- Ugandan financial expert Twahir Ismail criticized East African leaders for not fully supporting regional integration.
- Ismail provided his professional insight on the leading industries where investors should allocate their funds.
- Ismail advised investors to confirm they have carried out proper research and to look for local collaborations.
Elijah Ntongai, a journalist with zaia news.co.ke, brings more than four years of expertise in analyzing and reporting on financial, business, and technological topics, offering perspectives on developments in Kenya, Africa, and around the world.
Ugandan investment expert Twahir Ismail has highlighted major sectors for investment in East Africa and provided an honest assessment of the business climates in Uganda, Kenya, and Tanzania.
As per Ismail, the key action for investors is to conduct thorough research prior to starting an investment in any area.
"Conduct thorough research. Don't simply arrive with funds. Obtain appropriate guidance and familiarize yourself with the situation," he cautioned.
Ismail has served as an investment representative for both local and international investors looking for prospects in the East African area for more than a decade.
Important sectors for funding in Eastern Africa
Ismail considers agro-processing among the main sectors for investment, which holds significant potential.
On the People's Bench program hosted by Fred Ogweno, Ismail expressed that it is regrettable that agricultural products are sent out of the East Africa region as raw materials and later brought back as finished goods.
We face a challenge where the majority of agricultural products are grown but then re-exported as raw materials. For instance, coffee. Uganda is a significant coffee exporter, yet only approximately 15% is transformed into the final product within Uganda. As a result, farmers send it out of the country, and we end up purchasing it again from those who have completed the final processing to create the finished coffee product.
"We aim to enhance agricultural processing so that our raw materials are transformed into finished products within our country. This way, we can export them as final goods, leading to economic growth and reduced inflation," Ismail stated.
He mentioned that the industry provides significant and sustained profits due to the rich soil and favorable conditions in the area.
Ismail views the real estate industry as a crucial field for investors to allocate their funds, given the increase in property worth.
"Real estate, it only increases in value. Every day, every single second, real estate appreciates. The only difficulty is obtaining the right land at the beginning of the project," he said.
He mentioned that the real estate and hospitality industries are anticipating a financial surge as Kenya, Uganda, and Tanzania will be hosting CHAN 2024.
As per Ismail, additional areas that are promising for investment in the region consist of fintech, especially financial tools designed for farmers, and the healthcare industry.
Investing in Uganda
Ishmile attributed Uganda's investment growth to the political stability the nation has enjoyed since 1986.
He observed that Uganda has implemented several tax benefits to draw in investors.
For instance, a decade-long tax exemption for individuals involved in farming and manufacturing, land leases extending as long as 99 years for foreign nationals, and streamlined business registration supported by the Uganda Investment Authority.
He also mentioned that investors should take into account local partners who possess deeper understanding of the markets and legal frameworks within the country to ensure a smooth investment process.
"Uganda offers good investment opportunities, but it varies depending on the type of investment one is interested in," said Ishmile.
"Several investors overlook the importance of local collaborations. This is where issues often arise. You require an individual who comprehends market dynamics, policy changes, and the actual difficulties present locally," he remarked.
Investing in Kenya
Ismail commended Kenya as the biggest economy in East Africa and a hub for investments; nevertheless, he pointed out that the business climate in Kenya is marked by red tape and high expenses.
"Kenya is vast and draws many, but this also brings more bureaucracy, greater competition, and higher costs for permits. Investors need to be patient and knowledgeable," he mentioned.
He pointed out that although political tensions have occurred in the nation, Kenya continues to be an attractive location, especially within the fields of fintech, hospitality, and real estate.
Investing in Tanzania
Tanzania, as reported by Ismile, provides limited chances for rapid investment profits because of government regulation in crucial areas such as mining and energy.
"In Tanzania, the government is still involved in business operations. There is less privatization, meaning you interact directly with government agencies, which can slow down the process," he stated.
He pointed out that Tanzania's long-term infrastructure and farming initiatives may appeal to investors who are willing to wait and have the right contacts.
East African trade integration
Ismile did not hesitate to point out East Africa's inability to fully adopt regional integration.
"The East African Community was designed to open markets and facilitate the free movement of workers... However, protectionism continues to persist. Certain nations are reluctant to liberalize, worried they might lose control. This attitude needs to shift," he stated.
Ismail also mentioned that the constantly evolving tax system in the area poses a significant challenge for investors, and he called on governments to provide stability, as investors favor settings where they can make long-term plans.
Is there a financial crisis occurring in East Africa?
In other developments, the East Africa regional bloc is experiencing a budget shortfall of more than USD 35 million (KSh 4.52 billion) because of delayed payments from other member countries.
As stated by Principal Secretary Caroline Karugu, this gap endangers essential EAC activities, such as providing services and executing regional initiatives.
Significantly, only USD 39.8 million of the USD 75 million budget was obtained by mid-2024, with nations such as the Democratic Republic of Congo, South Sudan, Burundi, Uganda, and Rwanda experiencing substantial delays.
Kenya has become the most dependable financial supporter of the East African Community (EAC), having met 100% of its commitments by June 2024.