Representatives of the Singapore Business Federation, Excellency High Commissioner and Dear Sister, Dear Diplomats, Director Johan Burger, Ladies and gentlemen,
All protocol observed
I was invited to talk on the challenges and opportunities in doing business in East Africa.
The talk comes at a good time. In Kigali, Rwanda, last week, the World Economic Forum meeting has just ended. Usually it takes place in the Mountains of Davos, in Switzerland. The main topic was how Africa can use ICT for its development.
You cannot talk about East Africa without mentioning the East African Community. 6 countries are members of the East African Community: Rwanda, Burundi, Tanzania, Uganda and Kenya. Recently, a month ago, South Sudan was admitted. The total population of the EAC is 170 million people.
With the exception of Kenya, which is a middle-income country, all these countries are ranked among the Least Developed Countries. The other five are among the poorest in the world. On the list of 48 poorest countries in the world, 33 are from Africa and 5 among them are in East Africa. Although things are improving in Africa, it is not happening fast enough.
Ladies and Gentlemen
Going back to the early 60’s. My father in law used to be a Rwandan Diplomat in 10 different countries around the world since 1966 or 50 years ago now. He is now in retirement. Of course we discuss a lot, since I married his daughter and has somehow followed his footsteps in diplomacy. I worked in the foreign service of Rwanda for the last 18 years.
In our numerous discussions I came to the conclusion that what African Diplomats in early 60s were asking from the International Community, are the same things that we are still asking now, unfortunately still without success.
The African Diplomats (now in retirement) were requesting, and we, the new generation, are still asking, the following:
- Access to the market for our commodities (mainly coffee, tea, cotton, and minerals) in Europe and America; we are requesting them to open their markets as we opened for them to ours.
- Fair prices for our commodities.
- More financial aid.
- More capacity building.
- More technical assistance.
- More transfer of technology.
- Less subsidies to the European and American farmers.
- Non-interference in domestic matters.
- The waive/or elimination of public debt since the majority of Highly Indebted Poor Countries are in Africa, according to the IMF/International Monetary Fund.
The list goes on and on.
We failed and are still failing to convince our counter parts and as the Italian communists used to say “la lotta continua/the struggle has not ended.”
Maybe we are doing business with the wrong people. Maybe, once again, it is time to change our partners. The American Jim Rogers, writer, Professor of Finance and media commentator worldwide, in 2007 moved his family from the USA to Singapore in the belief that the twenty-first century will be the century of Asia.
I fully agree with him. Maybe it is time for Africa to increase the cooperation with Asia, and look more to the East than the West.
Ladies and Gentlemen
Coming back to East African Community. What we wanted to achieve is the following: the free movement of people, free movement of goods, free movement of services, free movement of capital, and one currency for all six member countries.
We go far in our dream. We wanted even to have a “Political Federation,” meaning one President for the six countries. In the beginning it was a hot discussion, but now everybody is silent about it.
So far we have succeeded in having only the free movement of people. This means as an example, that a Rwandan or Burundian can circulate without a visa in all the six countries. We have even created for foreigners an East African Tourist Visa, meaning that you can obtain a visa in our High Commission in Singapore that will allow you to travel in Uganda, Kenya and Rwanda for 90 days on a multiple entry visa.
The free movement of goods is facing a big challenge due to the excessive protection of the domestic market by member countries.
The free movement of services (Kenyan lawyer or doctor to come to Rwanda and exercise) is still protected.
The free movement of capital or the ability to do many operations abroad, such as opening bank accounts, buying shares in non-domestic companies, investing where the best return is, and purchasing real estate abroad, is not welcomed or people do it in hidden manner. It is still suspicious and seen by many as tax evasion.
For one currency for the whole East Africa Community, there is no rush in my view. Even the Euro is passing through a difficult time. The difference in economies of member countries in East Africa is at the heart of the problem. Though we are all very poor countries, we are not poor at the same level.
Allow me to cite the 6 big challenges or opportunities that we are facing in East Africa.
We urgently need the following:
- Energy: When you are in Power without power/electricity, your power is meaningless. This is a challenge that the whole of Africa is dealing with. As an example, in Rwanda only 22% of our population has electricity. The 78% remaining rely on the sun during the day. From 6pm to 6 am they are in total darkness. To get the point, you can figure out what you do when you leave offices at 6 pm until you go to bed around 11pm.Those hours are for us missed opportunities. By 2020 we want to get electricity for 70% of our people. We are ready to pay the bill.
- Infrastructure in Housing and Transportation for Goods: As said before, all countries in the East African Community are landlocked, except for Kenya and Tanzania. Railways and air cargo are a must, especially for the transport of goods. This will solve, among other things, the problem of “food security”. There is a need as well to invest in Housing, especially in cities. (We recognize Jurong Surbana and Devadas Krishnadas). Investing in Infrastructure requires heavy investments. The World Bank can help in funding this. The only “hiccup” is the “conditionality” to get the loan approved. Even though the WB knows that the project is beneficial for the whole region, it will, before releasing the money, ask questions on the status of human rights in each country and more other difficult questions.Those difficult questions are for us internal affairs. Therefore, we consider them as interference in our domestic affairs.For the last decade, we have found the alternative to the World Bank. China! China does not ask difficult questions before releasing the money.
- Intra-African Trade: In all East African Countries, i.e. Rwanda, Burundi, Tanzania, Kenya, Uganda and South Sudan, our imports are much larger than our exports. Intra African trade can reduce the gap significantly. This will reduce inflation, stabilize the currencies of the region, increase our savings and investments, increase the competitiveness and reduce interest rates of the banks. We must avoid the excessive protection of domestic markets.The Chinese politician Deng XIAOPING once said: “if you open a window, some flies will come in, but in doing so you allow fresh air and sun shine to come in as well.”
- Skilled people: People capable of doing innovation and research, educated people capable of competing worldwide. Should we have them, we will fight unemployment and underemployment. Should we have skilled manpower, few people will remain dedicated to Agriculture and move to Services, such as banking, insurance, telecommunication and value added industries. With this we will reduce the number of informal sectors and increase the formal sector. Here again our Universities are not ranking among the top worldwide; on the contrary, they are lagging far behind.
- Good governance: Better government has led to better results. By 2050, the UN predicts that there will be 2.5 billion Africans – or a quarter of the World’s population. Given good governance, they will prosper. The alternative would be a nightmare to everyone. Good leadership goes hand in hand with the fight against corruption. President John Pombe Magufuli of Tanzania is on the right track. It goes without saying with inclusiveness such as gender equality. Rwanda itself has been for more than a decade the first country in the world to have a big number of women in Parliament with 64%.
- Change of the mindset: We have a lack of urgency in everything we do. Yesterday I got a phone call from a fellow African diplomat of a French speaking country, and I innocently asked him how things were going at the Embassy. He told me, “doucement le matin”, slowly in the morning, “pas tres fort l’apres midi”, not too much effort in the afternoon. And when I asked him, shocked, what about the evening and night, he responded “le soir on va au lit et on dort mon cher Guillaume”, during the night we go to bed and sleep, dear Guillaume. In Singapore the problem of mindset was understood earlier on with the Leadership of Lee Kuan Yew. In Rwanda we decided to be united, to be accountable and to think big. We know that we are a small country, but we refused to be a small people, as President Kagame likes to say.
Former British Prime Minister Winston Churchill once said: “A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” Allow me at least to mention only one opportunity we have in East Africa.
The political stability: When I was a child, President Idi Amin Dada was in power in Uganda. He was a military man and a dictator. Many films and books have been written about him depicting how barbaric the man was, some going even further and say that he was a cannibal/eating other human beings.
How did he come to power?
On 25 January 1971, while the then President of Uganda Milton Obote was attending a Commonwealth Summit Meeting in Singapore, Idi Amin took the occasion and seized power in a Military Coup.
Immediately after, President Idi Amin declared what he called an "Economic War", or a set of policies that included the expropriation of properties owned by Asians and Europeans.
President Amin expropriated the businesses and properties belonging to the Asians and handed them over to his supporters or the people from his native region. The businesses were mismanaged, and industries collapsed from lack of maintenance. It was a complete disaster as a result.
The same year, as part of his "economic war", Amin broke diplomatic ties with the UK and nationalized eighty-five British-owned businesses. Another economic disaster followed.
To make it short, around 300 000 people were killed during his 8 years in power.
The time of that kind of President is over in East Africa. President Yoweri Kaguta Museveni of Uganda, who just get re-elected, is a business-minded person.
Among the Ugandan Indians expelled by Idi Amin Dada in 1972, is Professor Mahmood Mamdani. He was at that time a student. Professor Mamdani is a Ugandan Indian academic, author, and political commentator. He is now the Director of the Makerere Institute of Social Research. Professor Mamdani is a very influential figure, not only in Africa, but all over the world. Makerere University is one of the best in East Africa and moderate in the worldwide ranking.
Ladies and gentlemen
Before concluding, A word on the relationship between East Africa and South East Asia.
South East Asia has the history of colonization and the fight for independence in common with Africa. Most African countries and Asian countries were among the NON-ALIGNED MOVEMENT during the Cold War. Of course they used to share the poverty in the early 60s, but South East Asia have put it behind them while East Africa is still deep in it.
What we can notice is the fact that the two populations do not know each other. 50 years have not been enough to get to know each other.
This explains maybe why people in South East Asia prefer to invest in Myanmar, Mongolia and Vietnam (maybe one day in North Korea if the regime will show openness), which are countries closer to them, which share more or less the same culture. In the process they leave Africa alone (or to the Chinese). And yet they used to trade in the past.
Yesterday I was reading the interview by the Minister Mentor Lee Kuan Yew in S. Rajaratnam lecture of 2009, where he was explaining the difficulties of immediate post-independent Singapore. “In trade, we were so desperate, we went to Africa and started trade with Kenya and Uganda and so on.” Let us revive the trade.
The question one can ask is, “Is it worth investing in East Africa”? The answer is “Yes”. We all know that doing business in Africa is risky, but what we do not know, is that it is highly rewarding.
You may think (without saying it loudly), “what else can you say? You are the High Commissioner of Rwanda; you are highly paid to attract investors to your country!” You can even go further and say, “It is not your money in case we invest and lose!” That’s also true! I fully and totally agree with you!! Maybe I am not the right person to convince you.
But let us agree on one thing; If I fail to convince you in investing in Africa, do at least trade with us. If you are hesitant to trade, at least visit East Africa as tourists.
As the Chinese philosopher Lao TZU once said “The journey of a thousand miles begins with one step.”
Thank you for your time.