Firms in EAC slow to tap opportunities, AfDB boss says

By WINSLEY MASESE

Dismal performance of East Africa firms in the continent is likely to hold back the region’s improved growth prospects, a top African Development Bank (AfDB) has said.

Gabriel Negatu, regional director, Eastern Africa Regional Centre, said the poor performance is reflected in the companies’ poor rankings in the continent.

“None of the top 50 firms in the world are from Africa, and none out of the 50 firms in Africa are from East Africa and I find very alarming,” he regretted. He underscored the need for the companies to explore ways to improve and foster competitiveness.

“As a bank, we are facing this challenge head on in trying to set the stage for the private sector to flourish,” he said.

Negatu said that the bank has developed the Africa50 Infrastructure Fund, which he termed as a bold new proposal to develop the continent’s infrastructure.

“The fund will lend high return infrastructural development investments in the continent to unlock the potential, through the private sector,” he noted. Under the Africa50 Infrastructure Fund, the bank intends to mobilise from the stock market over $100 billion (Sh8.7 billion) to infrastructure developments.

Speaking during the institution’s 50th Anniversary in Nairobi, Friday, he said the bank’s funding towards private sector participation has grown from $200 million (Sh17.4 billion) in 2002 to $1.2 billion (Sh104.4 billion) in 2012.

Speaking at the same function, Energy and Petroleum Cabinet Minister Davis Chirchir attributed the poor performance by Kenyan companies to the high cost of doing business. “The cost of doing business in Kenya does not encourage them to grow but struggle to make ends meet and to turn a profit to the shareholder,” said Chirchir.

He cited the high cost of power in the country, poor its reliability and adequacy have been major stumbling blocks for the private sector to perform well.