East Africa Economic Report

Bloomberg reports that the Tanzanian shilling is the worst-performing currency in the world in 2025. Since January, the shilling’s exchange rate has weakened 8.9 percent. The speed of the depreciation is worrying: A week after the Bloomberg report, the shilling’s decline has crossed the 10 percent mark against major trading currencies- the Euro, the pound Sterling, and the US dollar. Our research shows that between February 3 and March 26 th , it lost an average of 10.33 percent against the three currencies. On February 3, the shilling traded at 2475.83 against The Euro, 3072.00 against the British pound, and 2473.83 against the US Dollar. Seven weeks later, the rates had fallen to TZS 2830.69, 3383.07, and 2619.31, respectively.  This is not a comfortable pace, market watchers say. The cause of the depreciation is the current account deficit amid growing imports, particularly of construction materials, among other imports. According to the Bank of Tanzania’s Monthly Econ...

I stumbled on two interviews involving Prof. Paul Krugman, a Nobel Price Laureate in Economics, regarding Zombie ideas. As the name suggests, Zombie ideas are just that –dead but revived by interest groups. The Professor mentioned a few Zombie ideas including Universal Health Care (Obama care) in the US which was opposed as unworkable but which has provided health care for an additional 20 million Americans.  This one struck a chord with me given the noise against Taifa Care in Kenya.  This is a health insurance plan designed to provide UHC to a greater proportion of Kenyans. Its an upgrade of the age-old NHIF which provided limited health care insurance. But it is facing sustained opposition from some Kenyans. Although data shows that the uptake is positive, having registered an estimated 18.2 million Kenyans,  compared to nearly 4.6 million under NHIF, the opposition, which is a zombie idea,  still persists. Yet if numbers were a measure of popularity, then S...

The metamorphosis of the Kenyan shilling from the worst-performing currency in the world in 2023 to the best-performing in 2024 turned chronic loss makers into profit generators. Two of the largest forex consumers in Kenya posted significant profits due, in part, to the rebound of the Maasai. Kenya Airways and Kenya power and lighting Company turned black. Both firms attributed part of the good fortune to the rebound in the shilling’s value in addition to improved business. Kenya Airways for instance, which last made profits in 2013, made a significant KES 513 million in the half-year to June 31, 2024. Also KPLC, which had posted KES 4.4 billion loss in 2023 posted a massive KES43.46 billion profit last year. The Kenya Airways, management and its Board could not hide their glee as they announced the return to profits after a decade-long lean period. In fact, the Chairman, Michael Joseph, branded it “a milestone.” Over the same period in 2023, the airline posted a huge KES 21.7 ...

 Gold trade in East Africa is interesting: Countries that produce gold in thousands of Kilograms export tons of gold. Countries that do not feature among the top gold producers in Africa, produce more gold than countries listed as top gold producers.  Three years ago, this publication noticed that Tanzania exported a lot of Gold to Burundi and Uganda between May 2020 and June 2021.  At the height of Covid-19 lockdowns, the two countries’ exports outside EAC were in negative territory. Burundi’s extra EAC trade was negative 7 percent in May 2020 while Uganda’s was negative 54 percent. Then in June of that same year, Burundi’s extra-EAC trade rose sharply to 67 percent, and an astonishing 804 percent in July, before declining to 54 percent in September, according to a Trade Mark East Africa (TMEA) Report. Uganda’s exports too, rose from negative 54 percent in May 2020 to 15 percent in June, 31 percent in July, and declined to 16 percent in October. The sudden increase...