Stanbic Bank’s 2024 economic outlook for East Africa

East Africa is facing a pivotal moment in its economic landscape as it navigates through currency struggles, trade alliances, and growth opportunities in 2024. The region is witnessing unique challenges and opportunities that are shaping the economic outlook for the upcoming year. Carol Nampurira, Corporate Sales Manager, Energy and Infrastructure, Global Markets, Stanbic Bank, shed light on the key factors influencing East Africa's economic trajectory in a recent interview with CNBC Africa. One of the major issues affecting East Africa's economies is currency depreciation. While Uganda has managed to maintain a relatively stable currency with only a 2% depreciation, Kenya has seen its shilling depreciate significantly by about 24%. The depreciation is attributed to factors such as import bills, high commodity prices, and limited foreign direct investment flows. However, both countries have seen some support for their currencies through remittances, tourism, and agriculture. Looking ahead to 2024, Nampurira predicts a more stable outlook for the Ugandan shilling supported by activities in the oil and gas sector and the coffee season. In contrast, Kenya is expected to face continued challenges in managing its currency due to the twin deficit and low reserve levels. Efforts by the Central Bank of Kenya to seek support from international institutions like the IMF and the World Bank are aimed at stabilizing the currency and reducing aggregate demand. The expulsion of Uganda from the African Growth and Opportunity Act (AGOA) has raised concerns about trade alliances and economic stability in the region. Despite the ban, Uganda continues to engage in dialogues with the U.S. to lift the restrictions. Nampurira highlights the importance of diversifying trade partnerships to mitigate the impact of such bans and increase exports to other markets. In terms of growth sectors, agriculture remains a key focus for East African economies, with heavy investments in infrastructure to boost agricultural productivity. Additionally, infrastructure projects in Uganda and Tanzania, such as oil, gas, and hydroelectric power projects, are expected to drive growth in the region. The easing of visa restrictions by countries like Kenya is also seen as a positive step towards attracting foreign investments and reducing the reliance on the dollar. As East Africa prepares for the opportunities and challenges of 2024, fostering dialogue, promoting key sectors like agriculture and infrastructure, and diversifying trade relations will be crucial in ensuring economic stability and growth in the region.