Buoyant economies, abundant resources and a growing population could make East Africa the next big economic success story, and its historic ties to the UK make it a promising prospect for trade cooperation post-Brexit, writes Sasha Wood.
The new Scramble for Africa is well underway, according to Alex Vines, head of the Africa program at London thinktank Chatham House. Foreign powers are vying for a stake in the economies of the world’s second most populous continent, expected to overtake China by 2025.
The continent is entering a period of unprecedented growth with foreign embassies popping up all over, and a slew of new investment and trade deals with foreign powers and multinationals. As a whole, Africa has the second fastest-growing economy in the world, with strong signs its emerging markets are set to replicate Asian growth in the next decade. The six-nation East African trade bloc that includes Tanzania, Kenya, Uganda and Rwanda has been the most successful and stable of Africa’s regional blocs since it was re-established in 2000. It’s formed a customs union and the basis of a common market, and is aiming for a single currency by 2024.
According to the African Develop-ment Bank’s East Africa Economic Outlook Report 2019, the region’s economy is racing ahead of the rest of the continent with annual growth at 7% “making it a promising investment and manufacturing destination”. The report notes that job creation and ramping up manufacturing will continue to be major priority areas for creating growth.
So it’s small wonder that govern-ments and businesses from around the world, including the UK, are rushing to strengthen diplomatic and commercial ties. Especially in light of Brexit, UK Trade Minister for Africa, Emma Wade-Smith points out: “One of the opportunities that Brexit affords us is increased interest from UK companies in Africa as they have to expand outside their normal trading blocs.”
In preparation for leaving the EU, the UK recently signed the UK-Eastern and Southern Africa Agreement, intended to replicate the existing EPA between East Africa and the EU, and ensuring free trade.
Last year the government actively courted business in the region, setting a new goal for the UK to be the largest G7 investor in Africa by 2022. The ambition was announced alongside a range of measures to boost trade and encourage UK investment in the region, including the creation of a new Africa Investors Board.
Trade between the UK and African nations, which is already worth more than £31billion, continues to grow.
The UK already has a firm foothold in Kenya, with more than 60 British companies operating there. And thanks to strong political and historical links, the UK remains the country’s strongest trading partner with more than £1.3billion of annual bilateral trade. Marks & Spencer alone buys products worth £100 million per year from Kenya, with other British supermarkets close behind. On the reverse, machinery and chemicals form the bulk of UK imports.
Ethiopia, meanwhile, is expected to maintain the rapid pace of growth it has experienced over the last decade. The continent’s fourth largest city and Africa’s diplomatic capital, Addis Ababa is another major gateway to the region. Trade between UK and Ethiopia has increased considerably in recent years and UK exports to Ethiopia have grown by 135%. Like many East African nations, major imports include machinery, oil and petrol, while coffee makes up more than a third of total exports.
A free market economy and abundant natural resources make Tanzania equally attractive to foreign investors, and the UK is one of its largest. The country is rich in gems and minerals such as rubies and diamonds, sapphires and tanzanite, with large mining operations for gold, silver, copper and platinum in the north of the country.
The nation’s economy has been expanding steadily over the last decade partly due to an increase in agriculture and manufacturing, while vehicles and machinery are the mainstay of exports from the UK.
Rwanda and Uganda are also ones to watch. Rwanda’s mining industry is going from strength to strength and its main imports include industrial machinery, something the UK can capitalise on. The population of capital Kigali is set to triple by 2040 and plans are afoot to decentralise the city.
With Brexit looming and economic indicators across the region positive, all signs point to East Africa being a strong prospect for future cooperation on trade. But with stiff competition from China, India and the US, businesses need to act fast.
British Airways: Has daily direct flights between London Heathrow and Nairobi, Kenya.
Kenya Airlines: Has daily direct flights between London Heathrow and Nairobi, Kenya.
Ethiopian Airlines: Flies ten times per week between London Heathrow and Addis Ababa, Ethiopia.
Rwandair: Has five weekly services between London Gatwick and Rwanda’s capital, Kigali. Outbound flights on Fridays and Sundays are non-stop services, while outbound flights on Tuesdays, Thursdays and Saturdays are connecting services via Brussels.
One Stop Services: There are no direct services to Uganda’s international gateway, Entebbe (25 miles from capital city Kampala), nor to Tanzania’s commercial centre, Dar Es Salaam, but convenient connecting options are offered by the likes of Emirates, Turkish Airlines, KLM, Qatar Airways and Brussels Airlines via their respective hubs. Alternatively, fly via Nairobi with Kenya Airways or via Addis Ababa with Ethiopian Airlines. Qatar Airways also flies from Doha to Zanzibar, Kilimanjaro and Mombasa.
Intercontinental Hotels: Runs 28 hotels in Africa including the Intercontinental Nairobi and Holiday Inn Dar Es Salaam City Centre. Crowne Plaza Nairobi Airport hotel opened recently.
Louvre Hotels Group: Has properties across sub-Saharan Africa under its Tulip brands including the Golden Tulip Westlands Nairobi, another in Addis Ababa and one in Kigali.
Best Western: Has 24 hotels across ten African countries including Kenya, Uganda and Tanzania, and three hotels in Nairobi alone.
Hilton: Has 39 hotels in Africa, with 100 new properties in the pipeline. The Hilton Nairobi Upper Hill is set to open in the continent’s tallest building.
Radisson Hotel Group: Recently added the Pearl of Africa Hotel Kampala in Uganda, as well as the Park Inn Addis Ababa to its collection of 42 hotels across 20 countries.
Accor Hotels: The group ontinues to grow its portfolio in Africa, where it currently has 114 hotels across its Ibis, Sofitel, MGallery and Novotel brands, including four in Kenya.
Marriott: Has a strong presence in Africa with 149 hotels across 29 countries including Rwanda, with new hotels slated for Nairobi, Dar Es Salaam and Kampala.
Dar Es Salaam: The city on the Indian Ocean is East Africa’s second busiest port with frequent ferries to the tropical island of Zanzibar famous for its snorkelling and diving spots. The city’s National Museum is a great introduction to the country.
Nairobi: Just 7km south of the city, Nairobi National Park let’s you see lions, leopards, rhinos and giraffes in their natural savannah home, and there’s an elephant orphanage too.
Addis Ababa: Ethiopia’s colourful cultural portal boasts great music and museums including the National Museum of Ethiopia featuring the three-million-year-old Lucy skeleton. The bustling open-air Mercato market is Africa’s biggest. Take some time to visit the Great Rift Valley lakes or take a boat trip to see the local hippos and UNESCO-listed Adadi Mariam rock-cut churches.
Kampala: Uganda’s capital borders Africa’s largest lake, Lake Victoria, and it’s a short drive south-west to the source of the Nile River at Jinja, which offers rafting and boat trips. The Uganda Museum explores the country’s tribal heritage. Tours of Lubiri royal compound reveal the fascinating and dark history of the region.
Kigali: Rwanda’s capital Kigali is safe, attractive and modern. Two hours’ drive from the capital, mountain gorilla trekking in Volcanoes National Park is a one-off experience not-to-be-missed.
Information correct at time of publication: July 2019