Tanzania Targets USD 10 Billion in Foreign Investment for 2024

I. INTRODUCTION

Karibu!

East African economies witnessed important policy shifts and investment activities in the past week.?

Ethiopia's National Bank unveiled a comprehensive overhaul of its monetary policy framework, moving to an interest rate-based regime with a new National Bank Rate initially set at 15%. Concurrently, Ethiopia established a currency swap agreement with the UAE, allowing exchanges of up to USD 817,000 and USD 803,000.?

In Tanzania, the Investment Centre set an ambitious target of USD 10 billion in investment capital for 2024, building on five consecutive years of growth. Kenya's cement industry faced a potential major change as Tanzania's Amsons Group bid USD 180 million to acquire Bamburi Cement.?

Meanwhile, Uganda and South Sudan reported progress in agricultural development programs supported by the African Development Bank, focusing on crop production, livestock improvement, and infrastructure development.?

These updates reflect ongoing efforts to modernize financial systems, attract foreign investment, and strengthen key sectors across East Africa. Continue reading to understand their implications for investors and business leaders.

II. TREND OF THE WEEK

Africa is the next economic frontier. Africon projections, published in 2022, indicate hard-to-ignore growth and development opportunities across the continent.?

Key Economic Indicators

• Africa's gross domestic product (GDP) was estimated to rise by 4% in 2023 and stabilize at 4.3% in 2024, demonstrating resilience in the face of global economic challenges.
• The continent's GDP is forecast to reach USD 29 trillion by 2050, presenting immense long-term investment potential.
• Five of Africa's six top-performing pre-pandemic economies (Benin, C?te d'Ivoire, Ethiopia, Rwanda, and Tanzania) are anticipated to re-enter the ranks of the world's ten fastest-growing economies in 2023-24.

Driving Factors

• Over 570 million Africans had internet access in 2022. Over a billion owned mobile phones. Those trends are leading to expansion in e-commerce, mobile banking, and digital services.
• Installed renewable energy capacity has increased by over 24 gigawatts (GW) since 2013.
• By 2020, 50 of 54 African countries had implemented waste management policies. 36 countries have plastic bans.
• The African Continental Free Trade Area (AfCFTA) agreement aims to support intra-African trade and economic integration.

III. TOP HEADLINES

TANZANIA

1. Investment Environment Shows Promise

Tanzania is positioning itself as an increasingly attractive investment destination in East Africa. Why? The Tanzania Investment Centre (TIC) has set an ambitious target of nearly USD 10 billion in business capital for 2024. This goal builds on five consecutive years of growth in both foreign and domestic investments. It also reflects the country's efforts to improve its trade climate and attract funding.

During fiscal year 2023-2024, TIC registered 707 investment projects valued at USD 6.6 billion. That is a 22% increase from last year's 369 projects worth USD 5.4 billion. The manufacturing sector led this growth, with 313 projects valued at USD 2.5 billion, followed by strong showings in transportation, commercial building construction, tourism, and agriculture. These investments are expected to generate over 226,000 jobs. Or, more than quadruple the employment impact observed in FY 2022–2023.

Tanzania's efforts to improve its investment appeal have not gone unnoticed on the international stage. In May, TIC was named the ‘Best Investment Promotion Agency in Africa 2024’ at the Annual Investment Meeting in Abu Dhabi. This achievement demonstrated the country's growing reputation as a competitive investment destination. It reflects the government's commitment to improving the business environment and increasing investor confidence.

In another move to stimulate investment, the Tanzanian government has proposed major policy changes aimed at engaging its diaspora community. New amendments seek to grant special status to Tanzanians living abroad, including inheritance rights and investment incentives through a "Diaspora Tanzanite card." These changes, if implemented, could open up new avenues for doing business, particularly in real estate and land development, as they would allow diaspora Tanzanians to access land occupancy titles more easily.

The agricultural sector presents particularly interesting opportunities for investors. Despite possessing 44 million hectares of arable land, only 15 million are currently under cultivation. That trend suggests room for expansion and modernization in farming practices. Similarly, the livestock sector remains largely untapped, with Tanzania having the second-largest livestock population in Africa but lacking in modern ranching and processing facilities.

KENYA

2. Tanzanian Conglomerate Bids for Cement Manufacturer

Amsons Group, a Tanzania-based conglomerate, has offered $180 million to acquire Bamburi Cement, a major player in Kenya's construction industry. The bid aims to purchase the entire stake in Bamburi, potentially leading to its delisting from the Nairobi Securities Exchange (NSE).

The offer price is USD 0.51 per share, representing a 44.4% premium over Bamburi's current market value of USD 0.35 per share. This significant premium suggests Amsons Group sees considerable long-term value in Bamburi's operations and Kenya's cement market.

Bamburi is currently majority-owned by Holcim, holding 58.3% through two investment vehicles. Martin Kriegner, Holcim's regional head for Asia, the Middle East and Africa, said selling its stake aligns with Holcim's strategy to focus on core markets.

Amsons Group, founded in 2006, has diverse interests across East Africa, including oil and petroleum products, manufacturing, and cement production. The company already operates a cement facility with a capacity of 6,000 metric tonnes per day, which includes the recently acquired Mbeya Cement site in Tanzania.

Edha Nahdi, Managing Director of Amsons Group, described the bid as part of their market expansion strategy. He indicated plans to deepen investments in Kenya beyond the cement industry in the coming months.

This acquisition, if successful, would mark Amsons Group's formal entry into the Kenyan market. It reflects a growing trend of cross-border investments within East Africa, particularly in key industrial sectors. The deal's size and the companies involved make it an important development in the EAC’s business scene.

UGANDA

3. AfDB Programme Shows Progress

The African Development Bank’s (AfDB) Agricultural Value Chain Development Programme (AVCP) in Uganda is making significant strides in enhancing the country's agricultural sector. As of June 2024, the project has disbursed 53.5% of its total funding of 57 million Units of Account (UAC), with implementation progress rated as satisfactory.

We have compiled its key achievements below.

(i) Crop Production:

• Maize cultivation has expanded to 42,575 hectares, far exceeding the target of 6,700 hectares.
• Rice production has reached 8,717 hectares, surpassing the goal of 7,750 hectares.
• Yields have improved, with maize reaching 4.5 tons per hectare (90% of target) and rice at 3.8 tons per hectare (95% of target).

(ii) Livestock Improvement:

• 3,299 farmers have accessed improved livestock breeds, including 2,199 women.
• Milk production has increased by 22%, progressing towards the 30% target.

(iii) Infrastructure Development:

• The Acomai Irrigation Scheme is 78% complete, with 46 km of secondary drains and 32.1 km of access roads finished.
• Three mini-irrigation schemes supporting research activities have been completed.

(iv) Seed and Input Distribution:

• Over 1,000 tons of certified corn seeds have been distributed to 91,222 farmers.
• Over 3,000 metric tons of maize fertilizer and 33,890 liters of pesticides have been provided to beneficiaries.

(v) Livestock Breeding:

• 4,686 doses of sexed semen and 22 exotic bulls have been acquired to support breeding programs.
• 5,498 artificial inseminations have been performed, resulting in 1,313 calves born to 1,075 farmers.

(vi) Environmental Impact:

• Tree cover has increased by 14.67%, progressing towards the 30% target.
• 4 million tree seedlings have been planted out of the 18.5 million target.

Challenges remain in completing the Acomai Irrigation Scheme by the December 2024 deadline and in fully utilizing the project's funding before the June 2025 disbursement deadline. The project aims to profile 400,000 farmers in a central database, an initiative that has not yet begun but is crucial for efficient input distribution.

These developments can be opportunities, given Uganda's agricultural potential. With 80% of its land arable but only 35% cultivated, there is room for growth. The sector accounts for 24% of GDP and employs 68% of the working population. However, challenges in commercialization, including limited use of fertilizers and quality seeds, lack of irrigation, and poor post-harvest handling, continue to impede progress.

The AVCP's focus on improving productivity, infrastructure, and market access aligns well with the need to address these challenges and capitalize on Uganda's agricultural potential.

RWANDA

4. Digital Transformation Advances

Rwanda demonstrated its commitment to technological advancement and democratic processes last week.

On the digital front, Rwanda partnered with UNESCO to launch a comprehensive capacity-building initiative focusing on digital transformation and artificial intelligence (AI). This collaboration with the Rwanda Development Board (RDB) saw over 100 employees participate in an online survey to assess digital literacy needs. The subsequent training sessions, delivered in partnership with The Lawyers Hub (a pan-African think tank), covered privacy and data protection, cybersecurity fundamentals, open data and open government, and AI fundamentals.

Simultaneously, Rwanda played a key role in regional ICT (information and communication technologies) collaboration. A workshop in Kigali, organized by COMESA and funded by the European Union (EU), brought together ICT stakeholders from Eastern Africa, Southern Africa, and the Indian Ocean regions. The event aimed to validate business models and training programs to harmonize ICT development across the region, focusing on enhancing the institutional capacity of regional ICT associations and improving technical capabilities in the sector.

Last week also saw the conclusion of Rwanda's national elections. This year's diaspora voter turnout increased by 182%, with 62,000 Rwandans in 70 countries eligible to vote, nearly tripling the 22,000 who participated in the previous election. Thanks to digital technology,

The main election took place on July 15, 2024, with over 9.5 million Rwandans participating. The country set up 2,600 polling stations domestically and an additional 160 stations abroad to facilitate voting. Special provisions ensure inclusivity, including polling stations in hospitals and arrangements for representatives of special groups such as women, youth, and people with disabilities.

5. Agricultural Resilience Shows Promise

South Sudan is strengthening its food and nutrition systems. Why? Up to 95% of South Sudanese rely on farming, herding, or fishing for their livelihoods. The AfDB-supported “Program to Build Resilience for Food and Nutrition Security in the Horn of Africa” is making progress in improving agricultural infrastructure and practices across the country.

Key achievements include:

• Rehabilitation of 5 hafirs, providing 140 million liters of water, and completion of 2 new hafirs with an additional 80 million liter capacity. Thirteen multi-purpose solar-powered boreholes have been established, with contracts awarded for 6 more hafirs, 9 additional boreholes, and 40 hand pump boreholes in Q1 2024.
• 119 community animal health workers have been trained in Kapoeta. Vaccination campaigns have reached over 627,000 cattle and 519,315 small ruminants, benefiting over 13,000 households. No disease outbreaks were reported in greater Kapoeta during the project duration.
• Provision of 10 metric tons (MT) of rice seeds to 1,325 farmers (60% women) in the Aweil Rice Scheme for the 2023 growing season. Additionally, 120 agro-pastoral groups received support for shallow wells, solar water pumps, and tree seedlings.
• A 25 km access road to the Aweil Rice Scheme has been rehabilitated. A slaughterhouse in Kapoeta town and three meat-selling markets have been completed, along with several small ruminant sheds.
• An e-registry platform was launched in November 2023 to facilitate extension and advisory services to beneficiaries.
• 22 youth and women agri-business groups, comprising 575 members (62.4% women), have been formed across four value chains.

Looking ahead, the project aims to further expand its impact by completing additional water infrastructure projects, continuing support for farmers and livestock keepers, and enhancing climate services. These efforts, combined with USAID's complementary activities in sustainable agriculture and economic resilience, are building a foundation for improved food security and economic stability in South Sudan's most vulnerable regions.

ETHIOPIA

6. Central Bank Modernizes Monetary Policy, Improves UAE Financial Ties

Ethiopia's National Bank (NBE) has unveiled a comprehensive overhaul of its monetary policy framework. It is a shift towards modern central banking practices. Simultaneously, the NBE has established a currency swap agreement with the Central Bank of the United Arab Emirates (CBUAE). Two memoranda of understanding (MoUs) cemented the partnership, which aims to facilitate cross-border transactions using local currencies.

NBE’s new monetary policy framework includes:

• An interest rate-based regime with a new National Bank Rate (NBR), initially set at 15%.
• Bi-weekly open market operations (OMO) auctions for liquidity management.
• Overnight lending and deposit facilities for banks at NBR +/- 3%.
• A forthcoming electronic platform will streamline interbank lending.

The currency swap agreement with the UAE allows exchanges of up to USD 186.7 thousand and USD 893 thousand. As a result, it can improve liquidity in local currencies and efficiency in cross-border transactions between the two countries.

These moves indicate Ethiopia's commitment to aligning its monetary practices with global standards while deepening its integration into regional and global financial systems. For investors and businesses operating in Ethiopia, these changes may lead to more predictable monetary conditions and potentially smoother cross-border transactions with the UAE, a key trading partner and source of foreign investment for Ethiopia.

IV. UPCOMING EVENTS

1. Free Webinar on East African Budgets

What: A virtual conference analyzing the 2024/2025 budgets of Kenya, Tanzania, Uganda, Rwanda, and DRC, and their implications for business and investment

Where: Online

When: July 25, 2024, at 12:30 PM East African Time (EAT)

Why attend:

• Gain insights into the financial plans of major East African economies
• Understand potential impacts on business and investment opportunities
• Hear from experts, including P.L.O. Lumumba and Shikana’s Amne Suedi.
• Participate in a Q&A session with experts

Who should attend:

• Investors interested in East Africa
• Business leaders operating in the region
• Economic analysts and researchers
• Anyone interested in East African economic policies

Where to register: https://shikanagroup.myclickfunnels.com/webinar-east-africa-finance-budget-2024-tz-kenya-uganda. Only 250 spots are available, so early registration is encouraged.

2. Transform Africa Summit 2024

What: Africa's leading annual forum on digital innovation and transformation

Where: Kenyatta International Conference Centre, Nairobi, Kenya

When: 28–30 August 2024

Why Attend:?

• Collaborate with global and regional leaders from government, business, and international organizations
• Shape Africa's digital revolution
• Network with over 19,000 delegates from 120+ countries
• Engage in 200+ sessions with 600+ speakers
• Connect with 2,600+ C-Suite executives and 150+ heads of state and ministers

Registration: Visit https://transformafricasummit.org/. Or, send general inquiries via [email protected], Sponsorship: [email protected]. Exhibition: [email protected].?

V. OPINION OF THE WEEK

“There’s no doubt that the future belongs to Africa. Just think about it: by 2050, Africa will have the same population as China and India today, with rising consumer demand from a growing middle class.?

The cities will be booming, and the number of urban areas with a population of over 5 million people will increase. By 2050, Lagos, with a current population of about 18 million, will double its size.?

The same would apply to Kinshasa, which has a current population of 15 million. Three of the ten most populous nations globally will be African. Africa, which already counts about 230 million youths today (about 20% of the global youth population), will increasingly be the youngest continent.”

Akinwumi Adesina, President, African Development Bank (AfDB) Group

VI. CONCLUSION

To capitalize on our latest newsletter, consider the action items below.

1. Assess your investment strategy in light of Ethiopia's new monetary policy framework, which may lead to more predictable financial conditions.

2. Explore opportunities in Tanzania's agricultural and livestock sectors, given the country's untapped potential and recent policy changes favoring diaspora investments.

3. Monitor the outcome of the Bamburi Cement acquisition bid in Kenya, as it may signify increased cross-border investment activity in East Africa.

4. Investigate partnership possibilities with agricultural development programs in Uganda and South Sudan, which are showing promising results in improving productivity and infrastructure.

5. Stay informed about upcoming events like the Transform Africa Summit, which can provide valuable insights and networking opportunities in the region's growing digital economy.

As always, conduct thorough due diligence and consider seeking local expertise when pursuing new ventures in these changing markets. You may need a country-specific approach to business and investment in the EAC. Shekinah Group can assist. Contact us today.

VII. RESOURCES

1. Tanzania proposes law changes to encourage diaspora investment - The East African?
2. https://kenyanwallstreet.com/inside-amsons-group-kshs-23-59bn-buyout-offer-for-bamburi-cement/?
3. Uganda - Agricultural Value Chain Development Programme (AVCP) - IPR June 2024?
4. UNESCO supports Rwanda Development Board on digital transformation?
5. Speech of Dr. Akinwumi A. Adesina, President of the African Development Bank, delivered by Vice-President Pierre Guislain at the Africa CEO Forum?
6. South Sudan - Program to Build Resilience for Food and Nutrition Security In the Horn of Africa - IPR May 2024 | African Development Bank Group?
7. https://nbe.gov.et/nbe_news/the-national-bank-of-ethiopia-and-the-central-bank-of-the-u-a-e-signed-a-currency-swap-agreement-and-mous-to-promote-the-use-of-domestic-currencies-and-interlink-their-payment-and-messaging-systems/?