Ecobank says East Africa economic outlook is impressive

By David Musyoka
East Africa's economic growth outlook is impressive in the medium term, indicating most countries will keep up with over five per cent growth, London-based senior economic researcher with pan-African Ecobank Group has said.


   Kenya tea exports are expected to grow because of the rising global demand, as optimism fuelled by oil and gas discoveries keep the economies on the roll.
   "We have started seeing Kenya exporting more tea even in tea producing countries like India. This shows demand in foreign markets is rising," Edward George, Head of Soft Commodities Research at Ecobank Group told Xinhua in Nairobi on May 14.
   He said Ethiopia and Kenya are also expected to become major cement exporters to the region. The two countries have seen a surge in the new investments in cement in the last five years attributed to demand in housing and roads construction.
   Regional discussions currently ongoing on possibility of setting up a multilateral fertilizer factory in the region are also seen as a good sign.
   Locally-produced fertilizer will save the beneficiary countries billions of dollars in avoided imports cost. Eastern Africa currently imports nearly all it non-organic fertilizer needs.
   The factory is also expected to result in higher farm yields, boosting food security and income to farmers resulting from sale of expected higher surplus.
   "The only difficult situation I see is the western Kenya sugar belt because of cane poaching," said George. Cane poaching essentially happens when sugar factories buy sugarcane from farmers who are not contracted to supply to them. Farmers are often enticed with better prices.
   "It means that the factories that support their out growers with farm inputs financing therefore lose out, and this is not only unprofitable but also unsustainable," said George.
   "One option is to consolidate the whole sugar production system in the western sugar belt, by say, merging the factories."
   The other option he said is for the government to introduce another cash crop for farmers that is more profitable as the cost of current production system in the region expensive, making Kenya sugar the most expensive in the region.
   Suggestions have been made that the government introduces palm oil production in the region as the climatic conditions there are good for it.
   Most of the palm oil used in the region for manufacture of cooking oil and other products is imported.
   "There is an option of Kenya producing cheaper sugar from the Coastal region and especially in Tana Delta region. This resource should be exploited," said George.
   Gas discoveries in Tanzania and Mozambique should be used to make urea, a nitrogen fertilizer. He said financiers, including Ecobank are keep to tap that opportunity. "The ability to harvest this gas will be a major win for the region," he added.
   The International Monetary Fund (IMF) said this week in a report that growth south of the Sahara will surge to 6.1 percent in 2014, well ahead of the global average of 4 per cent.
   Also, foreign direct investment inflows to sub-Saharan Africa are projected to increase to 54 billion U.S. dollars by 2015, compared to 37.7 billion realized in 2012. (Xinhua)

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