· Driven by increased vaccination rollout, recovery in the global economy, rising commodity prices, and growing economic diversification in the region, the East African economies are poised to fully recover from the COVID-19 induced recession in 2023, reports the African Development Bank (AfDB).
· The latest report by AFDB titled “Debt Dynamics in E East Africa: The Path to Post-Covid Recovery” analyses the socio-economic performance of 13 countries in the region.
· These include Uganda, Burundi, Comoros, Djibouti, Eritrea, Ethiopia, Kenya, Rwanda, Seychelles, Somalia, South Sudan, Sudan and Tanzania.
Driven by increased vaccination rollout, recovery in the global economy, rising commodity prices, and growing economic diversification in the region, the East African economies are poised to fully recover from the COVID-19 induced recession in 2023, reports the African Development Bank (AfDB). The latest report by AFDB titled “Debt Dynamics in East Africa: The Path to Post-Covid Recovery” analyses the socio-economic performance of 13 countries in the region. These include Uganda, Burundi, Comoros, Djibouti, Eritrea, Ethiopia, Kenya, Rwanda, Seychelles, Somalia, South Sudan, Sudan and Tanzania. However, the East African economy that used to be the top performer on the continent until 2020, will surrender its position to central and southern Africa in 2021 and to North Africa in 2022 with strong recoveries expected in those regions. According to the outlook, East Africa is expected to recover to an average of 4.1% in 2021, up from 0.4% posted in 2020, with average growth projected around 4.9% in 2022.
The report also pointed out a structural shift from a predominantly agricultural economy toward a more service-oriented economy. A few countries are also witnessing de-industrialization. To stimulate economic growth and build resilience, the report advocates speeding up of structural transformation through digitalization, industrialization, economic diversification and consolidation of peace, security, and stability. Apart from COVID 19 impact, the slow uptake of vaccines, rising global oil prices for the non-oil exporting countries in the region, the slow pace of structural transformation, conflicts and civil unrest, and weather-related shocks and locust invasions in the region, political fragility in some countries and limited economic diversification in others were identified as major hurdles to growth. The report highlights that East Africa is the only region that avoided a recession in 2020, due to better performance in agriculture, sustained public spending on large infrastructure projects, and increased economic integration. However, tourism-dependent economies like Seychelles have been hit hardest. Economies like Kenya, experienced fewer adverse impacts while commodity exporters like Tanzania, have been slightly more resilient due to rising prices for commodities.
Nnenna Nwabufo, the AfDB’s Director General for East Africa recommended scaling up vaccinations, designing and implementing economic stimulus packages, and stabilizing public debt by dealing with debt related to state enterprises. The region’s resilience in 2020 was attributed to relatively higher economic diversification and governments’ swift policy responses to counter the pandemic’s impacts.
Cautioning the region about the continued impact of Covid, Abdirahman Dualeh Beileh, the Minister of Finance of Somalia remarked that the contraction of economic activities, rise in fiscal deficits due to high public spending to respond to the Covid-19 pandemic amidst reduced public revenues, and exchange rate depreciation following reduced income from commodity exports, created fiscal and debt distress risks in the region in 2020.
