Faith Nyasuguta
East Africa is leading the economic recovery across the African continent, demonstrating remarkable resilience and growth despite numerous challenges. This region has shown impressive progress in various sectors, positioning itself as a beacon of hope for economic rejuvenation in Africa.
The East African Community (EAC) outperformed other African sub-regions with a growth rate of 4.7% in 2024, according to the World Bank. The countries that contributed most to this growth performance were Kenya, Rwanda, Tanzania, and Uganda.
Kenya’s economy alone is projected to rise to 5% in 2024 and 5.1% in 2025–2026. This growth is driven by improved macroeconomic circumstances, including reduced inflation and a more stable local currency. The Kenyan Shilling, which was one of the worst-performing currencies in 2023, appreciated by 21% year-to-date by the end of August 2024.
Private consumption and investment in Kenya have been bolstered by these improved macroeconomic conditions. From the standpoint of sectoral production, economic activity is being supported by the recovery in tourism and agriculture. Furthermore, as a result of liquidity constraints, Kenya faced vulnerabilities to macrofinancial instability as it needed to raise money to pay for larger fiscal deficits and bond redemptions.
Tanzania’s economic recovery has been bolstered by the agriculture and mining sectors. The government has implemented policies to enhance agricultural productivity and attract foreign investment in mining. These efforts have paid off, with increased exports and a rise in GDP. The completion of major infrastructure projects, such as the Standard Gauge Railway, has improved connectivity and facilitated trade within the region.
Uganda’s recovery is driven by its oil and gas sector. The discovery of significant oil reserves has attracted foreign investment, leading to the development of oil infrastructure and the creation of jobs. The government’s efforts to improve the business environment and promote private sector growth have also contributed to the country’s economic resurgence.
Rwanda has also shown significant progress, with its economy benefiting from strong investment in infrastructure and services. The government’s focus on creating a conducive environment for business has attracted foreign investors, further boosting economic growth.
The World Bank report indicates that the Eastern and Southern Africa (AFE) sub-region’s economy is expected to grow from 1.7% in 2023 to 2.2% in 2024 and then reach 3.9% in 2025–2026. Given these growth prospects, East Africa remains the sub-region with the greatest economic performance on the continent.
Growth is expected to spike in approximately 60% of Sub-Saharan African nations by 2024. This projection further cements East Africa’s position as a leader in the continent’s economic recovery. The Africa Pulse study observed that East Africa continues to lead in economic performance, driven by robust economic policies, increased investment in infrastructure, and the revival of key industries.
The COVID-19 pandemic posed significant challenges to East Africa’s economic recovery, but the region has shown resilience in the face of adversity. Governments in the region implemented measures to mitigate the impact of the pandemic, such as stimulus packages, tax relief, and support for small and medium-sized enterprises (SMEs). These measures have helped cushion the economic blow and set the stage for recovery.
Tourism, a key sector in East Africa, was severely affected by the pandemic. However, the region is now experiencing a revival in tourism, driven by increased vaccination rates and the easing of travel restrictions. Countries like Kenya and Tanzania, known for their wildlife and natural attractions, are once again welcoming tourists, providing a much-needed boost to their economies.
The agricultural sector, a backbone of East Africa’s economy, has also shown signs of recovery. Governments have implemented policies to improve agricultural productivity, such as providing subsidies for farmers and investing in irrigation infrastructure. These efforts have resulted in increased crop yields and improved food security in the region.
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