President Ruto: Shaping East Africa’s economic path…?

THE East African Community (EAC) is a regional intergovernmental organisation composed of member states such as: Burundi, Kenya, Rwanda, South Sudan, Tanzania, Uganda and the Democratic Republic of the Congo.

Established to promote economic, political and social integration, the bloc has a combined population exceeding 300 million and boasts vast untapped natural resources. Its primary objectives include enhancing trade, fostering regional stability and achieving sustainable development through shared policies and cooperative initiatives.

With its strategic location and growing influence, the EAC is emerging as a key player in Africa’s integration and a model for regional collaboration.

The election of President William Ruto as Chairperson of the East African Community (EAC) Summit, held in Arusha, Tanzania, in November 2024, marks a pivotal moment for the regional bloc. Succeeding President Salva Kiir of South Sudan, Ruto’s leadership presents a significant opportunity to accelerate financial and economic integration, solidify the EAC’s position as a regional powerhouse and adapt to shifting global economic dynamics.

With a combined population exceeding 300 million and abundant natural resources, the EAC is uniquely positioned to drive regional stability, enhance economic resilience and unlock its collective potential.

Unified policies under strong leadership can inspire investor confidence, attract foreign direct investment (FDI) and foster sustainable growth. By addressing non-tariff barriers and improving trade infrastructure, the bloc can further boost intra-regional trade, creating economic synergies and generating substantial revenues for member states.

Building on this momentum, the EAC’s success in implementing One-Stop Border Posts (OSBPs) exemplifies its capacity for impactful reforms. By reducing transit times by up to 70 per cent and increasing trade volumes by 15 per cent, OSBPs have significantly enhanced regional trade.

These achievements provide a strong foundation for deeper integration as the bloc seeks stronger global trade connections and explores potential alignment with the BRICS nations—Brazil, Russia, India, China and South Africa. Such partnerships would help diversify economic relationships and reduce reliance on traditional Western markets.

Rwanda’s Kigali International Financial Centre (KIFC) further illustrates how localised financial hubs can attract capital and foster economic independence. Since its launch, the KIFC has secured over 250 million US dollars in private equity, highlighting the potential of financial innovation to bolster regional integration. Strengthening financial ecosystems across the EAC will be key to mitigating external pressures and enhancing the bloc’s economic sovereignty.

At the grassroots level, financial inclusion remains a cornerstone of the EAC’s development strategy. Platforms like M-Pesa and MoMo have revolutionised cross-border mobile money transfers, reducing transaction costs by up to 25 per cent and enabling millions of previously unbanked individuals to participate in the formal economy. These fintech solutions align with regional goals to promote localized digital payment systems and reduce reliance on external currencies, complementing broader efforts toward economic integration.

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Infrastructure development is another critical driver of the EAC’s economic ambitions. Projects under the Lake Victoria Basin Investment Framework, which has attracted over 500 million US dollars in funding, demonstrate the potential of shared resources to drive large-scale development. Initiatives such as the Lake Victoria Ring Road and renewable energy installations have not only boosted tourism revenues by 25 per cent but also created thousands of jobs, reinforcing the region’s economic self-sufficiency amid global volatility.

In addition to infrastructure, the EAC’s alignment with the African Continental Free Trade Area (AfCFTA) provides a strategic advantage in managing geopolitical and financial pressures. Simplified customs procedures and harmonised tariffs have already increased exports to other African regions by 18 per cent, saving businesses an estimated 50 million US dollars annually.

Strengthening intra-African trade reduces external vulnerabilities, positioning the bloc to navigate challenges such as potential US tariffs.

The global push for de-dollarisation, led in part by BRICS, offers the EAC an opportunity to enhance its monetary independence. The East African Payments System (EAPS), which facilitates real-time local currency settlements, represents a significant step in this direction. By reducing transaction costs and minimising forex risks, EAPS strengthens regional economic integration while laying the groundwork for the East African Monetary Union (EAMU) and a future single currency.

Despite these advancements, the EAC must address emerging challenges, particularly the potential imposition of US tariffs under President-elect Donald Trump’s administration. Such measures could disproportionately affect key sectors like agriculture and textiles, which rely heavily on access to international markets. To mitigate these risks, the bloc must build financial resilience, deepen intra-African trade under the AfCFTA and diversify partnerships with emerging economies in Asia, the Middle East and Latin America.

Collaboration with BRICS nations, especially China and South Africa, presents strategic opportunities. China’s role as a leading trade partner and infrastructure investor can provide critical support for development projects and technology transfer.

However, while pursuing these opportunities, the EAC must maintain diplomatic engagement with the US, emphasising that its de-dollarisation efforts are pragmatic economic strategies rather than adversarial moves.

Navigating these complexities requires a multifaceted approach. The EAC must focus on value-added production, industrial investment and innovation to reduce reliance on external markets. Diversifying trade partnerships, leveraging global economic trends and building domestic resilience will not only protect the bloc’s economic interests but also advance its vision of monetary independence.

Under President Ruto’s leadership, the EAC has a unique opportunity to consolidate its progress and address these challenges. Drawing lessons from successful models like the European Union (EU) and the Association of Southeast Asian Nations (ASEAN), the bloc can deepen financial integration, promote industrialisation and move closer to its goal of a monetary union.

By prioritising de-dollarisation and fostering partnerships with emerging economies, the EAC is well-positioned to reduce dependencies, safeguard its interests and set a benchmark for regional integration in Africa and beyond. With strong leadership, the bloc can translate its potential into transformative growth and prosperity for member states.