East Africa is projected to lead the continent in economic growth, with gross domestic product (GDP)expected to increase from 4.3 per cent in 2024 to 5.9 per cent in both 2025 and 2026, according to the African Development Bank’s (AfDB) African Economic Outlook 2025. This reflects resilience in Ethiopia, Rwanda, Djibouti, Uganda, and Tanzania, all expected to attain an average growth rate of 6 per cent or higher in 2025–26, supported by continued public investments to deepen domestic value chains in the agriculture sector and domestic energy infrastructure, the report reads. ALSO READ: East Africa poised for fastest economic growth in region – AfDB report With Jonathan Nzayikorera, Executive Director representing the Eastern Africa Constituency at the African Development Bank, set to conclude his 3-year term, To discuss what’s behind Eastern Africa’s economic trajectory and the opportunities and threats on the horizon, The New Times sat down with Jonathan Nzayikorera, Executive Director for the Eastern Africa Constituency at AfDB as he concludes his 3-year term. Below are the excerpts: The latest Africa Economic Outlook shows that Eastern Africa is projected to grow faster than any other region in 2025 and 2026. What’s will drivethis growth? There are two factors: effective policies and strategic investments. Countries like Kenya are heavily investing in road infrastructure, improving mobility and boosting business activity. In Tanzania and Rwanda, efforts in electricity and power generation are accelerating development. For Rwanda in particular, investment in technology stands out. It's one of the few countries where economic growth could even reach double digits. These gains are supported by both local efforts and favourable global economic conditions. Past challenges, such as the war in Ukraine, have disrupted supply chains, driving up inflation and food and energy prices. But the current outlook is more positive, though policies like new US tariffs could again shift projections. Still, countries in the region are tapping into green financing and improving resilience. With sound policies and increasing investment, including from the private sector, East Africa’s growth prospects remain strong. How are Eastern African countries coping with the new trade tariffs? Trade tariffs impact everyone, some countries are directly affected, others indirectly. Take the US-China trade dispute as an example. Together, they make up over 40 per cent of the global economy. Many African countries export raw materials to China. If China’s industrial production slows, our exports drop, affecting our economies. Tariffs also affect consumption. If US consumers face higher prices without higher incomes, they cut back on spending, like tourism. That means fewer visitors, for instance, coming to see gorillas in Rwanda, which hurts our economy. There’s also a knock-on effect on investment. Global uncertainty makes investors hesitant. Capital becomes harder to access, and that can affect our ability to raise funds, for example, through bonds. So, even if we’re not directly involved in these trade disputes, the ripple effects from reduced demand to investor caution still reach us. In Eastern Africa, some countries like Sudan, Somalia, and DR Congo remain fragile. What steps can they take to strengthen their economies? Fragility has many causes, some external, like climate change, and others internal, like governance and conflict. While external shocks are harder to control, countries can work on internal factors. Good governance and peace are critical. Conflict destroys infrastructure, resources, and lives, making development nearly impossible. Promoting peace and stability is the first step. Dialogue, tolerance, and inclusive governance can help fragile states rebuild. But many also need regional and international support. South Sudan, for example, has seen efforts from the African Union and neighbouring countries to help it stabilise. Another solution is regional integration. When countries are better connected through roads, air links, or trade, the cost of goods and services goes down, and economic opportunities increase. Infrastructure investment and regional cooperation can reduce the impact of fragility. What would you advise your successor to focus on in the upcoming term, especially considering the many challenges in Eastern Africa? We need to ensure that the African Union’s financial institution is fit for purpose in driving the continent’s development. Right now, global events and shifting foreign policies are limiting the flow of international development resources. Some partner countries are reducing their contributions or redirecting funds toward military spending, which further shrinks the pool of available support for development initiatives. So, my first recommendation would be for the new leadership to develop a diversified resource mobilisation strategy for the bank. That means thinking innovatively about how to raise funds, not just externally, but from within Africa itself. Specifically for Eastern Africa, I would urge my successor to focus on expanding access to resources for our countries. That doesn’t just mean increasing the amount of financing, but also ensuring that the structure of that financing is more favourable. We need to move away from heavy exposure to foreign currency risks and build stronger local capital markets. Moreover, the bank should provide tools and strategies that help governments raise resources domestically.
