East Africa is poised to unlock new pathways for trade, development and growth. This comes as businesses, regulators and banks find and drive new direct investment, launch projects and close gaps to financial inclusion, providing a powerful tailwind for broader Pan African trade.
It is little to no surprise that the recently published African Development Bank 2023 East Africa Economic Outlook says East Africa will register the highest regional economic performance on the continent in 2023 and 2024, with growth figures at over 5%. The key now is to move forward with initiatives that grasp the opportunities to accelerate growth.
These trends were also reflected in Standard Bank’s recent six-month results to 30 June 2023, where East Africa grew its headline earnings a stellar 55% to $95.6 million. Key markets like Kenya, Uganda, Tanzania and Ethiopia, where Standard Bank has a strong and growing presence, all helped drive this growth, with positive upside ahead, notably as incentives and commitment to drive investment and trade gain ground. Standard Bank is currently laying the ground to ignite further growth in East Africa through strategic capital and capacity interventions, as it positions itself as a leader in the region.
After all, there are approximately 10 million small and medium enterprises and other commercial businesses that spread across East Africa, which contribute significantly to the economies in which they operate, driving GDP growth and providing significant employment opportunities. These value chains will spark renewed avenues for trade, development and growth going forward.
An example of this potential in action on the ground, Stanbic Bank Uganda, part of the Standard Bank Group and Uganda’s largest commercial bank by assets, is making integral moves to help connect more Ugandans to the digital highway. This comes as Uganda prioritises smart policies to solve societal challenges and spark economic growth guided by the national development plan, Uganda Vision 2040. According to the United Nations Development Programme (UNDP), Uganda has made noticeable progress in its digitisation journey by strengthening its mobile network coverage to meet the needs of its growing digital-first population. Over four million new mobile subscribers are expected to be live by 2025 in Uganda. To open the doorway to these opportunities, Stanbic Uganda has already adopted IBM’s Cloud Pak for Integration to help in its broader drive to accelerate digital transformation, maximise operational efficiency, reduce integration costs while onboarding new application programming interfaces (APIs) securely, and offering banking-as-a-service.
The benefits and success of regional development is profound. For instance, Standard Bank recently assisted a Kenyan manufacturer to produce paper locally, replacing expensive international inputs with domestically sourced wastepaper and sugar cane by-products. As a result, many more local exporters now have branded boxes made to order at home, at a fraction of the cost of imported products.
Similar moves are taking shape in Ethiopia, where government has undertaken a wide range of activities over the past years to improve the financial sector and this is sparking digital banking (including the introduction of M-Pesa), interest free banking and capital market growth, among others. Within the last two years alone, more than 3 million Ethiopians have managed to get access to loans utilising the digital banking system.
The upcoming second Uganda-South Africa trade and investment summit on September 5-6 in Kampala is a good example of how local and foreign businesses are playing an increasingly prominent role in supporting the East African government in its drive to attract foreign direct investment. Areas being targeted include agro- industrialisation, steel manufacturing, tourism and the energy sector. Businesses across banking, financial services, telecoms, food and beverages as well as retail are all taking advantage of the broad value-chain opportunities and potential, including the easier framework for doing business.
I expect these and other trends to drive trade and investment to gather pace from here, judging by the commitment being shown by the likes of Stanbic Uganda to facilitate, support and grow these new trade avenues.
Available statistics from the Bank of Uganda show that the value of the country’s exports to South Africa continues to grow doubling to US$ 21.24 million in the past 10 years up to 2022. However, the pace of growth has slowed in recent years. According to Uganda Investment Authority, Uganda’s exports to South Africa include cotton, gold, fish fillets, tobacco, coffee, and fresh flowers. However, the value of South Africa’s exports to Uganda decreased from US$ 251.6 million to US$ 127.6 million during the same period. South Africa’s exports to Uganda include machinery, vehicles, plastics, chemicals, electronics, parts and accessories, petroleum, live animals, books and newsprint, textiles, footwear, aircraft, and household goods. There is today, a real commitment to improve and grow these trade opportunities, both in Uganda and further afield, into the heart of Africa itself.
The above progress and new commitments to do business and invest in East Africa is why the African Development Bank projects mid-term economic growth in the region to accelerate to 5.1% in 2023 and 5.8 % in 2024, outpacing all the other African regions. This will be largely driven by growth in Rwanda, Uganda, Ethiopia, Kenya, Djibouti, and Tanzania. East Africa’s real GDP will continue to be propelled by its excellent services sector, contributing almost half of the economic growth in 2022.
It is now up to the private and public sectors to continue this good work and for investors to take advantage of the immense opportunity on our doorstep.