Forecast shows mixed picture for EAC economies in 2024

The economic outlook of the East African nations, according to the forecast, is characterised by a mix of challenges and opportunities, with agriculture standing as a common focus.

Agriculture stands out as a common focus area among East African nations, including Tanzania, Kenya, Uganda, Rwanda, and Burundi.

The countries have directed efforts towards increasing productivity, value addition, and supporting small-scale farmers in order to spur the sector’s contribution to an individual country’s gross domestic product (GDP) as well as create jobs for its citizens.

However, bloc member states also prioritise economic diversification in 2024, with the aim of promoting the export of value-added products, boosting the private sector’s role in strengthening their economies and mitigating risks that are associated with external factors.

Also read: Tanzania is eating Kenya’s regional cake

Tanzania

In the 2024/25 financial year, Tanzania is poised to focus on creating an inclusive economy. With the Sh47.42 trillion forecasted government budget, the country targets job creation, wealth generation, and promoting the export of value-added products.

Tanzania is expected to place emphasis on key sectors such as agriculture, livestock, fishing, forestry, and mining, especially in terms of increased productivity and value addition.

Notably, the rural economy was a priority, given the fact that 65.1 percent of the population resides in rural areas.

The government aims to address the disparity in financing, with only seven percent of commercial loans going to agriculture, despite it being the primary production activity.

Increased support for smallholder farmers, promoting primary processing factories, enhancing infrastructure, boosting digitalization, and implementing favourable financing policies are among the measures the country was intended to put in place this year.

Finance Minister Mwigulu Nchemba said the country plans to shift towards electronic payments and the formalisation of micro and small businesses, along with bolstering private sector participation and the mitigation of risks associated with natural and unnatural factors.

Other issues that would be addressed this year are increasing power generation through the Julius Nyerere Hydropower Project (JNHPP) in order to end power rationing, which has adversely affected the country’s productivity in the last four months of 2023.

This year, Tanzania is also expected to start the implementation of education reforms, organise local government elections, provide universal health insurance (UHI), and commence the operation of the Standard Gauge Railway (SGR), all of which will have positive social, political, and economic impacts on the country.

Speaking to The Citizen, an economic analyst, Dr Jane Nkosi, said there was a need to intensify regional coordination aimed at improving the ease of doing business within EAC.

“Putting emphasis on inclusive growth and scaling up agricultural productivity is a positive move,” she said.

However, she said coordinated regional efforts to enhance trade and economic integration, ensuring sustainable agricultural growth for the entire community, should be given exclusive importance.

Kenya

Kenya anticipates 5.5 percent economic growth in 2024, supported by the services sector, the agriculture rebound, and government initiatives to stimulate economic activity.

Despite challenges recorded in 2023, the forecasts were an indication that the economy was expected to remain strong, outpacing global and sub-Saharan African averages; however, economists warn of a volatile and dangerous global environment in 2024.

The call for practical policies, rationality, and long-term planning is being emphasised, particularly as Kenya grapples with economic challenges such as a free-falling shilling and the potential impacts of President William Ruto’s bottom-up economic model.

A regional development specialist and part-time lecturer at the University of Nairobi, Prof Samuel Mugabe, said recently that “Kenya’s resilience in the face of global volatility is commendable.”

“However, the government must carefully navigate the implementation of economic models to avoid unintended consequences. Pragmatism and adaptability will be key in 2024.”

Uganda

Uganda’s economy is projected to pick up in 2024, reaching a growth rate of 5.8 percent, driven by strong fixed investment, particularly in the oil sector, according to reports and forecasts.

The Lake Albert Oil Project and the East Africa Crude Oil Pipeline (EACOP) attract significant investment, with the government foreseeing growth in coffee production and positive domestic consumption.

However, risks include the suspension of Uganda’s eligibility under the Africa Growth and Opportunity Act (AGOA) and potential currency weakening affecting import costs.

Also, as the country’s public debt stock is primed to breach the Sh100 trillion mark, the government plans to spend Sh23.4 trillion to service its debt in 2024.

The enactment of the Anti-Homosexuality Act, 2023, has compelled the government to scale up negotiations with the World Bank to revisit its freeze on funding Uganda's projects.

Political dynamics are notable, with attention on President Yoweri Museveni’s son, General Muhoozi Kainerugaba, and his movements, which have been met with legal challenges.

As Uganda heads towards the 2026 general election, experts say the political landscape remains fluid.

Rwanda

Rwanda, which experienced robust economic growth in 2022, forecasts 6.6 percent growth in 2024, indicating a slight increase from what was recorded in the previous year.

Despite a temporary slowdown driven by fiscal and monetary policy adjustments, private consumption and investment are projected to be the primary growth drivers this year.

Rwanda’s successful business reforms, investments in infrastructure, and economic diversification will continue contributing to the country’s economic resilience in 2024.

A Rwandan economic policy advisor, Ms Amina Uwimana, writes on her Twitter account, now X: “Rwanda’s focus on sustaining growth amidst adjustments is a testament to the effectiveness of its reformation agenda.”

“Continued investments in infrastructure and economic diversification will be crucial for maintaining the country’s resilience,” adds Ms Uwimana, who also works with the United Nations Population Fund (UNFPA), in her New Year message.

Burundi

Burundi’s real GDP had been projected to grow by 4.5 percent in 2023 and 4.6 percent in 2024, driven by public investment in transportation and energy, according to reports.

Measures to boost agricultural production and stabilise the exchange rate with the aim of reducing inflation, mining, international aid, and remittances are expected to narrow the current account deficit for Burundi in 2024.

However, socio-political instability and disruptions in access to fertiliser pose risks, according to recent reports.

However, an economic consultant who doubles as a former lecturer at Bujumbura University, Dr Isaac Ndahura, said, “Burundi’s emphasis on public investment and agricultural growth is a step in the right direction.”

However, he added, “addressing socio-political instability is paramount to creating a conducive environment for the country’s economic development.”

For his part, an economist based in Dodoma, Dr Byemela Mmari, said East African countries will face mixed challenges and opportunities in 2024, noting however that each country has its own unique economic dynamics. Commonalities in focus areas such as agriculture and economic diversification provide opportunities for collaborative regional initiatives.

“There is a need for pragmatism, adaptability, and regional cooperation to navigate challenges and ensure sustained and inclusive growth across East Africa in 2024,” he said.

“EAC member states have to deal with all the setbacks in creating a better environment for cross-border businesses to thrive,” he added.