East Africa Posts Impressive Growth Trend


buy more about sans-serif;”>This State of East Africa Report was released Friday by the Society for International Development (SID), an international network of individuals and organizations founded in 1957 to promote social justice and foster democratic participation in the development process.

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It, however, noted that income per capita data for 2011 shows the significant intra-regional differences between Burundi’s per capita income of $271 and Kenya’s $808.

“East Africa expanded the value of its total trade by $8.2 billion to $45.8 billion in 2011 from $37.5 billion in 2010. Imports continue to dominate the region’s trade. Import growth of $6.5 billion in 2011 was responsible for 79 per cent of the region’s total trade expansion and for 72 per cent of total trade in that year,” the report reads in part.

The organisation said although exports increased by $1.76 billion they accounted for just 21 per cent of that year’s trade growth and only 28 per cent of the region’s total trade in 2011, the lowest since 2005.

This implies the $18 billion value of East Africa’s top five imports in 2011 was more than twice as large as the $7 billion value of its top five exports.

“East Africa’s five most important export products can barely pay for its fuel bill.”

East Africa also attracted foreign direct investment (FDI) inflows of $3.9 billion in 2012, a $1.8 billion increase from $2.6 billion in 2011.

With a combined total inflow of $3.4 billion, the two main energy rich countries of Uganda and Tanzania received 90 per cent of the investment inflows into the region.

In addition to the lure of the extractives sector, other investors in East Africa are targeting regional and domestic consumers with healthcare, financial services and cement production.

In 2011, the region received $8.3 billion in total net disbursements of aid up from $7.9 billion in 2010, and representing 18 per cent of total aid flows to sub-Saharan Africa for 2011.

Aid Cuts

According to the findings, Uganda and Rwanda experienced aid cuts in 2012.

“This year also saw a shift in aid allocations by donors away from the poorest countries, towards middle-income countries. These are signs that declining aid flows to the region could soon be a strong feature of its economic relationship with donor countries,” said SID.

SID said the rapid change in the structure of the East African economy is one of the most important drivers both of the region’s economic performance and the uneven distribution of income and other benefits of growth.

In 2003, Kenya’s was the only regional economy in which the services sector had a bigger share of the economy than agriculture. A decade later, all East African economies are in a similar position.

“While developing economies are usually characterized by a falling share of the agricultural sector in the overall economy, the trouble in East Africa is that the speed of change is overwhelming the capacity of the industrial and services sectors to provide the needed jobs and alternative livelihood opportunities,” the report noted.

The share of industry in the economy increased modestly in four of the five East African countries.

East Africa’s industrial sector employed about 560,000 workers in 2012.

“Assuming a labour force of about 77 million in 2010, industrial employment accounted for less than 1 per cent of the region’s total labour force. In order to reach the goal of having 2.3 million people working in manufacturing, the region’s industrial sector jobs will have to expand five times in the next 20 years.”


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