foreign investors looking to establish a presence in the financial services industry. Ultimately, Kenya’s new banking regulations not only protect local financial institutions but also assure international investors that the country is committed to maintaining a sound and stable banking system. These measures contribute to a safer and more conducive investment climate, reinforcing Kenya’s position as a key player in the East African financial market.
Uganda
Uganda and Tanzania overcome legal hurdles to advance regional oil pipeline
Uganda and Tanzania remain committed to the East African Crude Oil Pipeline (EACOP) despite ongoing legal battles and environmental concerns. The two governments have petitioned the Appellate Division of the East African Court of Justice (EACJ) to dismiss a lawsuit filed by four civil society organizations (CSOs) from Uganda, Kenya, and Tanzania seeking to halt the project. Environmental and human rights groups continue to oppose the USD 5 billion project, citing concerns over potential ecological damage, increased carbon emissions, and displacement of local communities. Despite this, Uganda and Tanzania argue that EACOP is vital for economic growth, energy security, and regional development. The 1,443-kilometer pipeline will transport 216,000 barrels of crude oil per day from Uganda’s Albertine Graben oil fields to Tanzania’s Port of Tanga once it becomes operational in 2025. The project is backed by major international investors including Total Energies and China National Oil Company (CNOOC), while Uganda National Oil Company and Tanzania Petroleum Development Corporation hold minority stakes.
Despite opposition from climate activists and the European Union, Uganda and Tanzania maintain that EACOP will transform their economies by generating thousands of jobs, improving regional infrastructure, and attracting foreign direct investment. The latest legal appeal, filed in December 2024, is the second attempt to halt the project, following a 2020 lawsuit that was dismissed in November 2023 for being time-barred. Uganda’s government insists that strict environmental regulations have been implemented to mitigate risks. Additionally, officials emphasize that EACOP will strengthen Uganda’s emerging oil sector, positioning the country as a major energy player in East Africa. Tanzanian leaders also highlight the pipeline’s role in enhancing regional trade and cooperation. As legal challenges and protests persist, Uganda and Tanzania remain resolute in seeing the project through to completion. Construction continues to progress, and financial agreements are nearing finalization.
Rwanda
AfCFTA fund to drive industrial growth and trade in Rwanda and Africa
The African Continental Free Trade Area (AfCFTA) Adjustment Fund, hosted in Rwanda, is set to play a crucial role in driving industrial growth and trade across Africa. This USD 10 billion fund aims to support countries and businesses affected by trade liberalization, helping them adapt to tariff reductions and increased competition. This fund is hosted in Rwanda however, it aims to support governments and the private sector in adjusting to liberalization, fostering growth, and enabling them to seize the opportunities presented by the AfCFTA market. It will provide financial assistance through grants, concessional loans, and other instruments to promote industrialization, infrastructure development, and manufacturing. The fund is particularly beneficial for businesses looking to expand production, improve competitiveness, and integrate into AfCFTA’s wider market.
Rwanda’s selection as the host of this fund highlights its emergence as a key financial hub in Africa, attracting more high-profile funds and investment initiatives. With the fund’s first disbursements expected in 2025, eligible governments and private sector players can seek financial support to enhance their capacity in trade and industry. This aligns with Rwanda’s broader strategy to position itself as a leading investment destination in Africa. Investors can benefit from concessional financing, grants, and support mechanisms that reduce investment risks particularly in industrialization, infrastructure, and manufacturing. As the fund contributes to infrastructure development, including improved logistics, energy, and transport networks, investors will experience reduced operational costs and better access to supply chains. Additionally, with AfCFTA’s goal of easing trade restrictions across Africa foreign investors can expand their operations across the continent without facing high tariff barriers.
Burundi
Netherlands funded project enhances Burundi’s global market access
A transformative market access initiative named UGUSHORA has been launched to strengthen Burundi’s export-driven economy, create jobs, and attract foreign investment. It is funded by the Embassy of the Netherlands in Burundi and implemented by the TRAIDE Foundation in partnership with TradeMark Africa (TMA). This two-year project valued at USD 2.05 million aims to boost trade and enhance the competitiveness of Burundian products in global markets. The initiative will forge strategic partnerships between Burundian and Dutch enterprises, unlock new investment opportunities, and promote innovation in horticulture, fisheries, and essential oils. By focusing on value chain development, eliminating trade barriers, and improving production standards, UGUSHORA will position Burundian exports as globally competitive. Additionally, the project will facilitate trade through technical support, digitization of export processes, and stronger market linkages to regional and international hubs.
The Government of Burundi has aligned UGUSHORA with its national development strategy to diversify the economy, increase trade, and drive employment growth. Speaking on the initiative, Minister of Trade, Transport, Industry, and Tourism, H.E. Marie Chantal Nijimbere, emphasized that limited access to technology, inadequate investment, and compliance challenges have hindered Burundian businesses from fully tapping into international markets. This project seeks to bridge these gaps, empowering micro, small, and medium-sized enterprises (MSMEs) and enhancing the visibility of "Made in Burundi" products. Foreign investors stand to benefit from UGUSHORA’s trade facilitation efforts as the project aims to increase export volumes by 30%, expand international market access for 65% of participating businesses, and enhance Burundi’s trade environment through digital innovation. As Ted Hunink, Deputy Head of Mission at the Netherlands Embassy, noted, the initiative responds to Burundi’s investor appeal made in December 2024, reinforcing the Netherlands’ commitment to private sector growth, entrepreneurship, and global market integration. With a strong focus on sustainable business practices, infrastructure improvements, and regional trade agreements, UGUSHORA presents a compelling opportunity for international investors seeking access to emerging markets in Africa. By strengthening Burundi’s trade ecosystem and improving logistics, compliance, and export efficiency, the project is expected to unlock significant economic value for both local businesses and global investors looking to expand in East Africa.
Democratic Republic of Congo
Cobalt export suspension in DRC opens doors for alternative investments
The Democratic Republic of the Congo (DRC) has announced a four-month suspension of cobalt exports to address concerns over global oversupply and stabilize the market. As the world’s leading cobalt producer, supplying over 80% of global output, this decision is set to create ripple effects across industries reliant on the mineral, including electric vehicle manufacturers, battery producers, and tech companies.
The suspension applies to all mining operations, from large-scale industrial mines to artisanal and small-scale producers. The government aims to regulate extraction, improve transparency, and formalize the artisanal sector, which has long been plagued by illegal mining and smuggling. The Regulatory and Oversight Authority for Strategic Mineral Substances Markets (Arecoms) will conduct an evaluation after three months to determine whether to modify or extend the export ban. This policy shift presents both risks and lucrative opportunities for investors navigating this region. While short-term supply chain disruptions and potential price surges in cobalt markets may impact businesses, investors can benefit by exploring alternative sourcing strategies. Countries such as Indonesia and Australia, which have growing nickel and cobalt industries, may see increased investment. Moreover, the DRC’s efforts to tighten control over its mining sector could pave the way for more sustainable and ethical mining practices, attracting foreign direct investment in refining and processing industries. Investors looking to enter Africa’s mineral wealth market may find new opportunities in downstream processing, local value addition, and infrastructure development.
Despite the immediate challenges, this move marks a shift toward a more structured and transparent mining sector in the DRC, potentially fostering long-term stability and profitability for global stakeholders. As cobalt remains a critical component in renewable energy and electric mobility, investors with a strategic outlook can position themselves to take advantage of evolving market dynamics.
Somalia
Cross border trade between Kenya and Somalia expands through new deals
The Somalia-Kenya Trade Week in Eastleigh, Kenya successfully fostered stronger business cooperation and investment opportunities between the two nations. Key outcomes included agreements to enhance cross-border trade, improve regulatory frameworks, and promote infrastructure development. The event also addressed trade barriers, encouraging smoother transactions between Kenyan and Somali businesses.
These developments create a more predictable and stable business environment for foreign investors. With growing exports to Somalia and enhanced trade policies, investors can capitalize on emerging opportunities in retail, logistics, manufacturing, and infrastructure. The agreements reached aim to simplify customs processes, reduce tariffs, and improve transport networks, making it easier for businesses to move goods efficiently across borders. Additionally, the event highlighted investment opportunities in Somalia’s recovering economy. Kenya is a crucial trade partner, and the new agreements provide a foundation for foreign investors to explore sectors such as agriculture, energy, and telecommunications. With commitments to enhance security and streamline trade procedures, Somalia is becoming a more viable market for international investors.
The discussions also emphasized the role of financial services in facilitating trade. Banks and fintech companies are expected to play a larger role in easing transactions between the two nations, ensuring faster and more secure payments. This financial integration will benefit foreign investors by reducing risks and increasing the efficiency of cross-border transactions. The trade week reinforced economic ties, opened new investment channels, and laid the groundwork for stronger business partnerships. Foreign investors now have better access to a dynamic and growing market in East Africa, with improved conditions for trade and investment
Upcoming events
11th East African Petroleum Conference and Exhibition
Date: 5–7 March 2025
Venue: Dar es Salaam, Tanzania
Agenda: The conference will focus on investment opportunities in East Africa’s petroleum and energy sector, discussing key trends, challenges, and advancements in oil and gas exploration, production, and infrastructure.
How to Register: To register, visit the official event website through this link (https://eapce25.eac.int/index.php/about/register)
Who Should Attend:
Key Features
Special Attendance
Amne Suedi, CEO of Shikana Group, will be attending the conference, engaging with investors and policymakers on legal and investment strategies in the region.
Africa investment exchange (AIX) Nairobi 2025
Date: March 19–20, 2025, Nairobi, Kenya.
Agenda: Focus on developments in Kenya and the East African Power Pool (EAPP), covering topics such as unlocking the region's power market, the future of Independent Power Producers (IPPs) and wheeling, and exploring the post-carbon economy.
Registration: Early bird registration is available until February 26, 2025. For more details and to register, visit the official website- https://africa-investment-exchange.com/events/africa-investment-exchange-aix-nairobi-2025/
Who should attend:
? Energy sector professionals
? Investors
? Policymakers
? Stakeholders in energy market.
Key Features:
? Discussions on regional integration
? Transmission investment
? Storage solutions
? Market design
? Emerging energy sectors like green hydrogen and synthetic fuels
Opinion of the week
“In a world shaped by policy uncertainty and trade tension, developing countries’ economies will need bold and far reaching policies to seize untapped opportunities for cross -border cooperation”.
Dr. M. Ayhan Kose, World Bank’s deputy chief economist and director of the Prospects Group
Conclusion
As East Africa continues to redefine its position in global trade and investment, businesses and policymakers must stay agile in adapting to new economic realities. The shifting dynamics within the EAC’s trade policies, Kenya’s financial sector reforms, Tanzania’s evolving labor market, and regional infrastructure investments signal both opportunities and challenges for investors. The implementation of the AfCFTA, increased foreign direct investment in energy and technology, and evolving regulatory landscapes all underscore the importance of staying ahead of the curve in an increasingly competitive market. For investors, the future of trade agreements, financial sector reforms, and regional integration will determine the ease of doing business across East Africa. The rise of digital finance, sustainable investments, and cross-border trade facilitation presents lucrative opportunities for those willing to engage strategically. However, navigating these opportunities requires in-depth market knowledge, risk assessment, and adaptive strategies to capitalize on emerging trends.
We remain committed to equipping you with the latest insights, expert analysis, and tailored advisory services to help you navigate East Africa’s evolving business landscape. Whether you are exploring new investment frontiers, adapting to regulatory changes, or seeking strategic partnerships, our expertise ensures you are well-prepared to make bold and informed decisions. The coming months will be critical for shaping the future of East Africa’s economic growth. Those who understand the shifts anticipate the risks and seize the right opportunities will be best positioned to thrive. The future belongs to those who act. Stay engaged with us for more updates, and let’s work together to unlock the full potential of East Africa’s thriving markets
Resources
1. The East African (2025)
2. The East African (2025)
3. The East Africa (2025) business tech
4. Business insider (2025) markets
5. Newtimes (2025)
6. Trademark Africa (2025)
7. The East African (2025) business- tech
8. Eastleigh voice (2025) business