East Africa’s economic growth is expected to recover to an average of 4.1% in 2021, up from 0.4% posted in 2020. In 2022, average growth is projected to hit 4.9%.

This is according to the African Development Bank’s (AfDB) latest economic outlook report titled Debt dynamics in East Africa: The path to post COVID-19 recovery for the region.

The rapid economic recovery of the region has been attributed to sustained public infrastructure spending, improved performance of the agricultural sector, and deepening regional economic integration.

The report reviewed the socio-economic performance of 13 countries including; Kenya, Burundi, Comoros, Djibouti, Eritrea, Ethiopia, Rwanda, Seychelles, Somalia, South Sudan, Sudan, Tanzania, and Uganda.

The report further revealed that COVID-19 containment measures and global supply and demand disruptions hit businesses and livelihoods hard and increased poverty.

To accelerate recovery and build post COVID-19 resilience, the report recommends that countries accelerate structural transformation through digitalization, industrialization and economic diversification.

In his keynote address at the launch, Somali Finance Minister Abdirahman Dualeh Beileh warned the pandemic could continue to impede progress toward inclusive growth.

“The contraction of economic activities, increase in fiscal deficits due to high public spending to respond to the COVID-19 pandemic amidst reduced public revenues, and exchange rate depreciation following reduced income from commodity exports, created fiscal and debt distress risks in the region in 2020,” Minister Beileh said.

Economic experts attending the launch called for better economic governance, notably clearing domestic arrears, improving debt management and transparency, and dealing with debt related to state-owned enterprises.

“For countries with substantial external financing risks, innovative financing instruments like non-debt equity, risk-sharing with the private sector, including through collateralization and increasing foreign investor participation in local-currency debt markets, should be explored to diversify the sources of development finance. This will insulate the region’s economies from global volatility shocks,” said Edward Sennoga, lead economist at the AfDB.