This archive report was first published on 2 January 2020.
East Africa: EAC Must Not Be Left Behind in Fourth Industrial Revolution ¶
As the world prepares for the Fourth Industrial Revolution (4IR), the East African Community (EAC) is lagging behind in exploiting the full potential of the previous three industrial revolutions.
With a population of over 172 million and a total gross domestic product (GDP) of over $172.7 billion, the EAC presents a huge market for manufactured goods. However, the region has practically missed the Agricultural Revolution, is only scratching the surface of the Industrial Revolution, and lacks the infrastructure to fully exploit the Information Revolution.
According to the East African Business Council, total trade among Kenya, Uganda, Tanzania, Rwanda, and Burundi declined by 20% to $2.12 billion in 2012-2016. In contrast, Chinese imports to the EAC amounted to $6.75 billion in 2017, more than thrice the 2009 figure.
Kenya, the region's biggest economy, imported $3.9 billion worth of goods from China in 2017, compared to Tanzania's $1.69 billion and Uganda's $1.15 billion. Chinese goods accounted for 22% of total imports to Kenya, Uganda, and Tanzania in 2013-2017.
Despite a ready market for secondary and tertiary goods, the contribution of manufacturing to EAC economies' GDP has been declining. Manufacturing as a percentage of GDP dropped from 10.6% in Kenya, 9.5% in Uganda, and 6.4% in Tanzania in 2013 to 8.3%, 8.5%, and 5.5% in 2017, respectively.
As the EAC policymakers must recalibrate the economies in readiness for the 4IR, which is technologically driven and less capital-intensive than the industrialisation phase. There is a need to tap the comparative advantages among EAC economies to increase intra-country trade and develop enabling policies that eliminate tariff- and non-tariff barriers that hinder large-scale industrialisation in the region.
