Tanzania Businesses Very Optimistic About Growth in East Africa in 2022-2023

The East African Business Council (EABC) just released its Barometer on Business & Investment in the EAC & Outlook 2022/2023, which captures the sentiment of the business stakeholders about how they see the business environment within the EAC.

EABC is the apex advocacy body of private sector associations and corporates from the six East African Community (EAC) partner states Burundi, Kenya, Rwanda, South Sudan, Tanzania, Uganda, and DRC.

It was established in 1997 to foster the interest of the private sector interests in the EAC integration process with the primary mission of promoting sustainable private sector-driven growth.

EABC has Observer Status at the EAC level which offers an avenue for advocating the private sector interests in the EAC integration agenda with a view to promoting a conducive business environment in the region.

This year’s EABC barometer shows the rate of investments, operation, and performance of businesses in the EAC bloc is recovering, and business stakeholders are optimistic about business in EAC.

Economic Recovery from Covid-19 in EAC

The Covid-19 pandemic has had a profound effect on businesses in the East African Community and globally.

Some containment measures employed by EAC partner states to curb the pandemic such as curfews and closure of certain businesses negatively affected businesses in various ways.

On the other hand, other businesses thrived by taking advantage of the new opportunities provided by the pandemic for instance manufacture of protective equipment, and medical care among others.

The economic effect of the pandemic has been a subdued GDP growth of 1% in Tanzania while a GDP decline in Burundi, Kenya, Rwanda, South Sudan, and Uganda of -1.3%, -0.1%, -0.2%, -6.6% and -2.1%, respectively, with the EAC trading block experiencing an average 1.6% decline in Aggregate GDP in 2020.

Perception of Outlook of Trade and Investment in EAC in 2022-2023

Respondents to EABC’s study were asked to indicate their sentiment on expectations of the business outlook from 2022 into 2023.

The key dimensions of interest were whether businesses expect improvements in the business climate, whether they expect the governments to put in place interventions for business recovery, whether they expect businesses to perform well, whether they expect the adverse effects of the pandemic are over and whether they expect to recover from the losses suffered during the pandemic.

They were also asked whether they expect to expand the businesses to other markets within the EAC post the pandemic.

The sentiments were mixed. Most businesses in Rwanda, South Sudan, and Tanzania are optimistic about the outlook for 2022 and 2023 about the following dimensions: improvements in the business climate, businesses performance, governments will put in place interventions for business recovery, recovery from the losses suffered during the pandemic, and expansion the businesses to other markets within the EAC post the pandemic. 

It is notable that businesses in Tanzania stood out with an optimistic view of the outlook across all dimensions.

The respondents were asked to indicate factors in the business environment that are likely to impact their future investment in the country. The factors included: competition, cost of labor, availability of raw materials, political stability, and technology among others.

EABC’s Business Barometer, an index that captures the sentiment of the business stakeholders with regard to how they see they see the business environment within the EAC during 2022 and 2023, was 11% on a scale that ranges from -100% to 100%.

The value of 11% indicating slight optimism for the coming year.