Special Feature: Top Investment Areas In East Africa And The Players Exploiting Them (3)

agriculture

Agriculture

Agriculture is the back bone of East African economies contributing significantly to the country’s Gross Domestic Product (GDP). For instance, PricewaterhouseCoopers Kenya (PwC) estimates that the agricultural sector contributes about 30 per cent of Kenya’s GDP and more than 60 per cent of the country’s total export earnings. Agriculture is also the biggest driver of employment with more than 75 percent of population engaged in the sector directly or indirectly.

 

Coffee is one of the major export earners for countries in East Africa with exports being made to the US, Europe, Japan and South Korea.

 

In 2011, data from the Kenya National Bureau of Statistics show that Kenya’s coffee earnings rose to US$200 Million in 2010. According to the Uganda Coffee Development Authority the country earned US$36.2 million from 244,319 bags of coffee exported in February.

 

Coffee is Burundi’s top foreign exchange earner employing ten percent of its entire population. The country earned US$2.4 million in the month of January 2012 in coffee exports.

 

Tea, another major foreign earner, brought in approximately Ksh. 109 billion (US $1.3 billion) last year for Kenya which is the world’s largest exporter of black tea. United Kingdom, Egypt, Sudan, Afghanistan Pakistan and China are Kenya’s major markets for tea. Burundi earned $1.41 million last year from the export of 560,353 kg of tea.

 

Data from USAID Kenya Horticulture Competitiveness Project (KHCP) show that horticulture which is Kenya’s leading source of foreign exchange brought in US$905.2 million last year in export earnings. In Rwanda horticulture export earnings for 2011 hit US$3 million.

 

Key investors in the sector include Uganda’s Madhvani Group of Companies which has several businesses in tea and horticulture, fruit processor Del Monte Kenya Ltd, dairy experts New Kenya Cooperative Creameries, and Brookside Limited, Tanzania Tea Packers Limited, Afri Tea and Coffee Blenders( Tanzania), Uganda Tea Corporation Limited, Sasini Tea (Kenya), Unilever Tea Kenya (UTK) Williamson Fine Teas Limited (Kenya), and Farmer’s Choice which specializes in pork, beef, lamb and processed poultry product. Indian firm Jay Shree Tea & Industries (JTIL) is in advanced stages of acquiring tea estates in Rwanda and Uganda.

 

There are existing opportunities in agriculture especially in financing of agricultural projects, value addition of farm produce, machinery and farm equipment and organic farming. With more than half of the regions arable land still unutilized, investors can make huge gains by tackling the major challenge of unreliable rain through the use of irrigation and water harvesting methods among other new farming technologies.

 

Infrastructure

Poor infrastructure has for years stood on the way of development of most countries in East Africa. Perhaps the biggest project in Kenya and the region is the multi-billion dollar Lamu Port South Sudan Ethiopia Transport Corridor (Lapsset). The U$23bn port and oil refinery project in Kenya’s coast linking Lamu to South Sudan and Ethiopia was launched this year and will be completed in four years.

 

The biggest beneficiaries of the wave of new infrastructure in the region of course are Chinese firms contracted to construct roads and rail networks across the region. Lately, Chinese investment in the region has been immense. For instance, one of the major construction projects in Kenya is the 30 km Greater Southern Bypass being undertaken by the China Road and Bridge Company (CRBC) at a cost of approximately Ksh. 17 billion funded in part by the Government of Kenya and a concessional loan by the Chinese Government. The CRBC has also been contracted for the construction of the Ksh. 8.5 billion 39-km Eastern bypass and the 31-km Northern bypass expected to make Kenya a regional commercial hub. CRBC will also undertake most of the construction of the Northern Corridor Transport Improvement Project (NCTIP) funded by the World Bank Group’s International Development Agency (IDA) covering road and air transport which will link Kenya to the rest of the region.

 

In Sudan, Sino Hydro Corporation is undertaking a US$300 million contract to construct a 486 kilometre road. Uganda has also in recent years put efforts to improve its national road network and transit corridors. After all, Uganda’s infrastructure is critical not just to its people but also to neighboring states, Rwanda, Burundi and southern Sudan which are landlocked.

 

Rwanda’s infrastructure was shattered by the 1994 genocide but the country has since undertaken projects to improve its infrastructure network. Last year, the Government kicked off the construction of a five kilometres roads in Rubavu town expected to improve trade with the Democratic Republic of Congo (DRC) which will be financed by the European Union.

 

Whilst CRBC has clinched most of the contracts, some of the other firms active in infrastructure in the region include Chian Wuyi Co Ltd and Shengli Engineering Construction Group Company.

 

There are more opportunities in the construction, upgrading and modernisation of roads, air, electricity, and rail networks in the region.

 

 

Also read:

Special Feature: Top Investment Areas In East Africa And The Players Exploiting Them

 

Special Feature: Top Investment Areas In East Africa And The Players Exploiting Them (2)