East Africa (EA) recorded a decline in real GDP growth from 4.7% in 2021 to 4.4% in 2022, but this was higher than Africa's average of 3.8% and only lagged Central Africa's growth of 5.0%. The growth slowdown was due to several factors, including the global growth slowdown, higher consumer prices, adverse weather conditions and mounting public debt. Ethiopia, Kenya, Rwanda, Seychelles, Tanzania, and Uganda had the highest growth, while Burundi, Comoros, Djibouti, Eritrea, and Somalia, posted lower growth rates, with South Sudan and Sudan remaining in recession.

Seychelles’ estimated GDP growth was the highest, driven by tourism, fisheries, and financial services. East Africa’s real GDP was driven largely by the services sector, contributing almost half of the economic growth in 2022. The sector contributed 2.0 percentage points to GDP growth, which was, however, lower than 2.5 percentage points on average for the period 2015-2021.

The region's natural and cultural attractions draw tourists from around the world, creating a demand for services like accommodation, food, and entertainment. With more people moving to urban areas, there is a greater demand for services like transportation, communication, and retail. The emergence of a middle class in the region also contributes to increased demand for services like banking, insurance, and healthcare. The services sector has greater potential for expansion and innovation than agriculture and mining, which are the traditional sources of income in East Africa.

Report by the African Development Institute