By 2031, East African countries, including Tanzania, Kenya, Uganda, Rwanda, and Ethiopia, are projected to experience significant economic growth, with varied GDP estimates. However, all these countries are expected to face trade deficits, where imports exceed exports. Addressing these imbalances will require comprehensive economic policies focusing on boosting exports, reducing unnecessary imports, and improving the overall trade balance for sustainable economic growth.

Tanzania

• GDP Estimate: $104.47 billion
• Exports: $13.48 billion
• Imports: $21.26 billion

Tanzania’s economy is expected to grow significantly by 2031, with a GDP estimate of $104.47 billion. The country's exports are projected to reach $13.48 billion, while imports are estimated at $21.26 billion. This suggests a trade deficit, which may require strategic economic policies to balance.

Kenya

• GDP Estimate: $148.51 billion
• Exports: $17.36 billion
• Imports: $36.17 billion

Kenya is projected to have a GDP of $148.51 billion by 2031. The country’s exports are expected to be $17.36 billion, whereas imports will be significantly higher at $36.17 billion. This indicates a considerable trade deficit, reflecting the need for policies to boost exports or control imports.

Uganda

• GDP Estimate: $62.73 billion
• Exports: $8.04 billion
• Imports: $15.73 billion

Uganda’s GDP is estimated to be $62.73 billion by 2031. The exports are projected to be $8.04 billion, while imports are estimated at $15.73 billion. This also shows a trade deficit, highlighting the importance of economic strategies to improve the trade balance.

Rwanda

• GDP Estimate: $18.96 billion
• Exports: $2.20 billion
• Imports: $4.00 billion

Rwanda’s economy is expected to have a GDP of $18.96 billion by 2031. Exports are projected at $2.20 billion and imports at $4.00 billion. This smaller economy also faces a trade deficit but on a smaller scale compared to other East African countries.

Ethiopia

• GDP Estimate: $176.27 billion
• Exports: $11.24 billion
• Imports: $47.30 billion

Ethiopia’s GDP is projected to be the highest among these East African countries, at $176.27 billion by 2031. However, the country’s exports are estimated at $11.24 billion, and imports at $47.30 billion, indicating a substantial trade deficit. This large gap underscores the need for policies to either increase exports or reduce reliance on imports.

Rest of East Africa

• GDP Estimate: $86.14 billion
• Exports: $9.29 billion
• Imports: $14.59 billion

The remaining East African countries collectively are projected to have a GDP of $86.14 billion by 2031. Their exports are expected to be $9.29 billion, while imports are estimated at $14.59 billion. This group also faces a trade deficit, suggesting regional economic policies might be necessary to address these imbalances.

Across East African countries, reserve positions and import cover varied widely. Kenya had the highest reserves and relatively stable import cover, while Tanzania and Uganda showed declining trends in reserves and import cover. Rwanda’s reserves improved slightly in 2023, whereas Burundi faced a critical drop in both reserves and import cover, highlighting significant economic challenges.

Tanzania

• 2021: $6.4 billion
• 2022: $5.2 billion
• 2023: $4.9 billion
• Growth (%): 33.9% in 2021, -18.9% in 2022, -6.0% in 2023
• Months of Import Cover: 7.1 in 2021, 3.7 in 2022, 3.6 in 2023

Analysis: Tanzania's foreign reserves showed a notable decline over the three years, from $6.4 billion in 2021 to $4.9 billion in 2023. The substantial growth in 2021 was followed by significant decreases in the subsequent years. The reserve coverage, which measures how long the reserves could cover the country’s imports, also fell from 7.1 months in 2021 to 3.6 months in 2023. This decline in both reserves and import cover reflects potential challenges in managing external shocks and maintaining import levels.

Kenya

• 2021: $9.5 billion
• 2022: $8.1 billion
• 2023: $8.6 billion
• Growth (%): 14.4% in 2021, -14.8% in 2022, 6.0% in 2023
• Months of Import Cover: 5.5 in 2021, 4.0 in 2022, 4.2 in 2023

Analysis: Kenya’s foreign reserves showed a decrease in 2022 but rebounded slightly in 2023. Despite a dip, Kenya maintained a higher reserve level compared to Tanzania. The reserves provided coverage for 5.5 months of imports in 2021, decreasing to 4.2 months by 2023. This suggests a moderate capacity to handle import needs and external pressures, with some improvement in the latest year.

Uganda

• 2021: $4.3 billion
• 2022: $3.6 billion
• 2023: $3.9 billion
• Growth (%): 12.6% in 2021, -17.8% in 2022, 8.7% in 2023
• Months of Import Cover: 4.8 in 2021, 3.9 in 2022, 3.4 in 2023

Analysis: Uganda experienced a decline in reserves through 2022 but saw an increase in 2023. The reserve coverage also decreased from 4.8 months in 2021 to 3.4 months in 2023. This trend indicates a tightening of reserve capacity to cover imports, potentially reflecting economic pressures or external vulnerabilities.

Rwanda

• 2021: $1.9 billion
• 2022: $1.7 billion
• 2023: $2.0 billion
• Growth (%): 4.9% in 2021, -7.7% in 2022, 15.5% in 2023
• Months of Import Cover: 5.6 in 2021, 4.1 in 2022, 4.2 in 2023

Analysis: Rwanda's reserves showed a recovery in 2023 after a decrease in 2022. The increase in reserves in 2023 also led to a slight improvement in import cover, from 4.1 months in 2022 to 4.2 months in 2023. This suggests a stabilizing situation with improved reserve adequacy towards the end of the period.

Burundi

• 2021: $0.3 billion
• 2022: $0.2 billion
• 2023: $0.1 billion
• Growth (%): 198.8% in 2021, -35.7% in 2022, -51.2% in 2023
• Months of Import Cover: 2.9 in 2021, 1.4 in 2022, 0.7 in 2023

Analysis: Burundi's reserves have been decreasing sharply from 2021 to 2023. The reserve coverage fell significantly, from 2.9 months in 2021 to only 0.7 months in 2023. This rapid decline indicates severe challenges in maintaining adequate reserves to cover imports, potentially affecting the country’s economic stability and external debt management.

Tanzania's foreign reserves and import cover from 2021 to 2023

The decline in Tanzania's foreign reserves and import cover suggests that the country may be facing economic challenges that could affect its growth and stability. Addressing these issues through targeted economic policies and strategies will be crucial for sustaining economic development and enhancing resilience to external shocks.

1. Declining Foreign Reserves

Tanzania's foreign reserves decreased from $6.4 billion in 2021 to $4.9 billion in 2023. This decline indicates that the country may be facing challenges in maintaining a robust buffer against external shocks. The reduction in reserves can be attributed to various factors, including trade imbalances, economic downturns, or increased external debt payments.

2. Reduced Import Cover

The months of import cover, which indicates how long the reserves can sustain import needs, fell from 7.1 months in 2021 to 3.6 months in 2023. This sharp decline suggests that Tanzania’s capacity to cover its import requirements with available reserves has diminished significantly. Lower import cover can impact the country's ability to manage its external trade and may lead to increased vulnerability to global economic fluctuations.

3. Economic Stability Concerns

The consistent decrease in reserves and import cover might signal potential economic instability or strain. Reduced reserves limit the country’s ability to handle economic shocks, stabilize its currency, and support trade. It could also affect investor confidence and economic growth.

4. Policy Implications

The decline in reserves highlights the need for strategic economic policies to strengthen Tanzania’s economic position. Key areas to address might include:

• Boosting Export Performance: Enhancing the competitiveness of Tanzanian exports can help improve the trade balance and increase foreign reserves.
• Diversifying Revenue Sources: Reducing reliance on external debt and diversifying revenue sources can mitigate risks associated with reserve depletion.
• Improving Economic Resilience: Implementing policies to bolster economic resilience, such as investment in critical sectors and infrastructure, can help manage external pressures and stabilize reserves.

5. Impact on Economic Development

Foreign reserves play a crucial role in supporting economic development by providing stability and confidence to investors and international partners. A declining reserve position could hinder long-term economic development goals by limiting the government's ability to implement development programs and attract foreign investment.

Tanzania’s currency remained relatively stable with gradual appreciation, while Kenya’s and Burundi’s currencies showed significant depreciation. Uganda’s Shilling exhibited stability with minor fluctuations, and Rwanda’s Franc appreciated steadily. These trends reflect different economic conditions across the region, with varying impacts on trade, inflation, and overall economic health.

Tanzania

• 2020–2023 Exchange Rates: The Tanzanian Shilling (TZS) has shown minimal fluctuations in value relative to the US Dollar over the past four years. The exchange rate increased slightly from TZS 2,288.21 in 2019 to TZS 2,383.00 in 2023.
• Percentage Changes:
  • 2019–2020: 0.26% increase
  • 2020–2021: 0.16% increase
  • 2021–2022: 0.23% increase
  • 2022–2023: 3.47% increase
• Analysis: The Tanzanian Shilling has experienced relatively stable but gradual appreciation, with a notable increase in 2023. This stability suggests a controlled inflation environment and consistent economic conditions.

Kenya

• 2020–2023 Exchange Rates: The Kenyan Shilling (KES) saw a significant increase in value against the US Dollar, from KES 101.99 in 2019 to KES 139.90 in 2023.
• Percentage Changes:
  • 2019–2020: 4.38% increase
  • 2020–2021: 2.99% increase
  • 2021–2022: 7.51% increase
  • 2022–2023: 18.69% increase
• Analysis: The Kenyan Shilling depreciated consistently over the period, with the most significant depreciation occurring in 2023. This trend indicates possible economic challenges, such as inflation or balance of payments issues.

Uganda

• 2020–2023 Exchange Rates: The Ugandan Shilling (UGX) showed a slight appreciation over the years, moving from UGX 3,699.24 in 2019 to UGX 3,725.86 in 2023.
• Percentage Changes:
  • 2019–2020: 0.31% increase
  • 2020–2021: -3.51% decrease
  • 2021–2022: 2.84% increase
  • 2022–2023: 1.18% increase
• Analysis: The Ugandan Shilling exhibited relatively stable behavior with minor fluctuations. The overall trend suggests a balanced economic situation with modest changes in currency value.

Rwanda

• 2020–2023 Exchange Rates: The Rwandan Franc (RWF) saw a steady increase in value from RWF 899.35 in 2019 to RWF 1,160.00 in 2023.
• Percentage Changes:
  • 2019–2020: 4.88% increase
  • 2020–2021: 4.84% increase
  • 2021–2022: 4.19% increase
  • 2022–2023: 12.59% increase
• Analysis: The Rwandan Franc has appreciated consistently over the years, with a notable increase in 2023. This could reflect strong economic performance or effective monetary policies.

Burundi

• 2020–2023 Exchange Rates: The Burundian Franc (BIF) depreciated significantly from BIF 1,845.62 in 2019 to BIF 2,564.30 in 2023.
• Percentage Changes:
  • 2019–2020: 3.76% increase
  • 2020–2021: 3.18% increase
  • 2021–2022: 2.96% increase
  • 2022–2023: 26.05% increase
• Analysis: The Burundian Franc experienced significant depreciation, particularly in 2023. This could indicate severe inflationary pressures or economic instability.

The exchange rate trends for the Tanzanian Shilling (TZS) from 2020 to 2023

The exchange rate trends for Tanzania indicate a relatively stable and appreciating currency, reflecting a controlled inflation environment and steady economic performance. This stability is favorable for economic planning, investment, and overall economic health. Compared to its East African neighbors, Tanzania's currency stability suggests a positive economic trajectory, possibly supported by effective monetary policies and economic reforms.

Stability and Gradual Appreciation

1. Stable Currency Value: The Tanzanian Shilling has remained relatively stable over the years, with minimal fluctuations. The exchange rate increased from TZS 2,288.21 in 2019 to TZS 2,383.00 in 2023. This stability suggests a controlled and steady economic environment, which is beneficial for long-term economic planning and investment.
2. Gradual Appreciation: The slight but consistent appreciation of the Tanzanian Shilling, particularly the 3.47% increase from 2022 to 2023, indicates a positive trend. This could reflect improvements in Tanzania's economic fundamentals, such as a stronger balance of payments, controlled inflation, or enhanced investor confidence.

Economic Indicators and Implications

1. Controlled Inflation: The stability and gradual appreciation of the TZS suggest that inflation has been relatively controlled. In many cases, currency depreciation is a result of high inflation; the modest appreciation of the TZS implies that inflation rates have been managed effectively.
2. Economic Growth: Stable currency values can be a sign of steady economic growth. The Tanzanian economy's ability to maintain a stable currency amidst global economic fluctuations suggests resilience and steady economic development. It could also be an indicator of positive economic policies or reforms that support economic stability.
3. Investor Confidence: A stable and appreciating currency often boosts investor confidence. It signals a predictable economic environment, which is attractive to both domestic and foreign investors. Tanzania's steady exchange rate could be contributing to increased foreign direct investment (FDI) and business activities.

Comparative Analysis

1. Regional Context: Compared to other East African countries, Tanzania's currency has shown less volatility. For instance, Kenya's Shilling has depreciated significantly, and Burundi's Franc has experienced substantial depreciation. Tanzania's stable currency suggests that it might be performing relatively better in terms of economic stability compared to its neighbors.
2. Economic Resilience: In the context of East Africa, where many countries are experiencing currency depreciation, Tanzania's stability might reflect stronger economic policies or resilience against external economic shocks. This relative strength can enhance Tanzania's position as a stable investment destination in the region.

Tanzania's intra-African trade activities indicate a positive trend in its role within the continent's trade network, with a notable increase in exports and a slight recovery in imports. This aligns with broader regional trends and reflects growing economic integration within East Africa.

1. Tanzania’s Position:

• Intra-African Exports:
  • 2020: $2.30 billion
  • 2021: $2.51 billion (Growth rate: 9.19%)
  • 2022: $2.64 billion (Growth rate: 5.15%)
  • 2023: $3.13 billion (Growth rate: 18.29%)

Tanzania has seen a significant increase in its intra-African exports over the period, culminating in a 2023 figure that represents a 36.2% increase from 2020. This reflects a consistent upward trend, with the most substantial growth occurring between 2022 and 2023.

• Intra-African Imports:
  • 2020: $3.16 billion
  • 2021: $2.65 billion (Decline)
  • 2022: $2.50 billion (Decline)
  • 2023: $2.83 billion (Increase)

Tanzania’s intra-African imports experienced a decline in the initial years but rebounded in 2023, reaching $2.83 billion, which is a 6.0% increase from 2022.

2. East African Neighbors:

• Kenya:
  • Intra-African Exports:
    • 2020: $2.31 billion
    • 2021: $2.79 billion (Growth rate: 20.56%)
    • 2022: $2.59 billion (Decline: -7.22%)
    • 2023: $2.66 billion (Increase: 2.74%)

Kenya's intra-African exports grew significantly in 2021 but faced a slight decrease in the subsequent years, with a modest recovery in 2023.

• Intra-African Imports:
  • 2020: $3.17 billion
  • 2021: $2.93 billion (Decline)
  • 2022: $2.45 billion (Further Decline)
  • 2023: $2.41 billion (Slight Decline)

Kenya's intra-African imports have been decreasing consistently, with the 2023 figure being 24% lower than 2020.

• Uganda:
  • Intra-African Exports:
    • 2020: $1.42 billion
    • 2021: $1.78 billion (Growth rate: 25.22%)
    • 2022: $2.23 billion (Growth rate: 25.61%)
    • 2023: $2.38 billion (Increase: 6.75%)

Uganda experienced strong growth in intra-African exports each year, with the 2023 figure reflecting an 11.5% increase from 2022.

• Intra-African Imports:
  • 2020: $1.95 billion
  • 2021: $1.87 billion (Decline)
  • 2022: $2.11 billion (Increase)
  • 2023: $2.16 billion (Slight Increase)

Uganda's intra-African imports fluctuated but showed a slight increase in 2023, reaching $2.16 billion.

• Rwanda:
  • Intra-African Exports:
    • 2020: $0.72 billion
    • 2021: $0.75 billion (Growth rate: 5.33%)
    • 2022: $0.80 billion (Growth rate: 5.68%)
    • 2023: $0.75 billion (Decrease: -5.90%)

Rwanda's exports grew in the first two years but fell slightly in 2023.

• Intra-African Imports:
  • 2020: $0.98 billion
  • 2021: $0.79 billion (Decline)
  • 2022: $0.76 billion (Further Decline)
  • 2023: $0.68 billion (Decrease)

Rwanda's intra-African imports have consistently decreased over the years, reaching a low of $0.68 billion in 2023.

3. General Trends and Observations:

• Growth Patterns: The overall trend for intra-African trade shows a strong increase in both exports and imports over the period, with significant variations among countries. For Tanzania and its East African neighbors, the most notable growth is in exports, with Tanzania, Uganda, and Kenya all showing impressive increases at different points.
• Impact of External Factors: Countries such as South Africa and Egypt exhibit higher intra-African trade volumes due to their more developed economies and trade infrastructures, while smaller economies or those facing instability often show more volatile trade patterns.
• Regional Trade Dynamics: The East African region generally shows positive growth in intra-African exports, though imports exhibit mixed trends. This reflects both the growing integration within the East African Community (EAC) and the varied economic circumstances of each country.

The trends in Tanzania’s intra-African trade from 2020 to 2023

Tanzania's recent intra-African trade trends indicate a positive trajectory in its economic development. The growth in exports and the rebound in imports suggest improving economic conditions and regional integration. Continued focus on trade policies, infrastructure development, and investment in key sectors could further enhance Tanzania’s economic position within Africa.

1. Positive Export Growth:

• Steady Increase in Exports: Tanzania's intra-African exports grew from $2.30 billion in 2020 to $3.13 billion in 2023, representing a 36.2% increase over the period. This growth reflects an expanding market for Tanzanian goods within Africa and indicates improvements in Tanzania’s production and export capabilities.
• Significant Growth Rate in 2023: The sharp increase of 18.29% in 2023 compared to the previous year suggests that Tanzania's export sector is gaining momentum, potentially due to enhanced trade agreements, better trade relations, or increased competitiveness of Tanzanian products.

2. Recovery and Fluctuation in Imports:

• Initial Decline Followed by Recovery: Tanzania's intra-African imports initially declined from $3.16 billion in 2020 to $2.50 billion in 2022 but recovered to $2.83 billion in 2023. This fluctuation might be attributed to disruptions in global supply chains, changes in domestic consumption patterns, or varying levels of trade with neighboring countries.
• Increased Import Activity in 2023: The rebound in imports in 2023 could indicate a recovering domestic demand or increased economic activity, possibly driven by economic recovery post-pandemic or increased industrial activity.

3. Regional Trade Integration:

• Improved Regional Trade Position: Tanzania’s increasing export figures align with broader trends of improving regional trade within East Africa. This suggests that Tanzania is strengthening its trade relations with neighboring countries, which is crucial for its economic development given its geographical and economic positioning.
• Strategic Position in East Africa: By increasing its exports and stabilizing its imports, Tanzania is enhancing its role as a trade hub within East Africa. This could lead to greater regional influence and integration, benefiting from policies such as the African Continental Free Trade Area (AfCFTA).

4. Economic Development Indicators:

• Enhanced Production and Trade Capabilities: The growth in exports indicates that Tanzania is potentially developing its industrial and agricultural sectors to meet regional demand, contributing to economic diversification and stability.
• Potential for Investment: The increase in exports and recovery in imports may attract foreign investment as Tanzania demonstrates growth potential and economic resilience. Investors often look for stable and growing markets, and Tanzania's performance could make it a more attractive destination for investment.
• Infrastructure and Policy Impacts: The fluctuations and growth trends suggest that infrastructure improvements, trade policies, and economic reforms may be impacting trade performance. Enhanced port facilities, transport networks, and trade policies could be supporting Tanzania's increasing trade volumes.

5. Challenges and Opportunities:

• Challenges: While the growth in exports is promising, the initial decline in imports and the variability in trade figures could point to challenges such as trade imbalances, dependency on specific markets, or potential issues in supply chain reliability.
• Opportunities: The positive trend in exports provides opportunities for further economic development through regional integration, increased foreign investment, and industrial growth. Leveraging trade agreements and improving trade logistics could further enhance Tanzania’s economic prospects.

Balancing Industrial Expansion with Sustainable Practices

Tanzania

In Scenario Two, Tanzania exhibits a modest increase in total emissions, with a 0.29% rise translating to an absolute change of 0.03 MtCO2. The breakdown reveals that emissions from production have risen significantly by 4.78%, corresponding to an absolute change of 0.38 MtCO2. In contrast, emissions from consumption have decreased markedly by 12.99%, with an absolute reduction of 0.35 MtCO2. This indicates a significant shift away from consumption-related emissions towards increased production emissions.

Kenya

Kenya shows a notable increase in total emissions by 4.50%, equating to an absolute change of 0.92 MtCO2. The emissions from production have risen substantially by 5.29% (0.82 MtCO2), while emissions from consumption have increased by 2.00% (0.10 MtCO2). This reflects a rise in both production and consumption emissions, with a more significant impact from production activities.

Uganda

Uganda has the highest increase in total emissions among the East African countries, with a 24.95% rise (1.06 MtCO2). Emissions from production have increased by 24.86% (0.98 MtCO2), and emissions from consumption have also risen by 26.11% (0.08 MtCO2). This substantial growth in emissions from both sources highlights a significant escalation in Uganda’s overall emissions profile.

Rwanda

Rwanda shows a moderate increase in total emissions by 1.58%, resulting in an absolute change of 0.02 MtCO2. Emissions from production have increased by 2.00% (0.01 MtCO2), while emissions from consumption have seen a slight rise of 0.65% (0.00 MtCO2). The data suggests a small rise in emissions, primarily driven by production.

Burundi and South-Central Africa

South Central Africa shows a mixed picture with a 0.85% overall increase in emissions, or 0.24 MtCO2. Notably, emissions from production have decreased by 1.01% (-0.22 MtCO2), while emissions from consumption have surged by 6.86% (0.46 MtCO2). This indicates a shift in the region’s emissions profile from production to consumption-related sources.

Comparative Analysis

Production vs. Consumption:

• Tanzania: A substantial increase in emissions from production with a decrease in consumption-related emissions.
• Kenya: Both production and consumption emissions have risen, with production showing a more significant increase.
• Uganda: Both production and consumption emissions have significantly increased, with the largest overall rise in the region.
• Rwanda: Shows a modest increase in emissions from production, with minimal changes in consumption.

Regional Trends:

• East Africa: Countries like Uganda and Kenya are experiencing significant rises in total emissions, driven mainly by increased production and consumption activities.
• South Central Africa: Displays a decrease in production-related emissions but a substantial increase in consumption-related emissions, highlighting a shift in emission sources.

Tanzania’s emissions profile suggests a growing economy with increased production activities, coupled with efforts to reduce consumption-related emissions.

1. Increase in Production Emissions: The significant rise in emissions from production (4.78%) indicates growing industrial or economic activities within Tanzania. This could reflect an expanding manufacturing sector, increased energy use, or enhanced production processes. Such growth might be linked to economic development initiatives aimed at boosting industrial output and creating jobs.
2. Decrease in Consumption Emissions: The substantial decrease in emissions from consumption (-12.99%) suggests a reduction in consumption-related activities or a shift towards more sustainable consumption patterns. This could be due to improved efficiency in energy use, a transition to cleaner energy sources, or changes in consumer behavior.
3. Economic Implications: The increase in production emissions alongside a decrease in consumption emissions could imply that Tanzania is focusing on enhancing its production capacity while possibly implementing measures to reduce emissions from consumption sources. This might indicate a strategic focus on industrial growth with efforts to mitigate the environmental impact of increased production activities.
4. Sustainability Challenges: The rising production emissions may present challenges for sustainability, requiring policy interventions to ensure that economic growth aligns with environmental sustainability goals. This could involve adopting greener technologies, improving energy efficiency, or investing in sustainable practices within the production sector.
5. Policy Focus: To support continued economic development while addressing environmental concerns, Tanzania might need to balance industrial expansion with strategies for reducing overall emissions. This could include promoting sustainable practices, incentivizing low-carbon technologies, and enhancing regulations to manage the environmental impact of economic activities.

The African Continental Free Trade Area (AfCFTA) aims to create a single continental market for goods and services, facilitating the free movement of businesspersons and investments. It is expected to have diverse impacts on different African countries. Below is an analysis of the impacts on Tanzania and other East African countries, focusing on emissions and GDP changes.

Tanzania

GDP Impact:

• Tanzania is projected to experience economic growth due to the AfCFTA. The increase in GDP reflects the country's enhanced trade activities and economic integration within the African continent.

Emissions Impact:

• Total Emissions: Increase by 1.08%, translating to an absolute change of 0.12 MtCO2.
• Emissions from Production: Increase significantly by 4.19%, with an absolute change of 0.34 MtCO2. This is likely due to increased industrial activities and production to meet the growing trade demands.
• Emissions from Consumption: Decrease by 8.11%, with an absolute reduction of 0.22 MtCO2. This indicates a shift in consumption patterns or improvements in efficiency and sustainability in consumer goods.

Kenya

GDP Impact:

• Kenya, similar to Tanzania, will benefit economically from the AfCFTA. The country is expected to see substantial growth in its GDP due to increased trade and market access.

Emissions Impact:

• Total Emissions: Increase by 2.97%, with an absolute change of 0.61 MtCO2.
• Emissions from Production: Rise by 3.61%, resulting in an absolute increase of 0.56 MtCO2. The industrial and manufacturing sectors likely drive this increase.
• Emissions from Consumption: Increase by 0.97%, with an absolute change of 0.05 MtCO2, indicating slightly higher consumption-driven emissions.

Uganda

GDP Impact:

• Uganda is also set to experience economic growth through the AfCFTA. The country will benefit from improved trade relations and market expansion.

Emissions Impact:

• Total Emissions: Increase by 3.22%, with an absolute change of 0.14 MtCO2.
• Emissions from Production: Increase by 3.47%, translating to an absolute increase of 0.14 MtCO2, indicating a rise in production activities.
• Emissions from Consumption: Decrease slightly by 0.10%, showing a negligible impact in absolute terms, suggesting stable or improved consumption efficiency.

Rwanda

GDP Impact:

• Rwanda's economy is expected to grow under the AfCFTA, benefiting from enhanced trade and economic cooperation with other African nations.

Emissions Impact:

• Total Emissions: Increase by 1.07%, resulting in an absolute change of 0.01 MtCO2.
• Emissions from Production: Increase by 1.09%, with an absolute change of 0.01 MtCO2, indicating a marginal rise in production-related emissions.
• Emissions from Consumption: Increase by 1.03%, reflecting a small absolute change, suggesting a balanced increase in both production and consumption emissions.

Overall Emissions and Economic Growth

The AfCFTA presents significant opportunities for economic growth for Tanzania and other East African countries. However, it also brings challenges in terms of managing increased emissions, particularly from production activities. Policymakers must focus on sustainable practices and technologies to mitigate the environmental impact while capitalizing on economic benefits.

Economic Growth:

• All East African countries under AfCFTA are projected to see positive economic impacts, with notable GDP increases due to expanded trade, reduced tariffs, and improved market access.

Emissions Trends:

• There is a varied impact on emissions among East African countries. While production emissions tend to increase due to higher industrial activities, consumption emissions show mixed trends, with some countries experiencing reductions, likely due to efficiency improvements or shifts in consumption patterns.

Tanzania

Tanzania has experienced relatively stable inflation rates over the past three years. In 2021, inflation was at 3.7%, a modest rate reflecting a stable economic environment. By 2022, inflation increased slightly to 4.4%, likely due to rising costs of goods and services. In 2023, inflation marginally decreased to 4.0%, showing a small but positive shift towards stabilization. Tanzania's inflation rate remains lower compared to several other East African nations, reflecting more controlled economic conditions.

Kenya

Kenya's inflation rate has shown a gradual increase from 6.1% in 2021 to 7.6% in 2022, and slightly up to 7.7% in 2023. This upward trend suggests a growing cost of living, driven by factors such as food prices and fuel costs. The inflationary pressures in Kenya reflect broader economic challenges faced by the country, impacting consumer purchasing power and cost of living.

Uganda

Uganda's inflation rate was relatively low at 2.2% in 2021 but saw a significant increase to 7.2% in 2022. By 2023, inflation moderated slightly to 5.4%. This fluctuation indicates a period of economic adjustment, likely influenced by changes in global commodity prices and domestic economic policies. The recent decrease might be a sign of stabilizing inflationary pressures.

Rwanda

Rwanda faced a notable increase in inflation, from 0.8% in 2021 to 13.9% in 2022, and slightly easing to 14.0% in 2023. This sharp rise reflects severe inflationary pressures, possibly driven by supply chain disruptions, increased food prices, and other economic challenges. The high inflation rate could impact Rwanda’s economic stability and consumer spending.

Burundi

Burundi saw a dramatic rise in inflation from 8.3% in 2021 to 18.9% in 2022, and peaking at 27.0% in 2023. This significant increase suggests severe economic instability and possibly acute shortages of essential goods. Such high inflation rates could have serious implications for economic growth and the standard of living in Burundi.

South Sudan

South Sudan experienced extreme inflation fluctuations with a staggering rate of 30.2% in 2021, plummeting to -3.2% in 2022, and then skyrocketing to 40.2% in 2023. The drastic changes reflect ongoing economic and political instability, severe supply chain issues, and the impact of conflict on the economy. The high inflation rates are indicative of significant economic distress.

Ethiopia

Ethiopia’s inflation rate was notably high, starting at 26.8% in 2021 and rising to 33.9% in 2022, before slightly decreasing to 30.2% in 2023. This persistent high inflation rate indicates severe economic challenges, likely exacerbated by conflict and economic mismanagement. The high rates pose significant risks to economic stability and growth.

Malawi

Malawi’s inflation surged from 9.3% in 2021 to 20.8% in 2022, and further increased to 30.3% in 2023. This sharp rise points to substantial economic pressures, likely driven by increases in food and fuel prices. The high inflation rate presents a serious challenge to economic stability and the cost of living for Malawians.

Hence, East Africa's inflation trends over the past three years reflect a range of economic conditions from stable to severely distressed. Countries like Tanzania and Kenya have experienced moderate inflation, while others such as Rwanda, Burundi, and South Sudan face more severe economic challenges, evidenced by high inflation rates.

Tanzania's economic development in the context of inflation trends provides several insights

Tanzania's economic development is supported by its stable inflation environment, which fosters confidence among consumers and investors. The government's effective management of inflation contributes to economic stability and growth, positioning Tanzania favorably in comparison to its East African neighbors. Continued monitoring and responsive economic policies will be crucial in maintaining this stability and supporting ongoing development.

Economic Stability

Tanzania's relatively stable inflation rates over 2021-2023 (3.7% in 2021, 4.4% in 2022, and 4.0% in 2023) suggest a degree of economic stability. This stability is beneficial for long-term economic planning and investment, as it reflects a controlled environment where inflation is not fluctuating wildly. Such stability is conducive to business growth and consumer confidence.

Impact on Purchasing Power

The modest inflation rates indicate that the cost of living in Tanzania has not been subject to severe fluctuations. This relative stability helps maintain consumer purchasing power, ensuring that the general population can manage their day-to-day expenses without dramatic changes in prices. Stable inflation also supports economic growth by reducing the uncertainty faced by businesses and consumers.

Policy Effectiveness

The control of inflation within the 4% range over the past three years suggests effective monetary and fiscal policies. It implies that Tanzania's government and central bank have managed to implement strategies that keep inflation in check, such as monetary tightening or fiscal measures. This effective management of inflation reflects positively on Tanzania’s economic policy framework.

Investment Climate

Stable inflation contributes to a favorable investment climate. Investors often seek environments where inflation is predictable, as it reduces the risk associated with price fluctuations. Tanzania's stable inflation rate can attract foreign and domestic investors, fostering economic development and job creation.

Comparative Position

Compared to other East African countries with higher inflation rates (e.g., Kenya at 7.7%, Rwanda at 14.0%, and Burundi at 27.0%), Tanzania's lower and stable inflation rate positions it as a relatively more attractive destination for investment and economic activities. This comparative advantage can enhance Tanzania's appeal as a stable and predictable market.

Potential Risks

While the inflation rate in Tanzania is relatively low, it is essential to monitor any emerging trends or potential risks that could impact future inflation. Factors such as global commodity price fluctuations, domestic economic policies, or external shocks could affect inflation and overall economic stability.

East African countries exhibit varied trade dynamics between 2021 and 2023. Tanzania, Kenya, Uganda, Rwanda, and Burundi all experienced an increase in imports, leading to growing trade deficits. However, Uganda and Tanzania have shown more significant growth in exports compared to others, improving their trade positions relative to the other countries. The data suggests that while export growth is crucial, managing import growth is equally important to balance trade deficits and support economic stability in the region.

Tanzania:

• Exports: Tanzania's merchandise exports grew from $6.43 billion in 2021 to $8.21 billion in 2023, reflecting a growth rate of 18.97%. This places Tanzania's share of total merchandise exports at 1.34% in 2023, a slight increase from previous years.
• Imports: The country’s imports also increased, from $11.17 billion in 2021 to $16.45 billion in 2023. The growth rate of imports was 31.20%, indicating a significant rise in import activity.
• Trade Balance: Tanzania's trade balance has been negative, with a growing trade deficit. The deficit widened from $4.74 billion in 2021 to $8.24 billion in 2023 due to the higher growth rate of imports compared to exports.

Kenya:

• Exports: Kenya’s merchandise exports were $7.43 billion in 2023, showing a slight increase from $7.33 billion in 2021. The growth rate over the period was modest at 2.22%.
• Imports: Imports grew from $20.54 billion in 2021 to $22.05 billion in 2023, with an import growth rate of 7.33%. This represents a moderate increase in import expenditure.
• Trade Balance: Kenya experienced a widening trade deficit from $13.21 billion in 2021 to $14.62 billion in 2023, driven by the higher growth rate of imports compared to exports.

Uganda:

• Exports: Uganda's exports increased substantially from $3.97 billion in 2021 to $5.61 billion in 2023, marking a significant growth rate of 56.37%.
• Imports: Imports also rose from $9.49 billion in 2021 to $10.24 billion in 2023, though the growth rate was slower at 22.73%.
• Trade Balance: Uganda’s trade deficit expanded slightly from $5.52 billion in 2021 to $4.63 billion in 2023 due to the higher growth rate of imports compared to exports.

Rwanda:

• Exports: Rwanda's exports showed a slight decrease from $1.56 billion in 2021 to $1.22 billion in 2023, with a notable decline in growth rate of -21.67%.
• Imports: Imports grew from $3.34 billion in 2021 to $3.74 billion in 2023, with a slower growth rate of 12.03%.
• Trade Balance: Rwanda’s trade deficit increased from $1.78 billion in 2021 to $2.52 billion in 2023, reflecting the higher import growth relative to exports.

Burundi:

• Exports: Burundi's exports increased slightly from $0.19 billion in 2021 to $0.17 billion in 2023. The growth rate of exports was negative at -11.99%.
• Imports: Imports grew modestly from $0.90 billion in 2021 to $1.06 billion in 2023, with a slower growth rate of 24.79%.
• Trade Balance: Burundi’s trade deficit widened from $0.71 billion in 2021 to $0.89 billion in 2023 due to the higher growth rate of imports compared to exports.

Tanzania’s economic development involves analyzing and the key aspects that shape its economic landscape

Tanzania’s economic development involves a multi-faceted approach that addresses infrastructure, industrialization, agriculture, trade, human capital, digital transformation, and good governance. By targeting these areas, Tanzania aims to achieve sustained economic growth and improve the quality of life for its citizens.

1. Economic Growth and Structure

GDP Growth: Tanzania has shown consistent GDP growth over recent years. The economic development strategy focuses on sustaining this growth through various sectors, including agriculture, industry, and services.

Economic Diversification: Efforts are being made to diversify the economy away from agriculture, which currently employs the majority of the population, to more industrial and service-oriented activities. This includes promoting sectors like manufacturing, tourism, and technology.

2. Infrastructure Development

Transport Infrastructure: Investment in transport infrastructure, such as roads, railways, and ports, is crucial. The expansion of Dar es Salaam port and improvement of road networks aim to boost trade and logistics, enhancing Tanzania’s connectivity and regional trade competitiveness.

Energy Sector: Enhancing the energy sector is vital for industrial growth. Investments in both renewable and non-renewable energy sources are underway to address the power supply challenges and support industrialization.

3. Industrialization and Manufacturing

Industrial Policy: The Tanzanian government’s industrial policy aims to increase the contribution of manufacturing to GDP. This involves promoting industrial parks, supporting small and medium-sized enterprises (SMEs), and improving access to finance and technology.

Special Economic Zones (SEZs): Establishing SEZs to attract foreign direct investment (FDI) and boost industrial production is a key focus. These zones offer incentives such as tax breaks and streamlined regulations to attract investors.

4. Agriculture and Rural Development

Agricultural Productivity: Enhancing agricultural productivity through modern techniques, better seed varieties, and irrigation is crucial for food security and income generation in rural areas.

Value Chains: Developing value chains in agriculture, such as agro-processing, aims to add value to raw products, improve export earnings, and create jobs.

5. Trade and Investment

Trade Policy: Tanzania’s trade policy aims to increase export volumes and diversify export products. Efforts are being made to improve trade relations within the East African Community (EAC) and with other international partners.

Investment Climate: Improving the investment climate through regulatory reforms, anti-corruption measures, and infrastructure development is crucial for attracting both domestic and foreign investors.

6. Human Capital Development

Education and Skills: Investing in education and vocational training is essential to develop a skilled workforce that can support economic growth and meet the demands of a modern economy.

Health Sector: Strengthening the health sector to improve public health outcomes is crucial for maintaining a productive workforce and fostering economic development.

7. Digital Economy

Technology Adoption: Emphasizing digital transformation and technology adoption to enhance productivity, financial inclusion, and access to services is a growing focus. This includes expanding internet access and promoting e-commerce.

Innovation: Encouraging innovation and supporting startups and tech hubs can drive economic growth by fostering new industries and creating high-value jobs.

8. Policy and Governance

Economic Reforms: Implementing economic reforms to improve governance, transparency, and efficiency in public service delivery is essential for fostering a conducive environment for growth.

Fiscal Policy: Ensuring sound fiscal management, including effective tax collection and expenditure control, is vital for maintaining economic stability and funding development projects.

Challenges and Opportunities

Challenges: Tanzania faces challenges such as infrastructure deficits, regulatory hurdles, and external economic shocks. Addressing these issues through targeted policies and investment is crucial for sustained development.

Opportunities: The country has opportunities in areas such as natural resources, tourism, and regional trade integration. Leveraging these opportunities can drive economic growth and improve living standards.

Modest Gains Amidst Record-Breaking African Fundraising in July 2024

Despite Africa experiencing a record-breaking fundraising month in July 2024, with $420 million raised, Tanzania's start-up ecosystem saw modest gains, raising $9 million in H1 2024. While this is significantly lower than Kenya's $244 million, it highlights the country's potential for growth. Continued efforts to enhance the start-up environment and attract investments could boost Tanzania's future fundraising performance.

Start-up Fundraising in Africa: Focus on Tanzania

July 2024 Fundraising Overview

• Total Fundraising: $420 million (excluding exits)
  • This is the highest monthly performance in 14 months.
  • The amount raised in July exceeds the total for Q2 2024.
  • It is 2.5 times the average monthly amount raised over the past 12 months.
  • This is the best month of July since tracking began in 2019.

Breakdown of Fundraising Activities

• Number of Ventures: 47 ventures raised at least $100k each in July.
  • This is the second-best month in 2024, following May.
  • 16 ventures raised at least $1 million, aligning with the monthly average in H1 2024.

Major Deals in July 2024

• d.light’s Securitization Facility: $176 million
• MNT-Halan’s Raise: $157.5 million
• NALA’s Series A: $40 million
  • Combined, these three deals represent 90% of the total funding raised in July.

Exits

• Notable Exit: Quicket’s acquisition by Ticketmaster (details not included in the $420 million).

Year-to-Date Performance

• Total Funding in 2024: $1.2 billion
  • This comfortably surpasses the $1 billion mark.
  • The amount raised in 2024 so far has topped the total raised in 2020.
  • The next milestone is $1.4 billion raised in 2019, which is now within reach.

Country-Specific Fundraising in H1 2024

Distribution Among Big Four Countries

• Percentage of Total Funding: 79% of total funding went to start-ups headquartered in one of the Big Four countries (Kenya, Nigeria, South Africa, and Egypt).
  • This is slightly below the 5-year average of 83%.
  • In H1 2023, the Big Four countries attracted 92% of the region’s funding.

Kenya's Dominance

• Total Raised by Kenyan Start-ups: $244 million
  • Kenya leads for the third consecutive semester.
  • 32% of all funding raised by African start-ups in H1 2024 went to Kenya.
  • Kenya's share of total funding grew by 5 percentage points compared to 2023.
  • 86% of all funding raised in Eastern Africa went to Kenya (89% in 2023).

Eastern Africa Funding

• Total Funding in Eastern Africa: $285 million (37.5% of total funding on the continent).
  • Uganda raised $19 million.
  • Tanzania narrowly missed the $10 million mark with $9 million.
  • Sudan, Ethiopia, and Rwanda each raised less than $5 million.

Implications for Tanzania

• Performance in H1 2024: Tanzania raised $9 million.
  • This is significantly lower than Kenya's $244 million.
  • It indicates that while there is activity in Tanzania's start-up ecosystem, it remains relatively small compared to its regional peers.

Hence

• Growth Potential: The impressive fundraising figures for July 2024 indicate a robust and growing start-up ecosystem in Africa, especially in the Big Four countries.
• Tanzania's Position: Despite Tanzania's relatively modest fundraising performance, the country shows potential for growth. Efforts to improve the start-up ecosystem, attract more investments, and support innovation could enhance Tanzania’s share of regional funding in the future.

A 25-Year Journey Toward Regional Unity

TICGL’s Economic Research Centre has published a comprehensive research paper authored by Dr. Bravious Felix Kahyoza (PhD, FMVA, CP3P), which examines the evolution of the East African Community (EAC) from 1999 to 2024. The paper analyzes how budgetary strategies, infrastructure investments, and conflict management mechanisms have influenced the region’s pursuit of economic integration, political cooperation, and sustainable development.

Drawing on his expertise in financial modeling, valuation, and regional economic policy, Dr. Kahyoza provides a nuanced evaluation of the EAC’s institutional growth and policy dynamics, offering actionable insights to strengthen regional cohesion, fiscal coordination, and long-term stability across member states.

With eight Partner States—Burundi, Democratic Republic of Congo (DRC), Kenya, Rwanda, Somalia, South Sudan, Tanzania, and Uganda—the EAC now unites over 330 million people with a combined GDP projected to reach USD 320 billion by 2025. The paper argues that despite remarkable achievements in trade facilitation and infrastructure development, the region must urgently address persistent security challenges, economic disparities, and non-tariff barriers to realize its vision of a federated political union by 2050.

Key Findings and Insights

• Impressive economic resilience: The EAC maintained an average GDP growth rate of 5.9% during 2010-2019, outperforming the African continental average of 3.4%. Despite COVID-19 disruptions, growth is projected to rebound to 5.4% in 2025 and 5.7% by 2026, making East Africa one of the continent's fastest-growing regions.
• Strategic budget expansion: The EAC budget increased from USD 91.4 million in FY 2021/22 to USD 109.0 million in FY 2025/26, with 20-21% allocated to peace and security initiatives—demonstrating the Community's commitment to conflict resolution and regional stability.
• Infrastructure transformation: Flagship projects like the Standard Gauge Railway (SGR) connecting Mombasa to Kampala and Kigali have reduced freight costs by 40% (from USD 120 to USD 60 per ton), transported 10 million tons of cargo annually, and boosted Uganda's exports by 15%.
• Trade integration success: The 2005 Customs Union and 2010 Common Market have driven intra-EAC trade from USD 2.6 billion in 2005 to USD 15.2 billion in 2024—a 484% increase. In Q1 2025 alone, intra-regional trade surged by 53.6%, comprising 20-25% of total EAC commerce.
• Social development progress: The EAC Integrated Health Programme (2024-2027), backed by SEK 500 million from Sweden, has achieved 90% vaccination coverage in joint campaigns, prevented USD 100 million in disease-related losses, and expanded telemedicine access to 2 million rural residents.
• Persistent security challenges: Conflicts in South Sudan, eastern DRC, and Burundi cost the region an estimated USD 2.5 billion annually in lost productivity and have displaced over 6 million people, undermining integration efforts and deterring foreign investment.
• Non-tariff barriers crisis: The number of active Non-Tariff Barriers (NTBs) surged to 48 by May 2025 (from just 10 in late 2024), costing the region USD 500 million per year and reducing trade volumes by 20%, particularly in agriculture and manufacturing sectors.

Policy Gaps and Opportunities

While the EAC has established robust frameworks—including the Customs Union Protocol, Common Market Protocol, and Conflict Prevention and Management Mechanism (CPMM)—implementation gaps persist, particularly in:

Key structural constraints include:

• Economic disparities: GDP per capita ranges from USD 2,100 in Kenya to just USD 230 in Burundi, creating imbalances that hinder equitable benefit-sharing and monetary union convergence.
• Infrastructure deficits: An estimated USD 42 billion annual financing gap keeps logistics costs at 12% of GDP (versus 8% globally), with only 40% rural electrification and poor road connectivity.
• Political volatility: Ongoing conflicts in fragile states disrupt trade routes, generate humanitarian crises, and strain the CPMM's mediation capacity despite USD 15 million annual spending.
• Budgetary constraints: Partner State contribution arrears average 20% of pledged amounts, delaying 15% of planned projects and forcing 38% donor dependency.
• Monetary union delays: Fiscal disparities—inflation ranging from 3.5% in Tanzania to 20% in South Sudan—have postponed the single currency target from 2024 to 2027.

Strategic Solutions and Recommendations

To unlock the EAC's full integration potential and achieve projected gains of USD 10 billion in additional exports by 2030 under AfCFTA synergies, the paper proposes comprehensive reforms:

1. Strengthening Economic Integration:

• Expand the Single Customs Territory (SCT) with electronic cargo tracking to eliminate 50% of NTBs by 2027 and increase intra-EAC trade to 30% of total commerce.
• Develop regional value chains in agriculture and manufacturing (e.g., cashew processing hubs linking Tanzania and Kenya) to boost exports by 30% and create 100,000 jobs annually.

2. Accelerating Infrastructure Development:

• Fast-track SGR and Northern Corridor extensions to connect all Partner States by 2030, reducing transport costs by an additional 20% through USD 5 billion in blended financing from AfDB and domestic bonds.
• Deploy a regional broadband network under the Eastern Africa Regional Digital Integration Project (EARDIP), targeting 80% internet penetration to support e-commerce growth to USD 3 billion by 2028.

3. Enhancing Peace and Security:

• Bolster the Conflict Prevention and Management Mechanism (CPMM) with a USD 10 million AI-driven early warning system for 60% faster conflict detection, as piloted in South Sudan.
• Convene biannual high-level forums to resolve bilateral tensions (e.g., DRC-Rwanda disputes) and strengthen joint peacekeeping deployments under African Union auspices.

4. Promoting Social Development:

• Scale the East African Health Research Commission with USD 50 million for cross-border vaccination drives, targeting a 25% reduction in communicable diseases by 2030.
• Harmonize education standards through 10,000 annual student exchanges, equipping youth with digital skills to reduce unemployment from 15% to 10%.

5. Institutional and Financial Reforms:

• Establish a Sustainable Financing Mechanism with penalties for contribution arrears, aiming to reduce shortfalls by 50% and diversify funding to 50% domestic bonds by 2026.
• Implement performance-based budgeting with annual KPI audits (e.g., trade volume growth, conflict response times) achieving 90% project utilization rates.
• Allocate 25% of development budgets to fragile states (South Sudan, DRC, Burundi) to narrow GDP per capita gaps by 15% by 2027.

Conclusion

The East African Community stands at a critical juncture in its integration journey. After 25 years of revival, the EAC has demonstrated remarkable resilience through achievements like the SCT (which increased trade by 22%) and the SGR (which cut logistics costs by 40%). However, to realize Vision 2050's federated political union, the region must urgently address the "triple threat" of political instability, infrastructure deficits, and economic disparities.

The authors emphasize that regional integration is not optional—it is destiny. With coordinated reforms, the EAC can transform shared vulnerabilities into collective strengths, positioning East Africa as a continental leader in economic cooperation and peace-building. By implementing the proposed solutions—particularly NTB elimination, infrastructure acceleration, and CPMM strengthening—the EAC could achieve:

• 30% increase in intra-regional trade by 2030
• 25% reduction in disease burden through health integration
• USD 20 billion in partnership-leveraged infrastructure financing
• 50% reduction in conflict-related economic losses

By 2031, with bold and unified action, the EAC can emerge as a politically stable, economically vibrant federation that delivers shared prosperity to over 330 million East Africans—proving that "unity through diversity" is not just a slogan, but an achievable reality.

📘 Read the Full Research Paper:
"Fostering Peace, Security, and Economic Integration in the East African Community (1999–2024): Budgetary Strategies, Challenges, and Pathways to Regional Stability"
Authored by Dr. Bravious Felix Kahyoza (PhD, FMVA)
Published by TICGL | Tanzania Investment and Consultant Group Ltd
🌐 www.ticgl.com