Industrialisation and SME Development
Improving the competitiveness of the industrial sector so as to enhance the expansion of trade in industrial goods within the Community and the export of industrial goods from the Partner States aimed at achieving structural transformation of the economy, fostering the overall socio-economic development in the Partner States.
The EAC Partner States, like many developing countries, aspire to transform their economies to a modern and industrialised status that can sustainably generate sufficient outputs to satisfy both domestic and export markets and rapidly increase per capita incomes to improve the living standards of their people.
The industrial sector in the region has developed into one of the main components of national and regional economic structures.
The contribution of manufacturing to Gross Domestic Product (GDP) in East Africa is estimated at 8.9%, which is considerably below the average target of about 25% that all the five Partner States have set for themselves to achieve by 2032.
The industrial sector has the potential to contribute significantly to the economy by creating jobs, stimulating the development of other sectors like agriculture and services, increasing foreign exchange earnings, and modernising the lives of people.
To address the challenges of industrial development, regional cooperation needs concerted efforts in order to create an effective policy coordination framework geared towards eliminating constraints to growth and enterprise upgrading at national and regional level.
These efforts will also facilitate the identification of leverage elements that can be harnessed to accelerate the industrialisation process in each Partner State.
The EAC Industrialisation process is guided by the following:
The Vision is “a globally competitive, environment-friendly and sustainable industrial sector, capable of significantly improving the living standards of the people of East Africa by 2032”.
To effectively implement the EAC Industrialisation Strategy, five-year Action Plans are developed to progressively steer the region in achieving its vision.
The mission of the EAC Industrialisation Strategy is “to create a market driven, regionally and internationally competitive and balanced industrial sector based on the comparative and competitive advantages of the EAC region”.
The overall objective of the East African Industrialisation Strategy (2012-2032) is to enhance industrial production and productivity and accelerate the structural transformation of the economies of the EAC for attainment of sustainable wealth creation, improved incomes and a higher standard of living for the Community.
Basing on consultation with stakeholders in the five Partner States and a review of other regional blocs’ industrialisation strategies, and the global trends in industrial development, the EAC Industrialisation Strategy aims to achieve the following 5 specific targets over the 20-year period of its implementation:
- Diversifying the manufacturing base and raising local value-added content of resource-based exports to at least 40% by 2032;
- Strengthening institutional frameworks and capabilities for industrial policy design and implementation, and effective delivery of support services;
- Strengthening Research & Development, Technology and Innovation capabilities to foster structural transformation of the manufacturing sector and industrial upgrading;
- Expanding trade in manufacturing by increasing:
- intra-regional manufacturing exports relative to total manufactured imports in to the region to at least 25% by 2032 and
- increasing the share of manufactured exports relative to total merchandise exports to at least 60%; and
- Transforming Micro Small and Medium Enterprises into viable and sustainable business entities capable of contributing to at least 50% of manufacturing GDP up from 20% base rate.