Commentary
East Africa is not often in the news – and that is probably a good thing. Kenya and Tanzania are both well known tourist destinations, which also have extensive tea plantations. Together, these provide a relatively steady inflow of hard currency. With Uganda, they compose former British East Africa, which, since its independence in the early 1960s, has generally been relatively stable – Uganda being the occasional exception.
In this call, peers mostly discussed these three countries, but also extended the scope to include the “East African corridor”, including Ethiopia, Mozambique and Rwanda. These countries have seen horrific violence in recent decades, but, with the exception of Ethiopia, their economic outlook is improving.
Even if business is not booming, East Africa, while challenging for treasury practitioners, is not amongst the world’s most difficult regions. There are no formal exchange controls, though hard currency can occasionally be in short supply, especially in Tanzania, Mozambique and Ethiopia. Peers apply several different business models, some of which involve being paid offshore in euros or US dollars: this does not seem to cause any issues. One peer has a non resident entity in Kenya, which also acts as regional headquarters. One peer had made their Ugandan entity dormant, but still found business there was growing, so they have now re-activated the local entity.
Another peer has production facilities in Ethiopia, Mozambique and Rwanda, and runs import operations in Kenya, Uganda and Tanzania. They find Rwanda works well for treasury operations, with Ethiopia and Mozambique being more challenging, especially when it comes to sourcing hard currency.
Banking in the region, however, can be more difficult....Please Login / Register to read the rest of this Commentary.
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