EABC: East Africa must close value-addition gap

NAIROBI: EAST Africa is losing significant economic value by exporting agricultural commodities with limited processing, as regional agribusiness leaders call for stronger investment, better financing and more predictable policies to transform what farmers produce into higher-value products.

The warning emerged at the East Africa CEO & Investment Forum 2026 in Nairobi, where agricultural and investment leaders urged governments and the private sector to move beyond raw commodity exports and unlock greater value from the region’s agri-food systems.

The call came during a session on Agribusiness and AgroProcessing organised by the East Africa Business Council (EABC) in partnership with the East African Community (EAC) Secretariat and the Alliance for a Green Revolution in Africa (AGRA).

The discussions highlighted a sector with substantial potential but constrained by underinvestment in agro-processing, limited access to finance, inconsistent policies and barriers to cross-border trade.

Delivering the keynote address, AGRA Vice-president for Programmes Delivery, Prof Hamadi Boga, described the situation as an “agricultural paradox”, where the challenges facing farmers and agribusinesses are widely understood, but implementation of solutions remains difficult because of competing interests among governments, businesses and financial institutions.

Prof Boga said regional integration must also be protected from policy decisions that disrupt trade and undermine investor confidence.

He cited an incident involving additional testing requirements at the Kenya-Tanzania border during a maize shortage, which left trucks stranded despite there being no formal regulatory basis for the delay.

“Integration is not just about business. It’s about the movement of people and talent and it can be reversed as quickly as it is built,” he told delegates.

The concerns extend beyond individual trade disruptions to the broader structure of East Africa’s agricultural economy. AGRA Regional Director for East and Southern Africa, Prof Jean Jacques Muhinda, said agro-processing currently accounts for only 12–15 per cent of agricultural GDP across Africa, compared with roughly 60 per cent in advanced economies.

He identified what he described as the “hidden middle”: Aggregators, transporters and processors connecting farmers with markets as one of the most underfinanced and overlooked parts of the agricultural value chain.

This gap represents a major opportunity for the region to create jobs, increase farmer incomes and retain more value from agricultural production within local economies.

AGRA Head of Markets and Trade, Dr Wubune Nega, illustrated the potential through Kenya’s coffee industry. He said a kilogramme of Kenyan coffee cherry worth about 76 shillings at the farm gate can be valued at more than 2,500 shillings after milling, roasting and processing.

The example demonstrates how processing can significantly increase the economic value of agricultural commodities before they reach final consumers.

However, the region’s existing processing capacity is not being fully utilised. Dr Nega said a survey covering 15 countries found that agro-processing industries were operating at only 30–40 per cent of installed capacity on average.

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Such underutilisation means investors are not obtaining full returns from existing facilities, while farmers and economies are losing opportunities to capture additional value from agricultural production. Access to finance emerged as one of the biggest constraints.

Agriculture receives as little as 0.5 per cent of commercial bank lending across the region despite the sector contributing nearly a third of GDP in several East African economies.

Participants argued that closing this financing gap requires a different approach to agricultural investment, particularly one that reduces the risks faced by commercial lenders and private investors.

Panelists called for donor and government funds to be used increasingly to de-risk private investment rather than replace it. Value-chain financing models were highlighted as one potential way of directing capital towards businesses operating between farms and final markets.

The financing challenge is closely linked to the region’s trade performance. Intra-African agricultural trade remains relatively low, accounting for roughly 15 per cent of agricultural trade compared with more than 70 per cent within the European Union.

Panelists attributed the gap to non-tariff barriers, inconsistent standards and fragmented cross-border payment systems, all of which increase the cost and complexity of moving agricultural products between countries.

Reducing these barriers could expand markets for farmers and processors while encouraging investment in facilities designed to serve consumers across the region rather than individual national markets.

Young people also emerged as an important part of the region’s agricultural transformation. EAC Secretariat Youth in Agribusiness Advisor, Mr Kimathi Githachuri, highlighted efforts to organise young agripreneurs through the Youth in Agrifood Systems in EAC (YASE) digital platform.

The platform currently connects nearly 5,000 young people involved in agrifood systems across EAC partner states, with a target of reaching 10,000 members by the end of the year.

Mr Githachuri challenged the perception that young people are unwilling to remain in agriculture because they expect quick returns.

He argued that the challenge is increasingly about access to land and capital, which have become more difficult for younger generations to secure.

Participants also called for stronger support for women-led agribusinesses and the establishment of dedicated agricultural financing institutions modelled on institutions such as Crédit Agricole and Rabobank.

The forum concluded with calls for tangible action rather than additional commitments. Participants urged EAC partner states to scale proven de-risking and value-chain financing models, accelerate implementation of the EAC Regional Agri-Food Systems Investment Plan (RASIP) 2026–2035 through national policies and make better use of existing trade opportunities under the African Continental Free Trade Area (AfCFTA).

They also pointed to dutyfree trade arrangements with the European Union and China as opportunities to expand markets for processed agricultural products.

The central message from the session was that East Africa’s agricultural challenge is no longer simply about producing more.

It is increasingly about capturing more value from what the region already produces. Moving from raw commodity exports to competitive agroprocessing will require finance, infrastructure, reliable policies, stronger regional integration and investment in the businesses connecting farmers to markets.

For East Africa, closing that value-addition gap could determine whether agricultural growth translates into greater incomes, jobs, industrial development and stronger regional trade or whether much of the value generated from the region’s farms continues to be captured elsewhere.