COVID-19: How can EAC countries attract more foreign investment to aid recovery?

The East African Community (EAC) countries are gearing up to attract foreign direct investment as they plan to reopen their economies post the COVID-19 pandemic. The need for foreign investment is critical in jumpstarting the economies and aiding in their recovery process. CNBC Africa delved into this topic in an exclusive interview with Harry Broadman, the Managing Director of CFIUS Partners. Broadman highlighted that despite the challenges posed by the COVID-19 crisis, Africa has shown resilience in implementing reforms compared to other emerging markets. He emphasized that Africa's track record of hard-won reforms stands as a positive indicator for potential investors. In terms of sector appetite, Broadman mentioned that manufacturing, technology, and infrastructure logistics are key sectors that are likely to witness a surge in investment. He pointed out that with the African Continental Free Trade Agreement coming into effect, there is a growing need for infrastructure development to support increased trade across the continent. When discussing how economies can position themselves as attractive destinations for foreign investment, Broadman emphasized the importance of sound governance frameworks. He stressed that foreign investors seek stability and transparency in governance, as these factors instill confidence for long-term investments. In light of some African countries like Kenya gearing up to issue euro bonds and treasury bills to attract investment, Broadman differentiated between financial or portfolio investments and direct investments. He noted that while portfolio investments may appeal to some investors, the real focus should be on investments in plant, equipment, and manufacturing for sustained economic growth. The interview also touched on the role of major players like China in African economies. Broadman acknowledged China's significant investment in the continent but highlighted the emergence of new competitors that are challenging China's dominance. He suggested that African leaders should foster competition among foreign investors to diversify sources of foreign direct investment. Looking ahead post-COVID-19, Broadman emphasized the overarching goal for African economies should be to strengthen governance and ensure a conducive environment for investments. He advised that instead of focusing on specific sectors, governments should prioritize creating a transparent and stable business climate to attract foreign investors. In conclusion, the race to attract foreign investment in EAC economies post-COVID-19 hinges on governance, stability, and transparency. As countries in the region work towards economic recovery, the competition to entice foreign investors will be based on how well they can showcase strong governance practices and transparent policies.