AFRICANGLOBE – Barring any external shocks and a smooth end to Kenya’s remaining elections issues, East African economies are set for another year of robust growth with a projected peak in the medium term when oil and gas starts to flow.
The new deal between Sudan and South Sudan to restart oil exports in two weeks is a positive light as it will create new demand from the EAC supplies especially to South Sudan.
Better food production outlook in the EAC, according to Famine Early Warning Systems (Fews), will reduce need for imports and hold down food related inflation.
The two oil exploration laws passed in Uganda will help end oil production uncertainties and pull in more oil related investments ahead of commercial production, said Konstantin Makarov, Partner and Director of Stralink Africa, the research company that has released the latest East Africa economic update.
“In our view, the big reap in enacting the oil laws and implementing them is finally showing signs of development of key oil production infrastructure, potentially causing Uganda to be self sufficient and not depend on Kenya to import its crude.
Oil infrastructure development will be key to investor confidence in the economy and will reduce the cost of doing business,” said Mr Makarov.
Growth prospects are also good in EAC’s most fragile economy of Burundi, where sustained encouraging economic, political and social governance has helped the country win more donor support.
The country’s 2012/2013 budget is already receiving 49 per cent direct support from donors, anchored on improved business environment and macro-economic performance.
While politics remain the country’s highest risk driver, decision by the United Nations Security Council to extend the mandate of the UN Political Mission in Burundi for another year is expected to help support peace and long term development ahead of the 2015 elections.
The country’s ethnic-led corruption however remains a concern for investors, according to an earlier report by peace monitoring body International Crisis Group.
Kenya however, holds the wildcard in the growth forecasts for the region. While political risk on possible post election violence has drastically reduced, the outcome of the court case by former Prime Minister Raila Odinga against Uhuru Kenyatta’s win is being watched closely.
But even as President-elect Kenyatta is sworn in on March 26, the region will continue to hold its breath hoping that he and the Deputy President will continue to co-operate with the International Criminal Court where they face charges for their alleged role in 2007/08 post election violence.
Investors will also be watching what kind of cabinet Kenyatta will assemble, with expectations that it will reflect national unity because of the bruising nature of Kenya’s ethically-driven politics of which the most recent was not an exception.
By: Steve Mbogo