The East African Community (EAC) is regressing with Kenya, Uganda and Tanzania leading the pack.
It is gross discouragement to hardworking East Africans who are seeing their countries’ economies continue on a downward trend despite the much-hailed talk of GDP growth.
Coupled with unfavourable economic conditions globally, the EAC economies are degenerating, leading to chaotic disruptions of livelihoods of the majority poor.
Kenya’s debts, theft of public resources
Kenya is East Africa’s economic hub but with the goings-on lately, it seems like the centre is no longer holding.
A Gallup International annual End of Year Survey released in 2002 showed that Kenyans were the most optimistic people on earth and in 2019 the Global Optimism Outlook Survey found that 70 per cent of Kenyans viewed themselves as optimists.
This average was above the global standing at 56 per cent and continental Africa’s average of 64 per cent.
For a country that is resilient, innovative and enterprising, the tide, however, seems to always be against it due to skewed political representation and a lack of accountability by the elite.
Kenya is currently heavily-laden with debt incurred to line the pockets of a few politically connected individuals at the expense of tens of millions who are staring poverty in the eye.
With the repayment of loans to China and other creditors, it seems that Kenyans are not getting a break any time soon. The current public debt Kenya owns stands at approximately Ksh4.884 trillion (USD$49 billion). This is the equivalent of 56.4 per cent of the country’s Gross Domestic Product (GDP).
In 2008, the debt stood at 42.8 per cent. Having grown by close to 15 per cent since 2008, the country owes more than half its GDP.
Kenya cannot afford to adequately feed its people yet it can afford to splash billions on infrastructure that has not and will not improve people’s economic status anytime soon.
So bad is the situation that even Central Bank Governor Patrick Njoroge does not believe the much-touted economic growth sentiments by the government he serves. Last year during the launch of an IMF report on the status of Kenya’s economy, Njoroge said, “It’s true you have GDP numbers, but you can’t eat GDP. At the end of the day, what’s needed is specific income, plus jobs.”
The situation is worsening with 2020 bringing more job losses and the collapse of several SMEs. The future remains bleak for East Africa’s economic giant.
Hope from Black Gold Exports
Next month, Kenya plans to export its second consignment of 500,000 barrels of crude oil according to Brian Muriuki, strategic advisor in the Ministry of Petroleum and Mining.
He said that the second batch of exports will be larger than the first sale of 200,000 barrels which earned Kenya Kshs1.2 billion (US$12 million).
The crude was sold to the United Kingdom-based ChemChina UK at what the government said was “a price much higher than what was initially projected.”By becoming an oil exporter, Kenya could turn its fortunes and accelerate its development in the next few years. With the commodity, which is estimated at 560 million barrels of recoverable oil deposits in the Lokichar basin’s Blocks 13T and 10BB, Kenya could make enough to buoy her beleaguered economy.
Muriuki said the country wants to sell crude oil in bigger consignments in future to achieve better prices at the international oil markets. Depending on the performance of Kenya’s oil in the international market, Muriuki said that it will give commercial production a nod by giving confidence to the oil exploring firms to scale up investment.
In addition to oil, Kenya’s SME sector will benefit if policies are aligned to support its growth. Currently, the hard economic times have spelt doom for many small businesses leading to several closures or massive scale downs.
Looking ahead, Kenya is still well placed in the East African region to grow its economy since it remains an attractive region for foreign investors with major companies from the US pitching tent towards the end of last year. Things can only get better if all available opportunities are utilised for the maximum benefit of the citizens.
Tanzania’s disappearing journalist, government critics
Kenya’s next-door neighbour seems to have learned from the self-proclaimed professor of politics Daniel Arap Moi whose 24-year reign in Kenya left a lasting legacy of public resources theft and the disappearances of anti-regime individuals.
President John Magufuli’s government seems to have perfected the art of disappearing critics with journalists bearing the brunt.
In October last year, two international rights groups accused the Tanzanian government of increasingly repressing divergent political views.
Human Rights Watch (HRW) and Amnesty International said that Tanzania has implemented laws stifling independent journalism since Magufuli’s election in 2015.
The country has also severely restricted the activities of NGOs and opposition parties.
In May 2018, the country’s opposition said that at least 380 people had been abducted and disappeared in a government crackdown against suspected Islamists on the Southern coastline.
Since 2015, the Tanzanian government has banned or suspended five newspapers over content considered critical. The activities are based on the 2015 Cybercrimes Act where journalists and activists are prosecuted, including for social media posts.
But it is not all doom and gloom.
Tanzania’s increasing gold sales
In December last year, the Bank of Tanzania said in its monthly economic report that gold sales rose by 42 per cent to hit US$2.14 billion. The country recorded US$1.51 billion in gold sales from the same period in 2018.
Tanzania is Africa’s fourth-biggest gold producer after South Africa, Ghana and Mali. The East African nation hopes that after a tax crackdown, the overhauling of its mining code in 2017 will rebound the economy.
The move spooked foreign investors but it seems to be paying off. Mining is a relatively small contributor to the economy and Magufuli is pushing for more revenue from the sector.
Tourism is the key source of foreign exchange and it rose marginally to US$2.52 billion last year from US$2.45 billion in the same period in 2018. The growth was due to more visitor arrivals.
Despite the current setbacks, the economy seems to be doing well with the country also expanding its transport infrastructure to open up the regions.
Heading into the future, Tanzania’s economy could be rivalling Kenya’s but it will take some time before this happens.
Uganda’s no private meetings in homes
It keeps getting weirder in East Africa where repression seems to be the order of the day. While Kenya enjoys relative freedom of association and speech, it is not so in Tanzania and now, Uganda.
In addition to punishing the likes of Kyagulanyi Ssentamu popularly known as Bobi Wine, the Pearl of Africa has not run short of antics that seek to keep people subdued.
On January 6, Ugandan police detained the singer and political activist preventing him from holding his first public meeting with supporters as a presidential aspirant.
Bobi Wine is seeking to send President Yoweri Museveni home on a platform of reform and justice for all.
To disperse the crowds, police fired tear gas outside the capital, Kampala. This is despite the foiled meeting having been authorized by electoral authorities.
The 37-year-old opposition lawmaker was holding the first of several meetings he has planned in readiness for the presidential election scheduled for 2021.
Museveni, who was born in 1944, captured power in the 80s after leading a successful rebellion against Idi Amin and Milton Obote.
He has been controversially re-elected every time he runs for office with a majority of votes. However, the July 24, 2019 declaration that Bobi Wine will be running against him seems to have struck a raw nerve.
With these three countries experiencing these gargantuan events, will they become the end of the long journey to financial and political freedom?
Striking oil
Uganda’s oil production has been repeatedly delayed despite the discovery having happened over 10 years ago. Disagreements over taxes and development strategy seem to be the reasons holding back production.
Speaking on the sidelines of the Petrotech conference in India last year, Irene Muloniwas quoted by Reuters as saying that the country’s first production would be this year from the Kingfisher and Tilenga blocks.
“We are preparing for production. We have to build a pipeline for exports and a refinery to add value. So unless those two projects are done we can’t start producing,” she told Reuters.
Uganda hopes to conclude the construction of a crude export pipeline by 2022. The line passes through Tanzania and has the capacity to transport 260,000 barrels per day.
Challenges arise, though, since according to experts, Uganda’s oil is heavy and heaters have to be installed along the way to make the flow easier.
The Economic Complexity Index (ECI) notes that Uganda is the 122nd largest export economy in the world and the 77th most complex economy.
Uganda agricultural products make up 80 per cent of total exports with the most important being coffee, tea, cotton, copper, oil and fish.
Moving forward, the dynamics may change especially once the country starts producing oil commercially.
As a net importer, there may be a shift in the top export destinations including the United Arab Emirates which is Uganda’s biggest trading partner followed by Kenya, South Sudan, the Democratic Republic of Congo and Rwanda.
Uganda’s top import origins are China which accounts for US$1.15B of trade, India at US$724M, the United Arab Emirates at US$623M, Kenya at US$506M, and Japan at US$376M.
While the three East African nations are going through a turbulent period, the transition heralds a change in what the economies will look like in the next decade. With more push for accountability across the region, this remains to be seen.
