East Africa Urged to Promote Local Industry to Cut Soaring Debt

Rising Debt

Local industries have played a defining role in creating employment opportunities and contributing massively to the Growth Domestic Product. Major industries in East Africa that have been impactful include agriculture, forestry and fishing, mining and minerals, industrial manufacturing, energy, tourism, and financial services.

As of 2019 estimates, Kenya had a GDP of $98.264 billion making it the 65th largest economy in the world making East Africa lead growth in the continent by 5.7%. Most of the East African countries depend on single commodities that they produce locally for exportation, which have been contributors to their economy.

For Kenya coffee and teas contribute 29% of export and flowers 10%, Ethiopia coffee contributes 33%, Rwanda mineral contributes 41% while coffee and tea 38% while others like South Sudan mineral fuels – oil make 98% of its exports according to a recent report by African Development Bank (AfDB).

However, there is a disparity in the fast growth, whose quality is low, leaving poverty, unemployment, and inequality to persist in regional countries. As noted by 2019 East Africa Economic Outlook Report, there is a rising debt concern in the region.  That these countries should consider limiting the importation of capital goods and heavily promote local industries.

” The levels are at over 30% of GDP in most East African countries (over 166% in Sudan) and that, coupled with low deposit resource mobilization is a risk. Some countries will need to make structural reforms before they slide back to pre-Heavily Indebted Poor Country and they should consider limiting imports to capital goods while promoting local manufacturing of consumer goods which also creates jobs,” the report read.

Following the birth of African Continental Free Trade Area (AfCFTA) there are prospects of a deepened economic integration of the African continent upon the launch of its operational phase. The goodwill from the ratification, where East African countries have signed in is expected to boost trade among African countries by facilitating inter-regional trade, through trade policy, trade facilitation, productive capacity, trade-related infrastructure, trade finance, trade information, and factor market integration, are among others. This will promote the growth of the local industries, cutting down on overburdening debts.

 

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