Business leaders support EA integration

July 17, 2008
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, NAIROBI, July 17 – Survey data released on Thursday by PricewaterhouseCoopers (PWC) shows that over 90 percent of business leaders in Kenya, Tanzania and Uganda are in favour of East African integration.

However, differences remain between them on how it will play out and few CEOs are thinking about being competitive outside of East Africa.

“Our survey is showing that CEOs are overwhelmingly backing integration to increase the free flow of goods and services within East Africa. The bigger picture items, like the creation of a strong regional trading block and overall regional economic growth, are well down the list of their priorities,” Country Leader, PWC Uganda Joseph Baliddawa said.

While CEOs in the three countries are united around their primary reason for integration, when you dig a little deeper, differences between the countries start to emerge. For Kenya and Uganda the free flow of labour and creation of employment comes in second place, while in Tanzania it is the promotion of economic growth, he noted.

“Unless we all address the macro issues – like economic growth and trade – there is a big question on whether East Africa can ever provide us with the type of profit sanctuary that can springboard our businesses to global competitiveness,” said PWC Kenya Survey Director and Country Leader, Charles Muchene.

“We are seeing players from other developing markets starting to challenge the established order. Look at businesses from the BRIC countries – Brazil, Russia, India and China – they are benefiting from economic liberalisation policies, which have created sustained growth and a powerful voice in world trade.”

The survey also shows that, while CEOs back integration, they are not overly optimistic that it will play out as planned in the 1999 Treaty of Arusha.

The clear 90 percent of CEOs in favour of integration is by no means matched by the 31 percent who actually think that both the political and economic agenda will actually come to pass.

Tanzanian CEOs are relatively more pessimistic about East African integration. 22 percent of the Tanzanian survey respondents think that neither the political nor economic goals will transpire – compared to 10 percent in Kenya and 9 percent in Uganda.

Kenyan CEOs are particularly optimistic about the economic future of the block, with 72 percent believing it will transpire – compared to 43 percent in Uganda and 42 percent in Tanzania.

Ugandan CEOs, on the other hand, are the most optimistic group about integration both at a political and economic level.

“At the time of surveying, inequality within the East African Community was the primary concern of the small number of CEOs who did not support integration. We must prevail on the nay-sayers and ensure that we have them on our side for the longer term benefit of our region. We also cannot afford to ignore security concerns and political instability – like we have seen in Kenya and the continuing situation in Northern Uganda. Warfare and political volatility are the main reasons why other trading blocs around the continent have previously failed,” Muchene observed.

There was no clear consensus among CEOs about what the business community could do to assist governments and legislators achieve the vision of East African integration.

Regionally, 34 percent of CEOs plan to expand their own businesses rather than wait for government. But only slightly behind in percentage terms there is an even split between lobbying, partnering with government and developing a strategic framework to promote the vision of integration.

“The Kampala summit is an important forum for the business community to build some consensus about what we can do to make East Africa more globally competitive. The first step is to build a consensus on our strategy and we are kidding ourselves if we think the ‘business as usual’ strategy will get us there,” noted Baliddawa.

The findings form part of a previously unpublished study carried out on behalf of PWC for the 8th East Africa’s Most Respected Companies survey, entitled ‘Strength in numbers’.

It captures the views of 350 CEOs and MDs in Kenya, Uganda and Tanzania on issues that are relevant to business and economic growth.

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