Despite promising developments in the region, East African industrialisation remains elusive. The region continues to be heavily import-reliant, importing four to five times its exports, whilst regional trade remains low. Whilst much progress has been made with TMA’s support in driving down time and costs of trade in the region, and lowering import costs, there has been a muted production response at firm level. Export profiles are still dominated by primary commodities with few signs of value addition. Unemployment is persistently high across the region, particularly amongst youth.

One of the key innovations pursued by TMA under strategy 2, is to pilot Trade and Logistics Clusters (TLCs) in each country in the EAC as a way to support growth and job creation. Initial feasibility work combined with analysis through a World Bank geo-spatial model indicates that there are certain areas in the EAC which, based on their natural endowment, demographics and favourable locations, have a comparative advantage to create jobs and growth. However, certain binding constraints must be addressed. These include: low productivity, weak infrastructure, high energy costs, poor access to markets, policy instability, non-harmonised regulations, and lack of value addition.

The primary objective therefore of TLCs is to unlock constraints to value addition in export-oriented sectors that have high growth potential for manufacturing and labour absorption. TMA plans to ‘jump start’ growth in these pilot regions through a co-ordinated partnership approach with government and the private sector in tackling the constraints. The approach is demand-led and aligned with government industrialisation and export development strategies. Attracting investments in value-adding manufacturing will open-up new market opportunities for local producers and drive the upgrading of key value chains. Demand-led transformation of the regional economy depends on core domestic and inward investments that create market opportunity for local suppliers.