Factors behind EAC region’s 4.5 percent economic expansion

Arusha. The services sector and industry played a key role in 4.5 percent growth in the East African Community (EAC) bloc last year.

Continued public investments and easing of the global supply chain and Covid-19 related constraints were other contributing factors.

This emerged during the just-ended meeting of the 26th meeting of the EAC Monetary Affairs Committee in Bujumbura, Burundi.

The meeting, which was attended by the central bank governors, was told that the economic performance of the region remained strong last year.

A GDP growth of 4.5 percent was recorded in 2022 which was supported by a strong growth of the services and industry sectors.

“The easing of Covid-19 related restrictions, easing of global supply chain constraints and continued public investment perfected the growth,” said the EAC in a dispatch.

The Committee further noted that the growth in the seven nation bloc was expected to improve this year.

It is anticipated that the recovery efforts would be spearheaded “and strong performance of the services sector”.

Recovery and subsequent growth would also be marshalled by prudent monetary and fiscal policies, the statement added.

However, the Monetary Affairs Committee maintained that despite optimism, down- side risks may continue to hit the EAC economies.

Factors behind such risks, it was pointed out, include weak global growth and tightening global financial conditions.

Others are what the meeting described as protracted geopolitical tensions, climate change risks and volatile commodity prices.

Central bank governors from six of the seven partner states attended with Tanzania represented by Emmanuel Tutuba, the Governor of Bank of Tanzania (BoT).

The Committee also noted that most of the EAC partner states’s central banks have recently tightened their policies to address inflationary pressures.

The meeting discussed the delayed establishment of the East African Monetary Institute (Eami) which was to pave the way for the implementation of the monetary union.

The Committee was briefed on the revised timelines set out in the monetary union roadmap, with the new date of achieving the monetary union by 2031.

Despite delayed implementation of the single currency road map,, the central banks in all the member countries were credited for significant steps made in establishing the required institutions.

These include harmonization of monetary and exchange rate policies and of regulatory frameworks as well as implementation of measures to strengthen regional payments systems.

Other measures whose implementation are underway are enhancement of cybersecurity frameworks, capacity building and Risk Management for EAC central banks and promoting cross-border payments.

However, it was noted that a lot of work still needs to be done in the area of cross-border payment systems and, therefore, it was agreed to continue rolling out interoperability initiatives at national level.