East Africa’s investment policies hurting foreign inflows into region
FDI into the region is down three per cent to $7.6b from the previous year
By JAMES ANYANZWA
East African countries’ increasing restrictions on foreign investments are being blamed for the decline in foreign inflows into the region.
A new survey by the Usbased advisory firm AT Kearney shows that investors are more concerned about the operating environment in emerging markets and prefer putting their money into the US economy due to the country’s large domestic market, improving economic performance and new, lower corporate tax rate.
Foreign direct investment into East Africa — the fastest-growing region on the continent — declined three per cent from the previous year to $7.6 billion, according to the survey.
Last year, an Australian mining company, Orecorp, announced plans to review its operations in Tanzania after the country revised its mining laws to enable the government to renegotiate all mining contracts.
The US Agency for International Development says foreign investors seeking to inject capital into the region are facing regulatory and policy restrictions, that have reduced their appetite for putting money into in the six-member economic bloc.
For example, in South Sudan, all businesses established by expatriates must be 31 per cent owned by locals while Tanzania discourages foreign investment in sectors such as telecoms, mining, shipping, fishing and civil aviation by imposing investment ceilings and difficult licensing requirements.
In addition, foreign investors are forced into compulsory actions, including forced joint ventures, mandatory use of local inputs and staff and conditions for hiring foreign staff.
The US agency, in its
Foreign companies operating in Tanzania’s mining sector are required to preserve 30 per cent shareholding for the citizens.