East Africa is having a moment. The region — some 40 years ago a dystopian vision of drought, famine and instability — now presents as one of the world’s more optimistic stories.
The East Africa Community (EAC) has two of the top 10 fastest-growing economies — Rwanda and Tanzania — likely to be joined by Kenya in 2024. The bloc is forecast to hit an economic growth rate above 5% for 2024 and 2025.
Economists expect the region to continue growing due to a number of factors, including a population boom, expanded internet connectivity, and a proactive and pro-business regulatory environment. A shift of the world’s trade routes towards the Indian Ocean has only improved this outlook. Ask any recent traveller to Nairobi or Dar es Salaam and they will attest to a genuine sense of optimism there.
Given the macros, it should be no surprise that Emirati multinational logistics behemoth Dubai Port World (DP World) recently signed a 30-year, $250m port management deal to run four quays at Dar es Salaam, Tanzania’s largest port. Tanzania President Samia Suluhu Hassan hopes that the country will triple revenue from the harbour to $10.7bn over the next decade.
Less than a week after DP World’s signing, Bloomberg reported that South Korea is looking to Tanzania to secure its access to graphite as China tightens its hold on how much of the stuff it sends over to its regional neighbour. These investments should not be seen in isolation; they are a sign of the times.
DP World has capitalised on the emergence of the Indian Ocean as the locus of world trade with interests from the shores of southern Mozambique to ports in Somalia and into the Red Sea. Trade between East Africa and its Middle Eastern and Asian partners is not anything new. In fact, seen in the fullness of history it is the norm. Chinese ceramics in Tanzania and Kenya can be dated from the seventh century onwards.
Where the Gulf and East Asian states are striking deals with states such as Kenya and Tanzania, the EU and the US stacked their chips behind the Lobito Corridor — an ambitious African railway project from Africa’s heartland towards Angola’s Atlantic port city. The project will connect three of the world’s largest producers in critical minerals and rare earths: Angola (diamonds, copper, and iron), Democratic Republic of Congo (cobalt) and Zambia (copper).
President Joe Biden called the project a “game-changing regional investment”. Where DP World will manage the port in Tanzania, the European-owned Africa Global Logistics (AGL) won the Angolan government tender to manage the country’s second-largest port, Port of Lobito.
Given that SA is bordered by the Atlantic and Indian oceans, its geographical position would seemingly give it the advantage of trading with both East and West. The announcement of the Logistics Group’s intent to build a facility on the west coast, the Saldanha Dry Bulk Terminal, to increase volumes of manganese exports is heartening.
But just like other sectors of the SA economy, state-owned enterprises are jeopardising our geographic advantage. In this case, SA’s overreliance on the chronically underdelivering Transnet limits the country’s ability to seize the opportunity to export regardless of which ocean it ships into.
As the world enters a new multipolar era, African governments on either side of the continent can expect more opportunities for headline deals and infrastructure projects. The wisest will play competing investors off against one another, securing the best deal for their economic development, capitalising on more buyers in the market.
But the potential upside is, as ever, dependent on a government’s ability to get its house in order.
• Nott works for a venture facility for public benefit and is based in London. He writes in his personal capacity. You can follow his writing on X @TheAfricaBrief.
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