Rwanda to Lead East Africa’s Economic Growth in 2024 

Rwanda’s economy is expected to grow by 6.9% in 2024, up from 6.1 % in 2023 – according to projections by the East African Business Council (EABC), placing the country first in East Africa with high economic growth prospects.

Tanzanian economy is projected to grow by 6 percent this year up from 5.2 percent last year, followed closely by Burundi at 5.9% up from 3.3% in 2023, while DRC’s economic growth will see a contraction of 4.6% this year compared to 6.7% it registered last year owing to the political instability in the nation.

The ongoing political instability, coupled with a deepening economic crisis, is fueling civil unrest and political violence in various parts of the country, such as in the Kasai provinces in south central Congo, as well as in the capital of Kinshasa.

Since March 2022, insecurity in the eastern provinces has reached new heights, leading to an exponential rise in protection incidents, especially those involving sexual violence, and severe restrictions to the humanitarian space.

Kenya’s economy is also predicted for slight growth of 5.2% in 2024 from 4.9%, with South Sudan also seeing a 4.1 percent growth this year compared to 3.4% it registered in 2023.

EAC economic growth is also expected to surpass the Sub-Saharan African average growth rate of 4.0%, showcasing the collective economic resilience of the region.

EAC inflation on the other hand is projected to reduce from 12.5% in 2023 to 7.9% in 2024.

All EAC countries are also expected to witness reductions in inflation, indicating a positive outlook for price stability. Tanzania is set to maintain stability with a projected inflation rate of 4.0%, while DRC anticipates a decline from 19.1% to 10.6%.

Intra-EAC trade

The total Intra-EAC trade grew by 11.2 percent to US$10.9 billion in 2022 from US$9.81 billion in 2021. The trend shows that the EAC region has remained resilient and is recovering from Global shocks of Covid-19 and Russia-Ukrainian war.

The percentage share of intra-EAC trade to EAC total global trade remained at 15 percent in 2020-2022, this calls for need to boost manufacturing productivity, diversification, import substitution and competiveness for increased intra-EAC trade to 30%.

Manufacturing

The Manufacturing Value Added for EAC Countries has increased by 88.11% from $2.5106 billion USD in 2010 to $4.87 billion USD 2022.

The average Manufacturing Value Added as a percentage of GDP for the period 2010 to 2022 for EAC Countries is at 9.11%. This is below the world average of MVA % of GDP of 16%. This calls for deliberated plans to increase EAC’s manufacturing GDP share to 25% by 2032.

Admission of Federal Republic of Somalia

The Federal Republic of Somalia signed a EAC Treaty of Accession on 15th December 2023 at State House in Entebbe, Uganda. This expands EAC’s market to 301.8 million consumers, a land area of 5.4 million square kilometers and a combined Gross Domestic Product of US$ 312.9 billion. The improves EAC region strategic and geopolitical significance and prospects.

Risks

Geopolitical tensions and regional conflicts remain concerns, as they have the potential to disrupt trade and investment flows and rise Non– Tariff Barriers within the region.

Impact of climate change on critical sectors like agriculture poses a notable economic risk, potentially affecting food security and livelihoods.

Solutions

Investing in human capital, diversification of the economy into agricultural processing, infrastructure development, promoting technological innovations and tools, strengthening environmental sustainability, and empowerment of women, youth and SMEs are central to drive sustainable economic growth and prosperity for the EAC region.

Global

The projected global economic slowdown of 3.0 percent in 2023 to 2.9 percent in 2024 may potentially dampen exports and foreign direct investment. Global crises of conflict and climate change risks rise of commodity prices for energy & food leading to inflation.

Global inflation is forecast to decline steadily, from 8.7 percent in 2022 to 6.9 percent in 2023 and 5.8 percent in 2024, due to tighter monetary policy aided by lower international commodity prices. Implementation of East African Community (EAC) Common Market commitments is paramount for sustainable economic growth in the region amid global crises.

“Our theme for this year is “Bolstering Trade for Prosperity.” EABC is committed to strengthening public-private dialogue with the EAC Council of Ministers on policy proposals to increase intra-EAC trade and investments,” says EABC CEO, John Bosco KALISA.

Written by Phyllis MUCHOKI