Why East Africa Should Be on Your Radar in 2024
Shikana Group
Leading investment and advisory firm specialized in foreign investments in Africa.
INTRODUCTION
Welcome to this week's East African Community (EAC) Business Update from Shikana Group. Our newsletter provides key insights into the region's dynamic economic environment. Today, you will discover developments across Tanzania, Kenya, Uganda, Rwanda, the DR Congo, and South Sudan.
This edition spotlights Tanzania's rapidly evolving financial sector by showcasing impressive growth in mobile money adoption, banking profitability, and remittance inflows. We also bring you exciting news about the first Ritz-Carlton hotel in Sub-Saharan Africa, set to open in Tanzania, representing a huge milestone for luxury tourism in the region.
Other highlights include Kenya's KenGen joining a prestigious global index, Uganda's thriving investment scene, Rwanda's upcoming trade forum focused on digital innovations, DR Congo's push for financial autonomy, and South Sudan's efforts to attract mining investors.
As always, we conclude with an inspirational quote and details on upcoming events.
Read on to stay ahead of your competition in East Africa's business world.
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TREND OF THE WEEK
Tanzania's financial sector is growing rapidly. Mobile money use is widespread. Most banks are profitable but face cybersecurity challenges. The central bank is managing inflation and currency stability. Remittances are becoming more important. These trends show a sector that's modernizing quickly, with both opportunities and risks for investors.
Key data points:
That’s why we encourage you to pre-order our FREE market research report on Tanzania's financial system. Attendees will receive a complimentary copy of our market research overview. Learn more and register here: https://shikanagroup.lpages.co/finance-report-2024.
TOP HEADLINES
TANZANIA
Tanzania Set to Welcome First Ritz-Carlton in Sub-Saharan Africa
Tanzania is set to make history as the first Sub-Saharan African country to host a Ritz-Carlton hotel, significantly boosting its position as a premier tourism destination on the continent. This development marks a major expansion for the luxury hotel brand, which currently operates 108 properties in 30 countries.
The announcement comes as Tanzania implements new measures to attract foreign investment and leverage its diaspora community for economic growth. The government has proposed the Miscellaneous Amendments Bill 2024, aimed at granting special status to Tanzanians living abroad. This legislation would ease restrictions on land ownership and create a more favorable environment for foreign and diaspora investments, potentially benefiting luxury hotel developments like the upcoming Ritz-Carlton project.
The Tanzanian Ritz-Carlton is expected to set new standards in the country's luxury tourism sector. While specific details are yet to be released, the property is likely to blend local cultural elements with the brand's signature luxury, similar to other Ritz-Carlton hotels worldwide. The development aligns with Tanzania's broader economic strategy to leverage its natural resources and expand its service sector.
Currently, the Ritz-Carlton brand is present in Africa only in Morocco and Egypt. The expansion into Tanzania represents a major milestone for both the company and the continent's luxury hospitality sector. The success of this venture could pave the way for further high-end hotel developments across Sub-Saharan Africa, potentially transforming the region's tourism scene.
The introduction of world-class brands like Ritz-Carlton could play a crucial role in attracting high-value tourists. It is expected to create jobs, stimulate local economies, and elevate Tanzania's profile on the global luxury travel stage.
KENYA
KenGen Joins MSCI Frontier Markets Small Cap Index
Kenya Electricity Generating Company PLC (KenGen) has been added to the Morgan Stanley Capital International (MSCI) Frontier Markets Small Cap Index. This inclusion is expected to increase foreign investment in the Nairobi Securities Exchange-listed firm.
KenGen, which produces 60% of Kenya's electricity, has an installed capacity of 1,725 megawatts (MW). Over 86% of this comes from renewable sources: 826 MW hydro, 753.8 MW geothermal, and 25.5 MW wind.
The MSCI index is a key benchmark for institutional investors targeting high-growth emerging markets. KenGen's addition may boost its liquidity and share price on the NSE.
The Nairobi Securities Exchange views this as an opportunity to showcase Kenyan companies to global investors, potentially attracting more foreign capital to the local market.
UGANDA
Investment Sector Shows Growth
Key companies on the Uganda Securities Exchange are attracting increased investor interest. MTN Uganda reported a 20.17% revenue increase to $405.9 million, with profit after tax up 29.69% to $78.9 million. British American Tobacco Uganda saw profit before tax grow to $1.75 million despite decreased sales.
On July 19, the USE traded 2.77 million shares with a turnover of $46,399. Investors are particularly focusing on MTN shares ahead of its planned mobile money business separation in 2025, and on Umeme Limited due to expected dividends and potential exit compensation.
In related news, state-owned Kiira Motors Corporation will host Uganda's first e-Mobility Expo on August 16, 2024, in Jinja, aiming to promote electric vehicle adoption and position Uganda as a leader in Africa's e-mobility sector.
RWANDA
?Trade Development Forum Underway
Rwanda and TradeMark Africa (TMA) will co-host the Trade Development Forum in Kigali from December 2–3, 2024. The event, themed "Digital Trade," will gather officials, experts, and business leaders from 14 TMA countries and beyond.
Key focus areas include:
- Interoperability of digital payments
- Use of distributed ledger technology and AI in trade
领英推荐
- Automation for green trade initiatives
The forum aims to apply technology to improve trade facilitation and policy frameworks across Africa.
David Beer, TMA CEO, highlighted progress in reducing transport times across East Africa's Northern Corridor by about a third, while emphasizing the need for further advancements.
Rwanda's Trade Minister, Jean Chrysostome Ngabitsinze, noted the country's commitment to African economic integration, citing initiatives like the Rwanda Electronic Single Window and Kigali dry port as examples of overcoming geographical challenges.
This is the sixth edition of the forum, with previous events held in Kenya (2011, 2012, 2014, 2019) and Uganda (2018).
DR CONGO
Government Targets $1.5 Billion Self-Funded Investment in 2024
The Democratic Republic of Congo plans to invest USD 1.5 billion from its own resources in 2024, aiming to reduce reliance on foreign funding. This initiative is part of a strategy to contribute over 50% of its investment needs by 2030, up from its current heavy dependence on external donors.
In 2022, international donors funded 90% of health investments. The DRC's low tax revenue, at 11.5% of formal GDP compared to Sub-Saharan Africa's 23.4% average, has contributed to this dependency.
To support its investment plans, the government expects to raise USD 1.3 billion in tax revenues and an additional USD 177 million from renegotiating a copper mining contract with Sicomines in 2024. The focus will be on road infrastructure and the "Local Development Plan for 145 Territories" to improve connectivity and social infrastructure.
The DRC projects USD 46.5 billion in investment expenditures from 2022 to 2029. While foreign funding remains important, the government aims to surpass external funding by 2025 and nearly double it by 2030. It indicates a shift towards greater financial autonomy.
SOUTH SUDAN
Minister to Showcase Critical Minerals Potential at Continental Event
South Sudan's Minister of Mining, Martin Gama Abucha, will lead a delegation to the Critical Minerals Africa (CMA) 2024 summit in Cape Town on November 6–7, 2024. The country aims to demonstrate its untapped, critical mineral resources and attract global investors.
South Sudan is estimated to possess over 40 million tons of copper and huge reserves of zinc, manganese, nickel, and cobalt. The summit will feature a dedicated South Sudan Mining Forum to connect local projects with international investors.
The country is actively pursuing partnerships to develop its mining sector. In February, South Sudan signed an agreement with South Africa's Department of Mineral Resources and Energy for collaboration on exploration and skills transfer. South Sudan is also establishing a geological laboratory and working with Russian company ROSGEO to create a mineral resource management system.
To improve its investment climate, South Sudan is amending its regulatory framework and plans to establish a mining chamber to manage partnerships with global investors. The country currently offers various mining licenses, including reconnaissance, exploration, and large-scale mining licenses, with durations ranging from 2 to 25 years.
Minister Abucha is expected to provide updates on these initiatives and showcase further investment opportunities across South Sudan's critical mineral value chain at the CMA 2024 summit.
UPCOMING EVENT
Second African Development Bank Transport Forum
What: A convening of policymakers, industry leaders, and experts to advance critical sector reforms and innovative solutions in African transport and logistics.
Where: Sofitel H?tel Ivoire, Abidjan, C?te d'Ivoire
When: September 18–19, 2024
Why Attend:
Who Should Attend:
Registration: https://surveys.afdb.org/opinio/s?s=ATF_2024_Registration.?
OPINION OF THE WEEK
“Manufacture, don’t just trade. There is money in manufacturing even though it is capital intensive. To achieve a big breakthrough, I had to start manufacturing the same product I was trading on, which is commodities.”
Aliko Dangote
CONCLUSION
This week's analysis reveals strong economic growth across East Africa. Tanzania's financial sector is modernizing rapidly, with 44.6% of adults now using mobile money. The upcoming Ritz-Carlton hotel and KenGen's inclusion in a global index show increasing foreign investor interest in the region.
Countries are investing heavily in infrastructure and diversifying their economies. DR Congo plans to invest USD 1.5 billion of its own funds in 2024. Uganda is pushing into e-mobility, while South Sudan is showcasing its vast mineral resources, including an estimated 40 million tons of copper.
Digital transformation is a key focus, as highlighted by Rwanda's upcoming trade forum on digital innovations. These trends indicate an East African economy that's not just expanding but becoming more sophisticated and globally integrated.
RESOURCES