East Africa market watch

East Africa's economic prospects are showing signs of improvement, with falling costs and interest rates fueling optimism among business leaders. CNBC Africa recently interviewed Christopher Legilisho Lemin, the East Africa Economist at the Standard Bank Group, to discuss the region's economic landscape. Lemin highlighted several key points indicating a positive outlook for East Africa. In Kenya, inflation has reached record lows not seen in nearly twenty years, while interest rates are on a downward trend, with expectations of further cuts by the central bank in the coming months. Across the region, countries like Uganda and Tanzania are experiencing low inflation rates, hinting at a stronger economic performance in 2025. Lemin also mentioned that despite a slight slowdown in Uganda's Purchasing Managers' Index (PMI), consumer demand remains resilient, providing a positive outlook for the economy going forward. The implications of the recent U.S. developments were also discussed, with Lemin pointing out that East African countries, particularly Kenya and Tanzania, stand to benefit from lower oil prices under a Trump presidency. He noted that historically, Republican presidencies have seen a decline in oil prices, which could positively impact net oil-importing nations. Despite mixed expectations for Uganda, given its developing oil sector, overall, the region is likely to attract significant U.S. investments with a focus on business and less on human rights. The resignation of the U.S. ambassador in Kenya was also analyzed, with Lemin suggesting that the move reflects an upcoming shift in U.S. policy towards the region under President Trump. The outgoing ambassador, Meg Whitman, played a key role in promoting U.S. investments in Kenya and enhancing bilateral relations. Lemin expressed interest in seeing who President Trump appoints next to continue advancing Kenya's economic ties with the U.S. In terms of the performance of the fixed income and currency markets, Lemin highlighted stability in Kenya's currency and the significant increase in foreign exchange reserves. With recent funding from the IMF boosting reserves, Kenya is poised for a strong finish to 2024 and a positive start to 2025. Tanzania also saw its currency appreciate due to inflows from the agricultural and mining sectors, leading to increased stability in the market. Overall, Lemin's insights indicate a promising economic future for East Africa, with improving macroeconomic indicators and favorable external factors setting the stage for growth and investment in the region.