Why Gulf Money is Flooding into East African Infrastructure
Shikana Group
Leading investment and advisory firm specialized in foreign investments in Africa.
Introduction
Mining modernization, fintech evolution, and infrastructure development are reshaping East Africa's investment climate as 2024 draws to a close.
November saw Tanzania and Kenya host parallel mining conferences aimed at attracting international capital, while Rwanda unveiled a US$200 million fintech strategy to position itself as a regional hub. Meanwhile, Uganda made a decisive shift in financing its US$4 billion oil refinery, opting for full equity funding over international project finance.
These developments reflect a broader regional push toward value addition and cross-border integration, even as different countries pursue distinct economic priorities.
Trend of the Week
Tanzania's mining sector is growing. The country has a large area for mining—over 800,000 square kilometers (sqm). This land has many types of minerals. Tanzania has
Mining now adds 9.1% to Tanzania's gross domestic product (GDP). The government wants to increase this to 10% by 2025.
To help the mining sector grow, Tanzania created new laws in 2010. These legal frameworks set up different types of mining licenses:
Tanzania also offers benefits to mining companies, including zero import taxes on mining equipment in the first year of operations.
These resources, goals, and policies show that Tanzania's mining sector may expand more in the next few years.
Top Headlines
TANZANIA
1. Mining Sector Eyes 10% GDP Target After $3.5B Exports
Tanzania's mining sector is accelerating its modernization push through policy reforms and international partnerships. At the recent Tanzania Mining and Investment Conference (TMIC) in Dar es Salaam, over 2,000 participants gathered to discuss mineral value addition strategies. The event highlighted Tanzania's progress in growing mining's gross domestic product (GDP) contribution from 4.8% in 2018 to 9.1% in 2022, with a target of reaching 10% by 2025.
The sector's export performance has been strong:
A key development is the partnership between Finland's Geological Survey (GTK) and Tanzania's Geological Survey (GST) to map 50% of the country's land area by 2030. This systematic mapping effort aims to de-risk exploration for investors by providing better geological data. For companies considering entry into Tanzania's mining sector, this presents an opportunity to access new geological information over the next 5-7 years.
The Ministry of Minerals is also streamlining processes for investors. Recent reforms include faster permitting for CNG facilities and new frameworks for mineral value addition. Small-scale miners, who contributed 40% of mining revenue last year, are getting increased support through training and access to formal marketing cooperatives.
For investors, the current focus areas include:
Practical considerations for market entry should include establishing relationships with local technical partners, understanding the new regulatory frameworks for value addition, and evaluating infrastructure needs - especially power supply and transport logistics. The government's emphasis on in-country processing means pure extraction plays may face headwinds, while proposals that include downstream value addition are likely to receive faster approvals.
KENYA
2. Mining Conference Debuts as Counties Await Sh2.9B Royalties
Kenya has taken big steps to overhaul its mining sector, launching its first Mining Investment Conference and Exhibition from November 26-27, 2024. The event, held in Nairobi, signified a strategic shift in how Kenya approaches mineral development and investment attraction. The government is addressing key bottlenecks, especially revenue sharing and community benefits.
A major focus is reforming the royalty payment system. Mining Cabinet Secretary Hassan Joho announced plans to expedite mineral royalty payments to counties and communities as soon as investors pay, rather than waiting for treasury disbursement. This addresses a significant pain point, as counties are currently owed over KES 2.9 billion (US$ 22.4 million) in accumulated royalties. The breakdown shows varied regional impact:
Recent geological work has strengthened Kenya's investment case. The completion of the National Aerial Geo-Physical Survey identified 970 new mineral occurrences across the country. For investors, this data reduces early-stage exploration risk and helps identify promising areas for detailed investigation.
The government has also formalized artisanal mining, with practical results:
The conference highlighted Kenya's focus on sustainability and technology. Taita Taveta University received recognition for training mining engineers and promoting green mining technologies. This signals growing local technical capacity and support for environmentally conscious mining practices
UGANDA
3. USD 4B Refinery Shifts to Full Equity Financing Model
Uganda is changing its approach to major infrastructure funding, with considerable implications for investors and contractors. The government's decision to fully equity-finance its $4 billion oil refinery project with partner Alpha MBM Investments is a notable shift from traditional project finance models. The 60,000 barrels per day facility at Kabaale in Hoima District will be central to Uganda's oil sector development.
This financing pivot comes amid wider investment momentum:
The refinery project is part of Uganda's three-pronged oil development strategy, alongside the East African Crude Oil Pipeline (EACOP) and upstream projects in Tilenga and Kingfisher. Previous attempts to finance through international markets faced challenges, leading to the current equity-focused approach with UAE backing.
For contractors and service providers, this shift has practical implications. Direct equity funding typically means faster decision-making and more streamlined procurement processes compared to project finance structures with multiple lender requirements. However, it also means stricter owner oversight of costs and deliverables.
Yktkhe partnership with Alpha MBM Investments, led by a member of Dubai's royal family, suggests growing Gulf interest in East African infrastructure. Companies looking to participate in Uganda's infrastructure projects should consider:
The timing of these developments, alongside regional infrastructure initiatives like EACOP, creates opportunities for companies with expertise in oil and gas infrastructure, especially those with experience in similar markets.
RWANDA
3. $200M Fintech Strategy Targets 300 Companies by 2029
Rwanda is backing its fintech ambitions with concrete investment targets and regulatory reforms. Recently, the government launched a five-year fintech strategy targeting US$200 million in investments and 300 fintech companies by 2029. The numbers show rapid sector growth - from just 3 fintech firms in 2014 to over 75 today, serving more than 3 million users.
The market is seeing active product innovation:
Bank of Kigali's latest results provide insight into market dynamics. The bank has reached 431,000 retail and 195,000 corporate clients, with its agent network processing over 3.8 million transactions worth RWF 1,134 billion. Small business lending grew 25.3% to FRW 260 billion, while retail loans increased 26.1% to FRW 256 billion.
For fintech companies and investors, Rwanda's strategy focuses on practical market gaps. The government aims to increase fintech adoption from current levels to 80% by 2029.
Key opportunity areas include:
Companies entering the market should note Rwanda's emphasis on regulatory compliance and financial inclusion. The central bank actively supports innovation while maintaining strict oversight. Successful market entry strategies typically involve partnering with established financial institutions and demonstrating clear financial inclusion benefits.
BURUNDI
5. Services Trade Gap Hits $18.3M as Regional Integration Deepens
Burundi is working to strengthen its position in regional trade and services, despite current trade imbalances. Recent data from the East African Business Council shows services make up 12.5% of Burundi's GDP, with significant room for growth in tourism and transport sectors.
The tourism numbers reveal both challenges and opportunities:
Transport services show similar patterns but with strategic advantages. While current air transport data shows exports of US$3.1 million against imports of $196.8 million, Burundi's position as a land-linked country offers opportunities to serve neighboring markets like eastern DRC and Rwanda.
The timing is significant as regional integration deepens. Recent workshops between EABC and GIZ focused on building capacity in transport and tourism under the AfCFTA Protocol on Trade in Services. This suggests growing institutional support for businesses looking to expand services trade in Burundi.
Companies considering the market should focus on building strong local partnerships and understanding regional trade protocols. The government's emphasis on tourism development and transport services indicates these sectors may see supportive policies and investment incentives in the near term.
DRC
6. Investment Secured for 450,000 TEU Deepwater Port Project
DR Congo is expanding its maritime access with a new deepwater container port at Banana. British International Investment (BII) committed up to US$35 million to partner with DP World on the project, which aims to transform DRC's trade capabilities. The port will feature a 600-meter quay with annual capacity of 450,000 TEU and a 17.5-meter draft to handle large container vessels.
This development is significant for regional trade. Current main port Matadi is located 93 miles upstream from the coast, limiting vessel access. The new Banana port, targeting completion after 2025, will provide DRC direct deepwater access to international shipping lanes for the first time.
For businesses operating in or considering DRC market entry, this port development could substantially change logistics calculations. Direct deepwater access should reduce shipping costs and transit times compared to current options through Matadi or neighboring countries' ports.
Companies should:
The project also signals increasing international investor confidence in DRC infrastructure, with BII extending its existing African ports partnership with DP World. This could lead to further infrastructure investment opportunities as port development drives demand for supporting facilities and services.
Opinion of the Week
“It is a once-in-a-lifetime opportunity to see a country being rebuilt. We have seen it in Rwanda and Sierra Leone. Every time that happens, it brings great opportunities. When a country has the kind of destruction Somalia has had, a boom follows. The opportunities are limitless.”
Liban Egal, founder and chairman, First Somali Bank
UPCOMING EVENTS
领英推荐
1. 2nd AAAG Annual Conference 2024
When: December 2-6, 2024 (8:00 AM - 5:00 PM EAT)
What: High-level gathering of public finance leaders focusing on "Building Public Trust in PFM Systems for Sustainable Growth"
Where: Arusha International Conference Centre, Afrika Mashariki Road, Arusha, Tanzania
How: Registration through official website www.aaag.org.zm
Cost: Contact secretariat at +260979883099 for pricing tiers
Who Should Attend:
●?Accountants General from 20 member countries
●?Public Financial Management experts
●?African Union Commission representatives
●?AfDB and World Bank officials
●?Government finance officers
●?Public sector auditors and accountants
●?Policy makers in public finance
Key Features:
●?Digital transformation in public sector efficiency
●?Strategies for combating illicit financial flows
●?Networking with regional finance leaders
●?Policy development workshops
●?Sponsored by SAP and ACCA
2. East Africa Energy Cooperation Summit (EA-ECS) 2025
When: January 29-30, 2025
What: High-level regional energy summit focusing on resource wealth, regional collaboration, and investment opportunities across East Africa
Where: Gran Melia Hotel, Arusha, Tanzania
How: Registration is available through EnergyNet's official platform
Cost: Contact organizers for tiered pricing ([email protected])
Key Focus Areas:
●?Regional power market development
●?Cross-border energy projects
●?Renewable energy initiatives
●?Gas-to-power opportunities
●?Mining sector energy integration
●?Digital infrastructure development
Who Should Attend:
●?Government energy ministers and officials
●?EAC representatives
●?Power utilities executives
●?Renewable energy developers
●?Mining sector leaders
●?Infrastructure investors
●?Digital infrastructure providers
●?Energy regulators
●?Project financiers
Unique Features:
●?Interactive country-specific boardroom sessions
●?Public-private sector dialogue platforms
●?Project fast-tracking workshops
●?Regional collaboration frameworks
●?Investment matchmaking opportunities
Official Endorsement: Supported by the East African Community (EAC) Secretariat Organizer: EnergyNet Ltd (Clarion Events)
Conclusion
East Africa's economic transformation is increasingly driven by strategic infrastructure investments and policy reforms rather than aid programs or commodity cycles. The region's parallel push into mining modernization, fintech development, and transport upgrades suggests a more coordinated approach to development than in previous years.
Key trends to watch:
For investors and businesses, the timing looks favorable for market entry or expansion. Policy frameworks are maturing, infrastructure gaps are being addressed systematically, and there's strong political support for private sector growth.
However, success will require patient capital, strong local partnerships, and practical understanding of each market's unique dynamics.
Resources
1. Seatrade Maritime News
https://www.seatrade-maritime.com/ports-logistics/bii-invests-drcs-deepwater-container-port-dp-world
2. Africa Energy Insights
https://africaenergyinsights.com/Tanzania/post/uganda-uaes-alpha-mbm-investments-takes-lead-in-ugandas-4-billion-oil-refinery-project/
3. IWeb Africa
https://www.google.com/amp/s/itweb.africa/amp/content/mYZRXM9glZ1vOgA8
https://www.google.com/amp/s/itweb.africa/amp/content/WnxpE74Y9xKMV8XL
4. The New Times Rwanda
https://www.google.com/amp/www.newtimes.co.rw/article/22244/news/featured/featured-bank-of-kigali-continues-to-empower-communities-and-businesses-driving-financial-success-in-q3-2024/amp
5. Pune News
https://pune.news/international/rwanda-unveils-national-fintech-strategy-to-boost-financial-growth-272952/
6. EABC Online
https://eabc-online.com/eabc-and-giz-improve-capacity-of-50-business-leaders-in-transport-and-tourism-on-afcfta-protocol-on-trade-in-services-in-burundi/
7. Kenya News
https://www.kenyanews.go.ke/kenya-host-her-debut-mining-conference-to-spur-investments/
8. Digiface
ing-a-low-carbon-mining-future-with-green-technologies-taita-taveta-university-recognised-at-the-kenya-mining-investment-conference-and-expo-2024/
9. Uganda Investment Authority
https://www.ugandainvest.go.ug/over-169-million-signed-in-new-investments/