Indian Investments in East Africa: recent trends and prospects

Summary:

The East African region is the fastest growing region within the African continent with a growth rate of 5.3 per cent in 2016 surpassing the average growth rate of 2.2 per cent of Africa. These countries have the advantage of having a diversified economy and are more resilient towards external shocks. The East African Community is an intergovernmental organisation and comprises Burundi, Kenya, Rwanda, South Sudan, the United Republic of Tanzania and the United Republic of Uganda. According to African Development Bank (AfDB), the East African region has the largest number of Regional Economic Communities (RECs) and intergovernmental regional
bodies. The EAC partner states qualify for duty-free access to the United States market under the African Growth and Opportunity Act (AGOA), as well as EU’s “Everything But Arms” initiative, under which all products from LDCs except arms and ammunitions have preferential access to the EU market.

Foreign Direct Investment in the East African Community
According to the World Investment Report 2017, East Africa received FDI of US$ 7.1 billion – a 13 percent increase from 2015 level of US$ 6.3 billion and
accounted for 12 per cent of the continent’s total investment received. Although East Africa, being a non-oil producing region, accounts for comparatively less FDI received, the potential non-oil sectors are expected to attract investment in coming years. East Africa offers market access to a population of over 145.5 million and combined GDP of US$ 147.5 billion. It is also considered as world’s fastest reforming region in terms of business regulation. This study focuses on the trends in the foreign direct investment received by the East African Community countries from 2007 to 2016 and highlights select potential sectors for investment among others. In the EAC region, Uganda, Kenya and Tanzania have been the major drivers of foreign investment inflows during 2007 to 2016. Uganda received the highest FDI followed by Kenya, Tanzania, Rwanda, South Sudan and Burundi.

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