Balanced Economies Spur East Africa’s Sustained Growth

On Thursday, June 1, 2017, The Africa Society and Corporate Council on Africa hosted a discussion with KCB Bank on “Investment Opportunities in East Africa” at Covington and Burling LLP. Jane Mwangi, Director, KCB Foundation and Vincent Aberi, Head of Diaspora Banking, accompanied Samuel Makome, Group Chief Operating Officer.Mr. Makome began his remarks by acknowledging the sharp downturn of African economies, between 2015 and 2016 due to a severe decline in commodity prices. However, he saw a general rebound in early 2017 and anticipates that this trend will continue with continental growth rate of 2.6% in 2017, and 3.5% in 2018.He continued by stating that the East Africa story is different, emphasizing that East Africa outperformed the rest of the continent. Over the last two years, most commodity dependent African economies have suffered severely which resulted in weakened and unstable currencies. However, East African economies have been very resilient, with growth rates between 5.5% and 5.9%, between 2015 and 2017, for Kenya; 6.3% for Ethiopia and Tanzania, and 5.4% for Uganda in 2017.The main reason for East Africa’s economic resiliency is its balanced economies, which are driven by agriculture, trade and manufacturing. This resiliency is reflected in the strength of the local currencies and is evidenced by the Kenyan Shilling moving from 90 to the dollar to 102 to the dollar, between 2014 and 2017. Though East Africa has been growing steadily over the past few years, countries like Burundi and South Sudan have seen a decline in their economies due to political unrest.Per Mr. Makome, investors interested in East Africa should explore opportunities in agribusiness, manufacturing, housing, services connected to the oil and gas sector, and ICT, especially FinTech. Mr. Makome anticipates that the next growth will come from FinTech. He shared that KCB, through its subsidiary FinTech company, is positioning itself to take advantage of this growth.KCB, a 120-year-old bank, is the largest financial services organization in East Africa in terms of assets size, with a presence in Kenya, Uganda, Tanzania, Rwanda, Burundi, South Sudan and a representative office in Ethiopia. KCB also caters to the diaspora through its Diaspora Banking.