Africa Banking Development DFI East African Community Economy Report

East Africa holds its ground as Africa’s fastest-growing region

East Africa’s growth projection for 2020 has been pushed down to 1.2 per cent, a rate that outstrips other African regions and is forecast to rebound to 3.7 per cent in 2021, according to the African Development Bank East Africa Regional Economic Outlook 2020.

The projection is under the baseline scenario that assumes the virus is contained by the third quarter of 2020.

Before the COVID-19 pandemic, East Africa’s economic growth was projected to be more than 5 per cent, which is above Africa’s average of 3.3 per cent and the global average of 2.9 per cent. However, COVID-19 and locust invasion have contributed to job losses, increased humanitarian needs and will lead to poverty and income inequality.

If the pandemic persists until the end of 2020, growth is projected at 0.2 per cent which is still above Africa’s predicted average of -1.7 per cent and -3.4 per cent under the two scenarios.

At the launch of the report held in Nairobi last week, Simon Kiprono Chelugui, Cabinet Secretary of Kenya’s Ministry of Labour, said the regional countries could overcome the effects of the pandemic and turn their economies around by mitigating the external and domestic risks.

Also read: Can East Africa leapfrog to a circular economy?

“We need to implement a decisive and coordinated response to contain the spread of COVID-19; mitigate its health and socio-economic effects; accelerate structural transformation; improve the investment climate, and maintain the peace and security of our region,” he said.

The bank’s Regional Economic Outlook indicates that the COVID-19 pandemic will affect East African economies through the falling of commodity prices and trade and restrictions on travel with a consequent negative impact on tourism. The region’s fiscal and current account balances have been affected by waning financial flows while disruptions in supply chains have hurt food production and distribution.

“Our ambition is to address the adverse effects of COVID-19 pandemic and ensure that social and economic development across the continent is accelerated, including through the creation of an African workforce of the future,” said Nnenna Nwabufo, the Director-General of the Bank’s East Africa Regional Office.

She also noted that the bank has provided urgently needed support to address the immediate impacts of the COVID-19 pandemic, including support of US$212M to Kenya, US$165M to Ethiopia, US$10M to Seychelles and US$4M to South Sudan.

Source: The Exchange

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