Why East Africa could become continent’s next economic giant
Dar es Salaam. East Africa could soon become Africa’s economic powerhouse if ongoing plans to expand the East African Community are implemented successfully.
Latest figures from the International Monetary Fund (IMF) forecast the seven-member bloc’s gross domestic product (GDP) to hit $346.17 billion this year, thanks to notable growth in a number of countries, with Tanzania being the region’s fastest growing economy.
According to the IMF, Tanzania’s economy is projected to grow by about $17 billion from 2021 to 2023 to reach $85.42 billion.
Kenya’s economy is projected to reach $118.1 billion this year. This will be a growth of about $8 billion compared to the 2021 level.
On the other hand, the GDP of Uganda stood at about $40.53 billion in 2021, but latest projections put it at $49.79 billion, suggesting a two-year growth of about $9 billion.
The GDP of the Democratic Republic of Congo, which comes third in the EAC, is projected to reach $69.47 billion this year.
Rwanda, South Sudan and Burundi follow with $13.15 billion, $7.01 billion and $3.23 billion, respectively.
According to the East African Community (EAC) secretary-general Peter Mathuki, the bloc’s leaders are at an advanced stage of bringing Somalia on board, to be possibly followed by Ethiopia.
The entry of Somalia, with a projected GDP of $8.74 billion, and Ethiopia, whose GDP is set to be $156.1 billion, would lift the EAC’s GDP to $511.01 billion.
Going by the latest IMF figures, Nigeria has the biggest GDP in sub-Saharan Africa at $506.6 billion, while South Africa comes second with $399 billion and Ethiopia third.
This means that once Ethiopia joins the EAC, the bloc’s economy would be larger than that of Nigeria and South Africa.
On Somalia joining the EAC, Dr Mathuki told The East African newspaper earlier this month: “This was a decision of the heads of state, and I can tell you it will come with benefits.”
Somalia, he said, has a 3,000km coastline – the longest in Africa and if you combine that with Kenya’s 536km and Tanzania’s 1,424km, you have nearly 5,000 kilometres of coastline.
This, Mr Mathuki said, means that the cost of transporting goods will become cheaper because there will be a bigger marine service line.
On the question of security in Somalia, he said, they will deal with insecurity once it joins the Community.
After Somalia, he revealed, the other country they should be thinking about is Ethiopia.
“If we admit Ethiopia, the EAC market will be more than 500 million people. Nobody will talk about market matters and security without talking about East Africa,” assured Mr Mathuki.
The economist from Dodoma University, Dr Lutengano Mwinuka, cautiously welcomed Somalia and Ethiopia’s plans to join the EAC.
He told The Citizen by phone yesterday that their joining will be a blessing only if the question of insecurity is addressed so that the member states could trade among themselves seamlessly.
“The coming in of Somalia and Ethiopia is likely to widen the market size and hence boost trade among member states and so is the EAC’s GDP,” said Dr Mwinuka.
He went on to add: “As it is, investors from either country will stand a chance to expand their footprints.”
His sentiments were seconded by the economist from Mzumbe University, Prof Aurelia Kamuzora, who exuded her optimism that the joining of Somalia and Ethiopia will likely help to promote trade among the member states.
However, Prof Kamuzora said this would come true only if the member states produced competitive products.
“I don’t have a problem with Tanzania. We are making massive investments, thanks to the government’s pro-business approach,” she said.
That is why, Tanzania is faring well in the EAC ranking when it comes to GDP.
“I believe, with expected expansion in the market size, we will do even better in future,” said Prof Kamuzora.
The IMF has projected that the size of Tanzania’s economy will this year be the sixth largest in sub-Saharan Africa after Nigeria, South Africa, Ethiopia, Kenya and Angola ($117.88 billion).
The forecast Tanzania’s figures suggest that the size of the country’s economy is bigger than small European countries such as Croatia ($78.8 billion), Lithuania ($78.3 billion), Serbia ($73.9 billion) and Slovenia ($68.1 billion).
