00:03:
Hi, I'm Joanne Joseph and welcome to the latest episode of The Blue Space.
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We're coming to you from the Kenyan capital, Nairobi, and we find ourselves
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perched this morning on one of the tallest buildings in the country.
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The East Africa Corridor covers eight countries.
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It will soon be home to half a billion people sitting on some of the richest
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natural resources on the continent.
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While the rest of Africa is trying desperately to unlock growth, the East
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Africa Corridor is powering ahead.
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What does its success mean for the rest of the continent?
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Let's find out in the Blue Space.
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My name is Kitrono Kitong and I'm a businessman and I'm also the chairman of
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the Nairobi Securities Exchange.
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My name is Patrick Moahire.
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I'm the regional CEO for Standard Bank across East Africa, covering six
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countries.
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What is current on my playlist in my car is Hugh Masekela.
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It's Otis Redding.
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It is Sam Cooke.
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Oh, I've got some Afro beats.
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I've got some jazz.
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I'm a piano.
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I love the Senegalese and Mali music.
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What do you think of when you think of Africa?
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I think of a very vast and diverse continent.
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with a very young demographic.
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It's got the history, it's got the landscape, it's got somewhat going for it.
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And I think it's also quite cosmopolitan and quite eclectic.
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Welcome back to The Blue Space, brought to you by Standard Bank Corporate and
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Investment Banking.
01:48:
I'm Joanne Joseph, and today I'm joined in Nairobi by Standard Bank's Regional Chief
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Executive for East Africa.
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Patrick Mohire and Chairman of the Nairobi Securities Exchange, Kiprona Kitoni.
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Gentlemen, lovely to be with you today and thank you very much for making the time to
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chat.
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So Patrick, let me kick off with you.
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I'd like you to please just give us a sense of East Africa as a region.
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What corridors exist here?
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Tell me how they enable trade, the movement of people, labour, currency and
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the like.
02:15:
Okay, I'm happy to.
02:17:
First of all, I think it's important to put this in context.
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The East African community started, you know, almost 55 years ago.
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So we've been at this for a while.
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There was a small disruption in the 70s, but then we continually picked up from it
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again.
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So what you find is that there's a lot of connectivity and a lot of trade amongst
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all the three countries.
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Just to give you one perfect example, Kenya is the largest export market for
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Uganda.
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Uganda is the largest export market for Kenya.
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We don't see that kind of connectivity.
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And then there's been a lot of sort of kind of understanding and collaboration
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all the way from the leaders,
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the presidents, the technocrats, the finance people,
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to sort of harmonize and make sure that the rules and all the unifying factors
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that make us
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successful continue to be.
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And there are many, many unifying factors.
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English and Swahili is a common language.
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We have a lot unknown.
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In terms of legislation that depends on each other and there's continuous work in
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the background to make sure that we harmonize
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all the policies and that we allow to remove barriers.
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We have one stop borders at that moment where goods and services can cross
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very, very easily on the border.
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And I just think that it's a fantastic job of collaboration.
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I find that quite incredible, Patrick.
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I mean, I'm a member of SADC, as you probably know, Kiprono.
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We just haven't reached that point yet,
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but we certainly look to the East Africa corridor as a kind of signifier of hope
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for how
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we can start to cooperate in the future.
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I have had the unique opportunity of being close to, I mean,
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witnessing a lot of the developments in the integration of the East African region
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from a corporate, from an economic standpoint,
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from a political standpoint.
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And also from a social standpoint, because in my previous capacity as the President
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of the Chamber of Commerce in Kenya, in my current role,
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we have been actively involved in the leadership space on private sector.
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And like Patrick says, I mean, there has been a lot of work that's gone into it.
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And of course, you know, we learned a lot from the pitfalls of the
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1970s. Our leaders have sat down to try to make this region work.
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And I think it is work in progress, and I'm sure and I am convinced beyond a
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shadow of doubt.
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That we are at the cusp of a great renaissance.
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If we look at the competitive and the comparative advantages that each of the
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countries in the East African region present to each other,
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there is always something to be attributed to what each country can bring to the
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table.
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I'll give you an example.
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In the year 2000, the trade between Kenya and Uganda was 19 to 1 in favor of Kenya.
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In 2019, Uganda had a trade surplus over Kenya.
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And Kenya has the port, access to the port, and Uganda is a landlocked country.
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So if you look at that, it's a clear manifestation of the dynamism of our
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economies.
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And I think there has also been a lot of effort in dealing with the non-tariff
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barriers.
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One of the greatest sticky points in the cooperation between these nations has been
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the movement of goods at the border points.
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And this was resolved by a very simple, you know, treaty that was, you know,
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engaging by the countries of the East African region to have a one-stop border
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post.
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So today, if I'm going to cross into Tanzania for argument's sake at the port
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of Namanga,
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I don't need to go through two different buildings.
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Right.
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The customs officials are in one.
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one facility as are the immigration officials.
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So there's a lot of small things that have gone towards actually making this a
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reality.
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It's really exciting stuff.
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I mean Kiprona, can you give us a sense of how these transit and trade corridors are
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unlocking
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value for business as well as the local communities because I think the
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combination of those two is quite
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important.
06:25:
Thank you.
06:27:
That's really a very important question that you've asked me.
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And a few years ago, Trademark East Africa financed an initiative to try and simplify
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cross-border trade in the East African region.
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And it began, first of all, with a protocol at the port of Mombasa that will
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reduce the amount of time that
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vessels will be docked in Mombasa.
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It also reduces the amount of time that containers going into the hinterland, into
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the landlocked countries and also into Kenya itself,
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would be stationed in Mombasa.
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So it really worked.
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on the flow of the goods.
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And the second thing that has been done is that the Northern Corridor Initiative,
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which combines all the six countries of the East African region,
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meet regularly under the auspices of the heads of state with a council of ministers
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sitting beneath them.
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And their responsibility is basically to ensure that we have robust infrastructure
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deployed
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and also maintained.
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You see, the deploying of infrastructure and the maintenance of infrastructure are
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two different conversations.
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So there is a harmonization of policy in terms of ensuring that our road networks
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are efficient,
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our internet connectivity across the region from the undersea connectivity in
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Mombasa and Dar es Salaam are
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deployed into the region effectively,
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that we have enough airports and rail connectivity through standard gauge rail
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across the region.
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Mombasa has been a pivotal point because that is a deep water port that serves
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Kenya.
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As Dar es Salaam serves Burundi and also parts of Uganda and the Democratic
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Republic of Congo.
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So we have, all these countries are working concertedly to ensure that this
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infrastructure is robust enough to support trade and investment.
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The human resource protocols have also worked to ensure that there is a seamless
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flow of people across these regions.
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Today, I can fly to Dar es Salaam as I will.
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in a few days' time using my national identity card.
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No need for a passport.
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Similarly to Uganda and the rest of the region.
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That also helps in a great way.
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The other thing that I want to highlight is the fact that there is a dedicated deep
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water port in Lamu for the
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region.
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And that is even targeting to transport cargo northwards into Ethiopia.
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But I see that before we leave this issue of the cross-border cooperation, Tell me a
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little bit about this borderless banking, please, Patrick.
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I see it's also being used to facilitate the movement of currencies quite easily
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across borders.
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Yeah.
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So, I mean, effectively, what we've tried to do is to make sure that we reduce the
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time that we can send
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money across the countries.
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And that's a big, big benefit to a lot of the trade that happens.
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So you can seamlessly, within less than 10 minutes, get money across from Kenya to
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Tanzania.
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and vice versa.
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And obviously our clients love that.
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The ability that also from a macro perspective,
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there is a little bit of harmonization in terms of interest rates, etc.
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The central banks all coordinate.
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We have an East African payment system as well that we're trying to push through.
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In fact, there is a goal to get us back to a monetary union where we go back to one
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currency across East Africa.
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So that's a discussion.
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We've gotten a lot on the harmonization of rates and policy and targets,
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but we still have that aspiration that we can go back to one currency across all
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these countries.
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And as you know, that would be significant because it reduces a lot of volatility and
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it allows
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for even a freer moving.
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of exchange goods and services.
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And I think it's something a lot of the countries on the continent are actually
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aspiring to right now, Patrick.
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It seems like such a vibrant context in which to operate.
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I mean, you've got all these facilities,
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all these pipelines in place to facilitate such a lot of movement,
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create such opportunities.
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within this environment.
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I mean you can afford to truly be creative with the kind of infrastructure that
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you've put in place.
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Can you give me a sense of Standard Bank's activities within the region?
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Yeah, so obviously we, being one of the largest banks in Africa,
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have to support and really in many ways align with the goals of the countries.
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So when you look at some of the big infrastructure projects that Kip talked
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about.
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We try to play a role in those capital in supporting that so energy and
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infrastructure is huge
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both both renewable
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and extractives we also support a lot of the big should i say fintech space that's
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been created and
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you know kenya like very very innovative with the mpesa product which to some
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extent has also been a
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competitor in sort of our banking services but it has allowed all of us to to sort of
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move up.
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The digitization chain a lot quicker.
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So money can flow and payments can flow within the countries quite quicker than in
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any other places.
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So we also play a huge role in sort of supporting the SME ecosystem.
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And one of the things that we've been doing lately, which has been very quite
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successful, is that we see an anchor client,
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for example, if I was to pick East African breweries, just as an example, and we sit
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down with them and have a discussion around
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Their ecosystem.
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Who supplies you?
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Who delivers and distributes for you?
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And can we sit down and then figure out a way in which that we work together?
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Because one of the biggest issues that we've faced has been the high cost of,
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should I say,
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borrowing for SMEs.
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So we've been working very closely with these large anchor clients to see how do
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we de-risk so we can lower the rates.
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And for example, in East African breweries case,
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we were able to reduce what we were charging the SMEs by almost 40%
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because we had them on the table.
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So we had a tripartite and we were able to discuss that this is your ecosystem.
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If you want us to support this, we're going to do that.
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So, you know, give us that.
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So we are also trying to bring all those linkages across for our big anchor
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corporate clients.
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And it's working really,
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really well in terms of just allowing us to also be a banker for the SMEs in that
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space.
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If I may, let me give a customer's perspective.
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And I'm not here to do any marketing for Standard Bank.
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But I was present when they came into the country maybe 20 plus years ago.
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And at that time, the image that Standard Bank had was to do the corporate bank, to
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bank the big corporates.
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But, you know, to the spirit of East Africa, they have really taken up the
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innovative spirit.
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And there are three spaces that I would say Standard Bank has significantly, you
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know, participated in.
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One is in agriculture.
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I mean, Standard Bank today is one of the foremost banks in providing solutions to,
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you know,
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the rapidly growing agri-economy space.
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Number two is in the technology space.
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As Patrick just said, just now, they have been very actively involved also.
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but also in banking, the innovative companies that are playing in that space.
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And thirdly, of course, is the SMEs.
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I mean, you know that digitization is really on the upswing, and I think they
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have been one of the banks that have really been at the
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forefront in ensuring that there is seamless trade flows between the small and
14:03:
medium-sized enterprises, not just in.
14:05:
country, but even cross-border.
14:07:
That's really heartening.
14:09:
Of course, everything we're talking about is what the African Free Trade Agreement
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is trying to achieve, right?
14:14:
We hear a lot about the AFCFTA.
14:16:
And Patrick, quite frankly, some people believe it to be a pipe dream.
14:20:
Others say it is possible to achieve in a number of years, over a certain number of
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decades.
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I mean, it's taken about 50 years for your region to be able to operate as optimally
14:31:
as it does.
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Would you say this can be achieved in our lifetime continentally?
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I think, first of all, it was an incredibly ambitious project to do the
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AFTC.
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So the way I kind of look at it is that we have to take it in bite size, right?
14:48:
I think trying to ensure that you can have this one huge program,
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just initially, you know, it's going to take a bit of time.
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And we have stepped up.
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We're starting to see some small wins where countries are beginning to have
15:06:
these bilateral trade agreements.
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For example, there's one really good example I have.
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We have a lot of excess milk in Uganda. We recently signed a deal with
15:17:
Algeria to export that excess milk.
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Now, that's also part of the AFTC framework.
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But how do we continue to have those sort of small wins?
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Without necessarily just thinking there's going to be a big explosion and a big end
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to the AFTC.
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So that's kind of how I look at it.
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And I feel like we're making progress.
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At least there's some real conversations that are happening between leaders in
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terms of how to get this going.
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But it will take time.
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But I think the East African community, East African corridors,
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the entire East African region serves as a model.
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to the rest of the continent.
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Kiprona, I mean, surely they can take a leaf out of your book.
16:02:
I had a unique opportunity of being able to travel to many countries in my previous
16:07:
capacity in the Chamber of Commerce.
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And one of the things that really surprised me is the fact that we haven't,
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Africa has not traded with Africa.
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If you travel to West Africa, for example, and you visit a supermarket in Nigeria,
16:21:
you will find that
16:23:
Nigerian supermarkets are mainly stocking dairy products from New Zealand and
16:26:
Australia.
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And in Kenya, we have a surplus of those same, very, very same products.
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So there is a need to have a concerted effort to break down the barriers to
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trade.
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When we tried to sign a special status agreement between our two countries, we
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met...
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Headwinds because of the ECOWAS region having to approve certain,
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or rather take away certain barriers to being able to enable us to travel.
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I mean take our goods there and vice versa also to import petroleum products directly
16:55:
through that special status agreement into Kenya.
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So there are real practical examples of the challenges that the historical
17:02:
formations have presented.
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One very clear example also has been the sea routes.
17:06:
You know it's easier today to...
17:08:
Transport a container from the port of Mombasa to Felix to the United Kingdom,
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then it is to transport it to the port of Lagos.
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Because of the sea routes and the fact that there haven't been enough vessels
17:20:
plying those routes.
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And many of these vessels actually have detoured to other transit points,
17:26:
the global sea configuration.
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So there are certain low-hanging fruits.
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If you look at the collaboration today, for example, in the utility of energy
17:36:
resources,
17:38:
It's a perfect example of how East Africa is leading from the front.
17:40:
Ethiopia, with its Grand Renaissance Dam, will be exporting their surplus energy
17:47:
into Kenya.
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We import hydropower resource from Uganda.
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We shall be exporting our geothermal resources to other neighboring countries.
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So there is a close collaboration that is premised upon the competitive and the
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comparative advantages that each of
18:05:
these countries has.
18:07:
It's a long way coming, but I do believe that the journey has began.
18:08:
And to quote and paraphrase Chinua Achebe, he said that if you want to walk fast,
18:13:
walk alone.
18:15:
But if you want to walk far, walk with others.
18:15:
So I think in this region we are walking together.
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And it's a perfect example for the rest of the continent.
18:20:
It certainly is.
18:21:
I can't disagree with you at all there, Kebrono.
18:24:
Patrick, a closing thought from you.
18:26:
East Africa's growth points as you move forward, because it seems there's lots of
18:32:
room for expansion, despite what you've already achieved.
18:34:
Yeah.
18:36:
So, I mean, we are the fastest growing region in sub-Saharan Africa.
18:39:
I believe we're going to achieve about 6.5% growth for the next couple of years,
18:44:
which is significantly larger than the rest of the continent.
18:49:
And that's without some of the benefits of the big projects that are in the pipeline,
18:56:
you know, technically
18:58:
Tanzania, etc.
19:00:
The FDI that we're beginning to see, which is...
19:03:
In my view, I think, basically shows you the positive sentiment that people see.
19:09:
Not just the bank.
19:11:
We're investing a lot in East Africa.
19:13:
We feel like it's one of our growth vectors from a geographic point of view.
19:17:
It's one of the top three that we've selected as a bank.
19:20:
But when we speak to our clients, it's a similar discussion.
19:23:
You know, like you opened up by saying almost 500 million people, GDP of about
19:30:
500 billion.
19:32:
I'm growing at six, seven percent with a lot of connectivity.
19:37:
It makes it so much easier for a regional corporate or an international,
19:42:
multinational to have that discussion.
19:45:
So I'm very, very optimistic about the future.
19:48:
We will continue to play our role in connectivity.
19:51:
We do have international presence in London and New York, etc.
19:56:
to support international clients as well that want to invest in East Africa.
20:01:
So I feel like we will continue to be a very good cog in the wheel in sort of
20:08:
driving this sort of growth as we move
20:10:
forward and therefore enhance the growth rates that we're already beginning to see.
20:14:
Well, you certainly are a beacon for the rest of us in this region and certainly
20:19:
for regions all over the world.
20:21:
I thank you so much for making the time to speak to us today, gentlemen.
20:23:
We have to wrap it up there today.
20:25:
That is unfortunately all we have time for.
20:27:
But what a fascinating discussion with these two gentlemen.
20:30:
East Africa Regional Chief Executive for Standard Bank, Patrick Mujire, and
20:37:
Chairman of the Nairobi Securities Exchange,
20:39:
Kiprone Kitoni.
20:41:
Thank you both for joining us for this really insightful discussion.
20:41:
From me, Joanne Joseph, to all of you across Africa and around the world,
20:45:
it's goodbye until we meet again here in the Blue Space.
20:50:
Visit www.standardbank.com forward slash bluespace to find out more about the blue
20:56:
space.
