East Africa – The Rising Economic Jewel of Sub-Saharan…
East Africa - The Rising Economic Jewel of Sub-Saharan… Euromonitor International
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Sustainable Development Goals (SDGs) in East Africa
The Shift in Economic Power
The balance of economic power is shifting east in sub-Saharan Africa. By 2040, East Africa is projected to account for 29% of the region’s GDP – up from 21% in 2022 and just 14% in 2000. Its rise has been partly driven by improving bilateral links with China, which has been a key source of foreign direct investment in infrastructure and non-service sectors.
Foreign Direct Investment (FDI) from China
Foreign direct investment (FDI) has played a key role in facilitating economic growth as it has been a source of capital for infrastructure. For example, in 2022, Ethiopia received USD3.7 billion in foreign direct investment inflows – the highest ever on record. Improving Sino-African relations in recent years has led to China laying claim to an increasing share of investment across the region as part of its Belt and Road initiative. It has invested heavily in infrastructure megaprojects across East Africa, such as the construction of the Standard Gauge Railway and the Karimenu II Dam Water Supply Project in Kenya.
Growth in Non-Service Sectors
Non-service sectors have particularly excelled in East Africa over the recent past. Across the region’s major economies, namely Uganda, Ethiopia, Tanzania, and Kenya, real gross value added (GVA) in construction, agriculture, and manufacturing grew significantly compared to services. This growth has been supported by more productive methods of farming and increased export demand.
Fastest-Growing Economic Region
East Africa is predicted to be the fastest-growing economic region globally over the next two decades. With a projected GDP CAGR of 6.1% in real terms, it is expected to outperform other emerging and developing markets in Southeast Asia, Latin America, and Africa.
Challenges to Overcome
While growth prospects for East Africa are encouraging, the region still faces major challenges. Poverty, income inequality, weak macroeconomics, political stability, climate change, and skills shortage continue to hinder the region’s economic potential. Efforts should be made to develop self-sufficient and sustainable economic policies to prevent boom-bust cycles and promote inclusive growth.
Conclusion
East Africa has the potential to succeed due to its large and fast-growing population and improving business environment. However, addressing the challenges and focusing on sustainable development goals are crucial for long-term economic growth and prosperity in the region.
References:
- Megatrend Drivers: The Forces Underpinning Changes in Consumer Behaviour
- Sub-Saharan Africa: A Rising Economic Frontier?
SDGs, Targets, and Indicators
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SDG 1: No Poverty
- Target 1.1: By 2030, eradicate extreme poverty for all people everywhere.
- Indicator: Percentage of the population living below the international poverty line of USD3.10 a day.
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SDG 8: Decent Work and Economic Growth
- Target 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7% per annum GDP growth in the least developed countries.
- Indicator: GDP growth rate.
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SDG 9: Industry, Innovation, and Infrastructure
- Target 9.1: Develop quality, reliable, sustainable, and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all.
- Indicator: Foreign direct investment (FDI) inflows in infrastructure projects.
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SDG 10: Reduced Inequalities
- Target 10.1: By 2030, progressively achieve and sustain income growth of the bottom 40% of the population at a rate higher than the national average.
- Indicator: Income growth rate of the bottom 40% of the population.
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SDG 17: Partnerships for the Goals
- Target 17.1: Strengthen domestic resource mobilization, including through international support to developing countries, to improve domestic capacity for tax and other revenue collection.
- Indicator: Foreign direct investment (FDI) inflows.
Table: SDGs, Targets, and Indicators
| SDGs | Targets | Indicators |
|---|---|---|
| SDG 1: No Poverty | Target 1.1: By 2030, eradicate extreme poverty for all people everywhere. | Percentage of the population living below the international poverty line of USD3.10 a day. |
| SDG 8: Decent Work and Economic Growth | Target 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7% per annum GDP growth in the least developed countries. | GDP growth rate. |
| SDG 9: Industry, Innovation, and Infrastructure | Target 9.1: Develop quality, reliable, sustainable, and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all. | Foreign direct investment (FDI) inflows in infrastructure projects. |
| SDG 10: Reduced Inequalities | Target 10.1: By 2030, progressively achieve and sustain income growth of the bottom 40% of the population at a rate higher than the national average. | Income growth rate of the bottom 40% of the population. |
| SDG 17: Partnerships for the Goals | Target 17.1: Strengthen domestic resource mobilization, including through international support to developing countries, to improve domestic capacity for tax and other revenue collection. | Foreign direct investment (FDI) inflows. |
Analysis
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SDG 1: No Poverty
The article highlights that in 2022, East Africa’s major economies (Kenya, Uganda, Tanzania, and Ethiopia) had more than a quarter of the population living below the international poverty line of USD3.10 a day. This aligns with the target of eradicating extreme poverty for all people everywhere by 2030.
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SDG 8: Decent Work and Economic Growth
The article mentions that East Africa is predicted to be the fastest-growing economic region globally over the next two decades, with a projected GDP CAGR of 6.1% in real terms. This aligns with the target of sustaining per capita economic growth. The GDP growth rate can be used as an indicator to measure progress towards this target.
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SDG 9: Industry, Innovation, and Infrastructure
The article highlights the role of foreign direct investment (FDI) in facilitating economic growth and supporting infrastructure development in East Africa. This aligns with the target of developing quality, reliable, sustainable, and resilient infrastructure. The inflows of FDI in infrastructure projects can be used as an indicator to measure progress towards this target.
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SDG 10: Reduced Inequalities
The article mentions income inequality as one of the challenges faced by East Africa, with a focus on the bottom 40% of the population. This aligns with the target of achieving and sustaining income growth of the bottom 40% of the population at a rate higher than the national average. The income growth rate of the bottom 40% of the population can be used as an indicator to measure progress towards this target.
-
SDG 17: Partnerships for the Goals
The article emphasizes the importance of partnerships and international support for economic development in East Africa. This aligns with the target of strengthening domestic resource mobilization, including through international support to developing countries. The inflows of foreign direct investment (FDI) can be used as an indicator to measure progress towards this target.
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Source: euromonitor.com
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