East Africa Economic Report

  A Passenger  SGR train: Five hours to  Nairobi from Mombasa Finally! Kenya and Uganda have tightened the first bolts on the construction of the “Lunatic Express 2.0.” This marks the end of a six-year hiatus on the project.  The “Lunatic Express 2.0”, otherwise christened the Standard Gauge Railway, which had stalled on Kenya’s town of Naivasha will now extend to Kisumu and Malaba on the Kenya-Uganda border. This is a section of the longer Mombasa-Kampala-Kigali railway, envisaged back in 2009 by the East Africa Community. The crossing into Kampala, Uganda is a major milestone on the project. The two countries are under pressure from other members of the community to complete this section so that they take it up from there. The US$ 5 billion, 500KM section is a game-changer in transport logistics in this region. It cuts travel time from Mombasa Port on the Kenyan coast to Kampala, 1200KM inland, to 24 hours - down from the current four-days to a week. ...

Nairobi Expressway: With the City CBD in the background e  When the American You Tuber, Ishowspeed, visited Africa last Month, live streaming his stunts, Americans were shocked. To them, Ishowspeed had demolished the narrative of an underdeveloped, poverty- stricken Africa.   The African story previously was a story of destitution, of people living in hovels, no water, no electricity, no cities, and no cars... blah blah! “Africa is a shithole continent,” Trump said. The Live streams of expressways, high-rise buildings, modern cars, happy, healthy, and energetic people, shocked Americans, -and destroyed the narrative. I hear the live streams have stirred interest on the continent, and tourism enquiries are rising. I leave that to tourist- arrivals data at the end of the year. My point here is to answer the question: How did we get here?    It’s a combination of factors, to wit: Geopolitics, the digital revolution, the emergence of China as the second-largest power hou...

The Tanzanian standard Gauge Train, which has been running for less than two years, has suffered frequent minor mishaps. Among these are frequent stoppages due to power outages.  However, over the last two months, these mishaps have escalated to include a derailment and service suspension due to a flooded river damaging the infrastructure. This has led to the public lashing out at the management, terming it incompetent. No Sir. The management is not incompetent. The problem lies elsewhere, and no Management, however competent, can deal with it. The mistakes were made at the design stage. The line is a level crossing line with few elevations. That is the problem, and I shall be brutally frank. It will persist for the life of the line. Around October 25 th , 2025, the train derailed at Ruvu station during the morning run from Dar-Es- Salaam to Dodoma. The management described the accident as an “operational hitch.” And On December 31st, 2025. The service was suspended as heavy ...

The Road Now  Finally! Construction of the 170 KM Rironi Mau summit road has begun. The road, a section of the arterial Northern Corridor - the economic lifeline of East Africa. Due to heavy traffic and rugged terrain, movement is slow. Traffic jams sometimes last more than 10 hours, and accidents are frequent. Consequently, its upgrade was long overdue.  The upgrade involves two roads being constructed simultaneously: The Rironi- Nakuru-Mau summit highway is 175 KM long and will cost a whopping US$863 million. The second, is the 58 KM Nairobi -Mai Mahiu –Naivasha highway for $678 Million.  In total, the two highways will cost a whopping US$1.5 billion.   The 175 KM Rironi Mau-Summit Expressway is a toll road on a 30 year PPP contract meaning, the contractor will design, Finance, build, operate, and maintain the highway for 28 years. After that,the road will revert to the government of Kenya. The work involves upgrading the single-lane road to four- lanes betwee...

One of the many Bridges Tanzania and Zambia have done it again. Back in the 1960s, they jointly conceived a 1860KM rail link between the two countries. That was the longest Railway line in Africa.   For countries that were hardly a decade into independence, that was a bold dream. They approached the West and the World Bank for financial support but the project was rejected as “economically unviable.” Undeterred, they jointly approached China to build a railway line linking the two countries. China agreed to a US$406 million interest-free loan to be paid in 30 years. For China, this was the largest foreign aid project in the cold war era, for China itself was struggling. In 1968, work on the turnkey project began.  The feasibility study debunked the West’s theory. In 1970, construction began and was completed in 1975, two years ahead of schedule. The line runs through a difficult terrain with mountain ranges, rivers, and the Rift Valley. It comprises 320 bridges, with a t...

Ethiopia's GERD: Fully Operational East Africa, the fastest growing region in Sub-Saharan Africa, is stampeding over itself in launching mega power generation sources. These are the fruits of dogged investment in expanding Power generation capacity along with other infrastructure projects.   In the past decade, the region has sunk nearly US$10 billion in green field power generation, adding more than 8000 MW to its level 10 years ago.   Among the mega projects is Ethiopia’s Grand Renaissance Dam, that cost a whopping US$5 billion and will generate 6 GW of power.  Second was Tanzania’s Julius Nyerere Hydro Project which cost $2.9 billion (2GW), followed by Uganda’s Karuma dam which cost $1.7 billion (600MW). There are smaller ones such as Kenya’s Thwake multipurpose dam which cost 0.7 billion and Ol karia V geothermal station which cost 0.4 billion. All projects are green energy projects and all, with the exception of Thwake dam, are complete and operational. With the Comp...

At last, the truth has triumphed over propaganda. The East Africa Northern Corridor SGR is back on track. Preparations to start construction are in high gear in both Uganda and Kenya, we can report. The work begins after a six-year hiatus due to sabotage masquerading as a fight for good governance. The project became a victim of a plethora of rivalries, ranging from Geopolitical, regional rivalries, domestic politics, and business rivalries Kenya's Madaraka Express . At the regional level, Kenya’s southern Neighbor, Tanzania, shot first. She was also building her Central Corridor SGR targeting to serve the same destinations as Kenya, the landlocked countries, including Burundi, DR Congo, Uganda, and Rwanda. Trouble was, the line could not compete with the Northern Corridor. It was handicapped by distance, size of the Dar-Es-Salaam Port, and turnaround time. More than 10 million tons of freight to these countries pass through the Mombasa Port in Kenya each year. Of these, 75 percent...

Donald Trump Tariffs go. Tariffs stop….. Gut the government, Gut Medicaid, Gut social Security, and Gut regulatory agencies, demand deals. That’s Trumpnomics. Trump's first 100 days in office are a theatre of buffoonery, utter chaos. Only this time, the buffoonery is not on the streets or in a theatre, it's at the Oval Office, the world’s most powerful political office.  The Office of the President of the USA. The world rejected such pranks. East Asia, specifically, was blunt: “We won’t be bullied,” said China; “Infantile extortion,” chimed in the Japanese.  The US president, Donald Trump, is too small for his boots.  He is incompetent, Indecisive, confused, and destructive. A man who has reached his “Maria Antoinette Moment,” wrote the Financial Times. Maria Antoinette was the famous foolish queen of French King Louis XVI of the seventeen Century who famously wondered why “People cannot eat cakes” when told the demonstrators in the streets are protesting the lack o...

The strengthening of the Kenya shilling last year brought a windfall to many forex-guzzling firms in Kenya, we can report.  It drove two of the largest guzzlers, KPLC and KQ, out of the red and into black. The rebound that shaved US$900 million off our national debt also wiped between 55 and 67 percent off the books of KPLC and KQ respectively. Consequently, the two firms, which are forex guzzlers, posted huge profits.  Kenya Airways (KQ), hit a major milestone. It made the largest net profit in its history - KES 5.4 billion (US$42 million) in 2024 from a net loss of KES 23 billion ($143 million) the previous year. The airline has, since 2014, been a victim of external factors that led to losses: In 2014, it was hit by the Ebola outbreak in West Africa, one of its largest markets that grounded it for nearly a year. Then the whole aviation industry globally was grounded by the COVID-19 outbreak in 2020 for almost a year. Since then, it has been making losses since it wa...

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...

  Even before they were red-inked, Kenya's Adani Infrastructure development deals had generated more heat than sense. The calls for their rejection began in mid-October when a Senator alleged in the Senate  that the International Airport in Nairobi “had been sold.” He did not provide any evidence to back his claim. Soon the hysteria spread like a bush fire with all sorts of people decrying the alleged sale. At the same time, Adani inked a contract to build electricity transmission lines on a PPP basis. This outcry, which many observers suspected to be a political red herring, exposed the level of hypocrisy or ignorance of the legal profession in Kenya. The Law Society of Kenya rushed to court seeking to stop the alleged sale. What the LSK did not tell us is that the Airport deal was at the proposal stage—that it had just entered the ground floor of a five-floor process. A proposal faces many landmines on the way and can fail at any point before a contract is signed. For in...

  The Financial Market in East Africa is gradually being indigenized, we can report. In Kenya and Tanzania, indigenous banks have taken over the domestic market, shunting foreign banks to the periphery. We can also report that Kenya is the financial hub of Eastern Africa, an analysis of the H1 2024 financial reports of the leading banks shows. Their Asset base is also growing, meaning they are entrenched in the market.  Generally, the Capital base for all top banks has doubled in the last five years. In 2019, Kenya’s KCB had a capital base of US$8.6 billion. As at the end of H1 2024, the capital base stood at $17.17 billion, while Equity’s asset base grew from US$6.8 billion in 2019 billion to $13.7 billion in the first half of this year. In Tanzania, CRDB has more than doubled its asset base from $2.52 billion in 2019 to the current $5.7 billion, while NMB, the second largest bank in Tanzania, has seen its asset base grow from $2.36 billion in 2019 to the current $5.0...