Africa is at a turning point; with a gross domestic product (GDP) nearing $3 trillion (Sh385 trillion), the continent's economic and development potential is undeniable. In the burgeoning East African region, we see great potential for additional development.
The African Development Bank Group (AfDB) projects that East Africa is set to grow at 5.1 percent in 2024 and 5.7 percent in 2025.
The growth acceleration of 1.6 percent in 2024 from 3.5 percent in 2023 reflects the anticipated strong economic performance in the region, with seven economies projected to grow five percent or more in 2024. The region has relatedly seen an increase in its contribution to the continent's broader economic growth.
According to the Institute for Security Studies, the region contributed 14 percent in 2018 and 17 percent in 2022. This is set to grow to 29 percent by 2040.
The East African economy has demonstrated remarkable resilience, buoyed by its diversification efforts, innovative spirit, and collaborative mindset. This region, a shiny jewel in the African crown, has invested heavily in infrastructure development through public-private partnerships.
Through concerted infrastructure investment, we have seen a progressive move from traditional debt-led infrastructure projects to a joint approach cognizant of all parties. We also believe that this is the best way to ensure development that best serves the communities that benefit from and use the infrastructure built.
In a recent example of this collaborative approach, Stanbic Bank Kenya, along with MiDA Advisers, announced a partnership with Acorn Holdings, a renowned real estate developer, to facilitate a $700 million (Sh90 billion) long-term blended finance commitment for green, affordable student housing in Kenya.
Upon approval, the transaction will comprise up to a $180 million commitment from the US Development Finance Corporation and raise funds from Kenyan capital markets, deepening the positive impact of the transaction in the Kenyan capital markets and providing an opportunity for investors to participate in this opportunity.
The collaboration will result in the construction of 35 certified green housing projects, creating about 48,000 new student beds over the next 10 years, making it the single largest investment in student housing in Africa. The initiative will create an estimated 15,000 direct jobs and 35,000 indirect jobs.
As the world seeks to transition to cleaner energy sources, East African countries have been actively utilising their rich natural endowments to harness renewable energy to meet their growing energy demands sustainably. Kenya, Tanzania, Uganda, and Rwanda have been at the forefront of developing solar and wind power over the last decade. It is estimated that by 2050, clean energy could generate over 26 million jobs in Africa.
Africa will account for 11 of the world's 20 fastest-growing economies in 2024, according to the AfDB.
Real GDP growth for the continent is expected to average 3.8 percent and 4.2 percent in 2024 and 2025, surpassing projected global averages of 2.9 percent and 3.2 percent, respectively. This makes it the fastest-growing region after Asia.
