Nairobi, Kenya, October 28, 2021- The African Development Bank Thursday projected that East Africa’s economic growth will recover to an average of 4.1 percent in 2021 and further to 4.9 percent and 5.6 percent in 2022 and 2023 respectively, up from the 0.4 percent rate in 2020.
The bank noted that the rapid economic recovery of the region will be driven by sustained public spending on infrastructure, improved performance of the agricultural sector, and increased regional economic integration.
The East Africa Economic Outlook 2021 blamed the slowdown in 2020 on the COVID-19-containment measures such as lockdowns curfews and reduced external demand for exports of raw materials and lower tourism inflows.
“Shocks like floods and desert locust invasions affected the performance of the agriculture sector. Contraction of economic activity hit businesses and livelihoods hard, increasing poverty and income inequality,” the bank said.
Nnenna Nwabufo, the Bank’s Director-General for East Africa, however, noted that the region developed residence over the period through higher economic diversification in the region and the swift policy responses initiated by governments to counter the impact of the pandemic.
“A mix of policy interventions is needed to accelerate East Africa’s economic recovery and build post-COVID-19 resilience. These include scaling up vaccination, designing and implementing economic stimulus packages and stabilising public debt by dealing with debt related to state enterprises, among others” the Director-General pointed out.
The report further decried an increased fiscal and debt risks in the region in 2020 which was partly caused by high public spending in respond to the pandemic amidst reduced public revenues.
The contraction of economic activities, exchange rate depreciation following a reduced income from commodity exports was also blamed for increased fiscal deficits whith three of the 13 countries in the region reported to ve in debt distress.
Five other countries are at high risk of external debt distress., the bank said.
As part of its reccomendations, it urged governments to come up with better economic governance which it said will stabilize and reduce the public burden in East Africa.
“ Other key actions include improving debt management and transparency and dealing with debt related to state-owned enterprises and contingent liabilities in some of the region’s largest economies.,” it added.
