East Africa’s quest for deeper regional trade and investment still faces major challenges, according to regional ministries and private sector CEOs meeting in Nairobi.
Non-tariff barriers, regulatory fragmentation, high energy costs and weak industrial linkages continue to raise the cost of doing business.
The inaugural East Africa CEO & Investment Forum 2026 in Nairobi, bringing together governments and business leaders, has since called for urgent reforms to turn the region’s growing investment appetite into factories, regional supply chains, jobs and higher-value trade.
East African Community Secretary General Stephen Mbundi said the bloc must increase intra-EAC trade from the current 15.2 per cent to at least 50 per cent over the next five years, setting an ambitious target for the region’s private sector and governments.
Speaking at the two-day forum organised by the East African Business Council (EABC), Mbundi said the region needed to confront fundamental questions around its competitiveness, including whether the private sector was sufficiently involved in shaping regional policies and whether decisions were based on credible evidence.
While EAC economies had recorded an average GDP growth of 5.2 per cent over the past decade, the structure of trade remained a concern, with manufactured goods accounting for less than 20 per cent of exports and much of the region’s production concentrated in low-technology products.
Raw agricultural commodities still dominate exports, limiting value addition and the creation of higher-paying industrial jobs.
The secretary general said the region must move beyond increasing the volume of trade to increasing its value by building regional production networks.
The region’s cotton-to-textile value chain, including Kenya, for instance produces more than 250,000 bales of cotton worth over $172 million (Sh22.2 billion) in exports, but imports more than $300 million (Sh38.9 billion)in finished textiles and apparel, largely from China.
Because local factories are not fully spinning, weaving, and sewing that raw cotton into finished clothes, billions of shillings in potential revenue and millions of manufacturing jobs are sent abroad—primarily to China.
The industrial performance of individual economies shows the scale of the opportunity.
Kenya’s industrial sector contributes 18 per cent of GDP, with manufacturing at 7.3 per cent.
Uganda has increased manufacturing’s GDP contribution from 8.3 per cent in 2018 to 16.5 per cent, while Tanzania’s manufacturing share rose from nine per cent in 2010 to 23.2 per cent in 2023.
In Rwanda, industry contributes 21 per cent of GDP, with growth led by metal, chemical, textile and construction activities.
Businesses however say regulatory uncertainty and protectionist measures continue to prevent companies from exploiting the region’s 300-million-plus consumer market.
EABC vice-chairperson Jas Bedi said planned investment commitments in the EAC reached a record $20.18 billion (Sh 2.6 trillion) in 2024, crossing the $20 billion threshold for the first time.
Domestic investors accounted for 31 per cent of the commitments, while manufacturing attracted the largest share, followed by transport and ICT, finance and real estate, agriculture and construction.
But the region generated approximately 317,000 direct jobs from these investments, highlighting the need to attract capital that creates productive and sustainable employment.
Bedi said recurrent stays of application under the Common External Tariff, non-harmonised policies, discriminatory domestic taxes, technical barriers and administrative bottlenecks were weakening predictability for investors.
He called for simplified and paperless cross-border procedures, greater digitisation and interoperability of systems to enable businesses to operate seamlessly across partner states.
EABC executive director Ahmed Farah said regional integration must become more practical for companies.
He called for an environment where businesses can source inputs, produce goods, trade and receive payments across borders efficiently and at lower cost.
Kenya’s East African Community Affairs CS Beatrice Askul said governments must address common constraints confronting businesses and investors and translate regional policies into practical and competitive business conditions.
“There is need to strengthen the investment climate and competitiveness while supporting digital technology, manufacturing and energy-related development,” Askul said.
Mbundi acknowledged that non-tariff barriers remain a major headache despite the EAC having resolved more than 200 since 2007.
The barriers range from standards and technical requirements to roadblocks, border administration procedures and measures aimed at protecting domestic industries.
He also identified inadequate infrastructure, transport and logistics, ICT gaps, limited access to finance and high energy costs as major constraints.
According to figures presented at the forum, trade barriers result in annual losses equivalent to 13-20 per cent, while some businesses face annual market exit rates of 35 per cent.
Removing the barriers could boost trade competitiveness by 32 per cent and increase trade by $63.5 billion (Sh 8.2 trillion).
The region has also set its sights on strengthening energy cooperation through the East Africa Power Pool as high electricity costs remain a constraint to industrial expansion.
