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The economic potential of East Africa: unlocking internal sources of growth to enhance regional competitiveness

By Emmanuel Lyimo
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The next opportunity for growth in East Africa may not lie in expanding beyond the region, but in making more full use of its economic potential. Despite a combined market of over 300 million people, intra‑regional trade still accounts for only a small part of the association’s total trade turnover, which is pushing businesses and policymakers to accelerate efforts to create a more interconnected regional economy.

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Against this backdrop, a roundtable discussion was held in Tanzania involving company executives, representatives of trade and investment from the East African Business Council (EABC), where businesses, governments, and development partners discussed how to turn regional integration into more significant investment flows, industrial growth, and market expansion for companies. These discussions also marked the beginning of preparations for the 2026 East Africa Business and Investment Forum, which is scheduled for September 17–18 in Nairobi and is expected to bring together investors, business leaders, and policymakers to promote East Africa as a competitive investment destination.

The significance of this topic is confirmed by the region’s trade statistics. In 2025, the volume of intra‑regional trade within the East African Community (EAC) reached $19.7 billion, while trade with the rest of the world amounted to $137 billion, which demonstrates the scale of potential benefits if businesses can overcome the barriers hindering cross‑border trade.

The Secretary‑General of the East African Community, Ambassador Stephen Mubandi, stated that boosting regional trade requires closer cooperation between governments and businesses, with the private sector playing a key role in attracting investment and creating jobs. «Our priority as the East African Community Secretariat is to implement the vision and commitments to increase intra‑regional trade. This should become the criterion by which every policy, partnership, and reform is assessed», he said.

The heads of state of the EAS have set the goal of increasing the share of intra‑regional trade to 50% by 2030. To achieve this, businesses will need greater freedom to operate across borders, and governments will need to eliminate restrictions that affect trade.

The cost of a fragmented market for companies operating in East Africa often manifests itself in practical difficulties that limit the potential of the regional space. EABC Executive Director Ahmed Farah stated that regional integration should be built around the interests of businesses and that companies should participate in shaping policies that affect trade and investment.

Among the main obstacles, he cited non‑tariff barriers, the uneven application of the Common External Tariff, differences in tax systems, and high transport costs, which prevent companies from fully leveraging the benefits of the common market. According to him, a more predictable regional environment would enable businesses to expand production, develop regional supply chains, and compete more effectively on the global market. The стремление towards deeper integration is taking place against the backdrop of East African economies seeking additional private investment to support industrialization and economic transformation. Maximilian Müller, Deputy Head of Mission at the German Embassy in Tanzania, noted that stronger ties between governments, investors, and businesses are needed to turn opportunities into real investments and jobs.

He added that the Invest. EastAfrica! platform is part of a broader effort to connect regional opportunities with international investors through sectoral engagement. The East African Development Bank (EADB) stated that financing businesses that promote regional integration remains a priority. EADB Regional Manager Stephen Wambura said that the institution will continue to support companies that promote industrialization, sustainable economic growth, and regional economic transformation.

The private sector views stronger integration as an important condition for the development of competitive regional value chains. The Executive Director of the Tanzania Private Sector Foundation (TPSF), Deogratius Massawe, stated that the abolition of discriminatory taxes, fees, and duties on goods produced within the EAC will help make the common market more efficient.

For producers, improved regional integration may mean lower costs, a broader sales market, and increased investment in industries that operate across several countries simultaneously. The Executive Director of the Confederation of Tanzania Industries (CTI), Leodegar Tenga, noted that the changing global economic conditions require East Africa to strengthen regional value chains and industrial cooperation. Dr. Gladness Salema, a member of the East African Legislative Assembly, stated that the region needs to move beyond political statements and direct resources to additional sectors and production systems that will enable countries to compete at the international level.

Tanzania’s vision for development up to 2050 places growth driven by the private sector at the centre of economic transformation, viewing business as a source of investment, employment, innovation and exports. The roundtable brought together more than 70 representatives of the government, company executives, business associations and development partners to discuss investment opportunities in manufacturing, agriculture, tourism, logistics, finance and trade.

The outcomes of the discussions will be used in preparing the EAC Trade and Investment Climate Report, which will be presented during the 2026 East African Leaders’ and Investments Forum. The prospects for businesses are clear: a more integrated East African market can provide a broader customer base, resilient supply chains, and new investment opportunities. The main task is to translate regional intentions into practical reforms that will simplify the movement of goods, capital investment, and business development across borders.

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