Average age of an East African citizen

The indicator in question in this column is figure 17.6.

17.6 of what?

According to published government statistics, the median weighted average age of an East African citizen is 17.6 years old. Among the 157 million East Africans alive today there are equal numbers of people over 17.6 years old as there are people under 17.6 years old.

So how do 17.6 years as a median age compare to other locales around the world?

average age of an East African citizen - The Exchange
Average age of an East African citizen – The Exchange

If the EAC were a country it would be the 13th youngest country in the world with Uganda, Burundi, and Tanzania bringing down the weighted average against the relatively older Kenya. To add perspective, the median age of both the #1 and #2 economies of the USA and China are more than twice as old at 37.8 years and 36.8 years respectively than an East African. Even more dramatic, ageing Japan has 46.5 years as median age and not surprisingly has a large retired population. Other countries in Africa are the closest in the median age of the population followed by economically challenged areas of the Middle East.

Young people demand different goods and services than older citizens. What types of goods and services are most likely to be in higher demand in East Africa versus developed nations?

Food, lots of it. A younger population means more mouths to feed. In addition, East Africans have children younger than citizens of other developing nations. Education – both secondary, tertiary, and vocational education will continue to experience high aggregate demand. Energy – either at home or in some productive means will be required for all the people. Telecom services tend to be very popular among more youthful populations.

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Do local markets have the ability to meet the demands of this young and growing population?

On the food front, East Africa has tremendous arable land available for farming though complex land rights issues and lack of capital for the use of modern farming techniques limit potential.

Education is sorely lacking throughout the EAC and affordable private schooling is entering the marketplace with early signs of success. It is likely that increased options and suitability of vocational and other means of education will emerge in the upcoming years to meet demand.

To meet its energy needs, thankfully, East Africa has a high potential for renewables such as solar with rapidly decreasing costs as well as traditional energy sources such as natural gas and other carbon-based energy sources.

Telecommunications is one of Africa’s great growth stories. Telecom services, mobile money transfers and mobile banking are making first impressions on youngsters all throughout the East African community.

With the scalability of telecom towers and networks, any location economically viable can connect East Africans to the sum of human knowledge through the magic of the internet.

What are the economic implications of millions of young East Africans coming of age in the upcoming years?

East African citizens have the benefit of the development of the remainder of the world and can leapfrog over the past and skip the expensive learning curves that have come with it. Things such as landline telephones, electrical poles to homes and businesses, bank branches, money transfers, and a host of other services have cost developing nations hundreds of billions of dollars, costs which were passed on to consumers. Not so for today’s East African youngster.

East Africa’s population is unconstrained by corporate institutional structures, products, or means of providing services.

It is highly likely that new brands and entire categories of businesses will emerge to meet the needs of the youngest and most interesting generation on the planet today.

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About the authors:

David L. Ross is Managing Director of Statera Capital and US Ambassador to the Open University of Tanzania active in growing companies in Eastern and Southern Africa through primary investment, investment advisory, strategic partnerships, and executive education. Connect on LinkedIn at https://tz.linkedin.com/in/davidlross1 or at david@stateracapital.com

Catherine Mandler is a Senior Analyst at Statera Capital. Connect on LinkedIn at http://www.linkedin.com/in/CatherineMandler or at catherine@stateracapital.com

Is China setting a debt trap on Kenya?

Loans from China hit a high of US$6.2 billion last year

The Chinese government has dismissed claims that it’s continued heavy lending to Kenya in the financing of mega infrastructure projects is a ‘ debt trap’, even as loans from Beijing hit a high of ShUS$6.2 billion(Sh625.9 billion) in December last year.

This is up from US$5.3 billion (Sh535 billion) a year earlier with a lion share going towards the construction of the multi-billion Standard Gauge Railway (SGR).

“We are not putting Kenya into a debt trap. China-Africa corporation cannot put Africa into a trap but booming economic growth,” China’s Charge’ D’affaires (Nairobi) LI Xuhang said during a meeting in Nairobi on the update on the SGR and China-Kenya relations.

“Kenya can decide on who they want to partner with. Kenyan people are wise enough to choose their trade and corporation partners. They can decide who benefits them more,” Xuhang said, noting that the fast-growing China-Africa relations have rattled other developed country.

His sentiments come in the wake of growing concerns that Kenya could lose its key assets to Beijing, among them the port of Mombasa, if the government defaults in the payment of the Sh327 billion(US$3.25 billion) owed to Exim Bank of China for construction of Phase one of the Standard Gauge Railway (SGR) project.

Apart from the first phase (472 kilometre) Mombasa-Nairobi SGR, the Chinese are funding and constructing Phase 2A at a cost of Sh150 billion (US$1.49 billion).

The 120-kilometre line which runs between Nairobi-Mai Mahiu and -Duka Moja, a small centre between Suswa and Narok town, is 90 per cent complete.

The government is said to be in negotiations with Beijing for an additional Sh370 billion (US$3.67 billion) to complete the remainder of the project, which is Phase 2B (Duka Moja-Kisumu) and the final stretch (Phase 2C) connecting Kisumu to Malaba, the Kenyan-Uganda border.

Kenya Railways acting Managing Director Philip Mainga has revealed that the government is keen to secure funds during the second Belt and Road Forum for International Cooperation (BRF) set for Beijing later this month.

“We hope to sign phase 2B during the meeting,” Mainga said, “Kenya Railways is working with the Chinese government in achieving the commitment we have on the 974-kilometre Mombasa-Malaba SGR project.”

Phase one of the SGR project was constructed by China Road and Bridge Corporation while Phase 2 is being developed by a sister company-China Communications Construction Company (CCCC).

China has funded over 70 development projects in the country cutting across transport, energy, water and housing sectors where about 50 Chinese companies are involved.

The Ministry of Foreign Affairs has defended the China-Kenya relation saying it is mutual and beneficial to the country.

The Asian Directorate at the ministry said the SGR is a landmark project for the government and its full impact will be felt once it reaches Malaba.

The directorate’s in-charge of China Lindsay Kiptiness, however, said grants and loans must be spent in their intended purpose if the country is to make any meaningful gains from the borrowing.

“We must ensure projects don’t become victims of corruption,” Kiptiness said, “As long as we can sustain our debt and projects contribute to economic development, I don’t see why we should not borrow for development.”

With the debate on increased borrowing from China continuing, the Nairobi embassy has given Kenya an option of pursuing Public-Private-Partnerships (PPPs) as an alternative to solid borrowing for projects.

Kenya spent nearly Sh15.43 billion to service loans from China in the first half of the 2018/19 financial year (July-December).

The government has largely contracted a mix of semi-concessional and commercial debt from China and international capital markets (Eurobond) since 2014 to improve the country’s infrastructure.

Meanwhile, Kenya Railways has called on the Chinese government to help secure the rail network in Kenya, with terrorism being among the biggest concerns.

Kenya’s public debt crossed Sh5.27 trillion (US$52.3 billion) last December, National Treasury statistics show, up from Sh4.57 trillion (US$45.4 billion) a year earlier, and Sh3.83 trillion (US$38 billion) in December 2016.