East Africa economic outlook 2025 – Deloitte

 

Report on Economic Outlooks in Sub-Saharan Africa and Alignment with Sustainable Development Goals (SDGs)

This report provides an analysis of the economic outlook for key nations in Sub-Saharan Africa, including Ethiopia, Kenya, Tanzania, Uganda, and Zambia. The assessment focuses on economic performance, sectoral developments, and policy reforms, with a significant emphasis on their contributions and challenges to achieving the United Nations Sustainable Development Goals (SDGs).

Ethiopia: Economic Reforms Amidst Challenges

Economic Outlook and Alignment with SDG 8

Ethiopia’s economy is navigating a period of significant reform aimed at fostering stability and growth, directly aligning with SDG 8 (Decent Work and Economic Growth). Projections indicate continued real GDP growth, supported by a series of ambitious economic liberalization policies. However, external pressures, such as new global tariffs, pose a risk to this trajectory, potentially impacting trade balances and progress towards SDG 17 (Partnerships for the Goals).

Policy Reforms for Sustainable Growth

The government has initiated several key reforms to strengthen the economy and advance multiple SDGs:

• Financial and Debt Management (SDG 1, SDG 8, SDG 17): An agreement with the International Monetary Fund (IMF) for a US$3.4 billion credit facility and a finalized US$8.4 billion debt relief agreement with official creditors are crucial steps. These measures provide fiscal space, enabling investments in poverty reduction (SDG 1) and public services, while strengthening partnerships for sustainable development (SDG 17).
• Foreign Exchange and Market Liberalization (SDG 8, SDG 9): The National Bank of Ethiopia has reformed the foreign exchange regime, including crackdowns on the parallel market and new currency retention policies. The liberalization of the financial sector, allowing foreign investment in banking, and the establishment of the Ethiopian Securities Exchange (ESX) are designed to attract capital, foster innovation, and build resilient infrastructure (SDG 9).

Sectoral Developments and SDG Contributions

• Agriculture (SDG 2): The Ethiopia Country Food and Agriculture Delivery Compact highlights a strategic focus on enhancing food security and ending hunger, a core target of SDG 2 (Zero Hunger). Efforts to export value-added coffee also contribute to economic growth and decent work (SDG 8).
• Infrastructure and Industry (SDG 9): The expansion of Ethiopian Airlines’ cargo fleet with a new Boeing 777 freighter enhances logistical capabilities, supporting trade and industrialization, which is central to SDG 9 (Industry, Innovation, and Infrastructure).
• Energy and Mining (SDG 7, SDG 8): Investments in the energy sector and projects like the Tulu Kapi Gold Project aim to provide affordable and clean energy (SDG 7) and create employment, driving economic growth (SDG 8).

Challenges to SDG 16

Internal conflicts and the suspension of aid from partners like USAID present significant obstacles. These challenges undermine efforts to achieve SDG 16 (Peace, Justice and Strong Institutions) and can reverse gains made in poverty reduction (SDG 1) and food security (SDG 2).

Kenya: Pursuing Growth Through Innovation and Fiscal Discipline

Economic Outlook and Contributions to SDG 8 and SDG 9

Kenya’s economy is projected to grow, driven by recoveries in key sectors. This growth is fundamental to achieving SDG 8 (Decent Work and Economic Growth). The government’s 10-Year Innovation Masterplan signals a commitment to SDG 9 (Industry, Innovation, and Infrastructure), aiming to build a knowledge-based economy.

Key Sector Performance and SDG Alignment

• Agriculture (SDG 1, SDG 2): The agricultural sector’s growth, supported by favorable weather and a national fertilizer subsidy program, is vital for reducing poverty (SDG 1) and ensuring food security (SDG 2). Key exports like tea, coffee, and floriculture are major contributors to economic growth (SDG 8).
• Tourism (SDG 8): The travel and tourism sector is a significant economic driver, projected to inject KSh1.2 trillion into the economy and create jobs, directly supporting SDG 8.

Monetary and Fiscal Policy for Stability (SDG 8, SDG 17)

The government is implementing fiscal, governance, and structural reforms to manage public debt while generating jobs. Key policy actions include:

• Debt Management: Securing a $1.5 billion Eurobond, loans from the IMF and Trade and Development Bank (TDB), and managing foreign exchange reserves are critical for fiscal stability. These actions align with SDG 17 by leveraging global partnerships for sustainable financing.
• Monetary Policy: The Central Bank of Kenya’s monetary policy aims to control inflation, with measures like lowering fuel prices providing relief to consumers and supporting stable economic conditions (SDG 8).
• Investment Promotion: Easing rules for special economic zones and the Investment Promotion Act are designed to attract foreign direct investment, fostering progress towards SDG 8 and SDG 9.

Challenges to Sustainable Development

• Political and Social Stability (SDG 16): Recent public unrest related to fiscal measures, such as the Finance Bill 2024, highlights challenges to SDG 16 (Peace, Justice and Strong Institutions). Political stability is crucial for attracting sustained foreign investment.
• Trade Relations (SDG 17): While Kenya is enhancing trade with the US and the DRC, new global tariffs and regional diplomatic tensions, such as Sudan’s import ban, pose risks to international partnerships and trade-led growth, impacting SDG 17.

Tanzania: Infrastructure-Led Growth and Regional Integration

Economic Performance and SDG Contributions

Tanzania’s economy is projected to outpace global and regional averages, driven by strong performance in the services, construction, and tourism sectors. This robust growth directly supports SDG 8 (Decent Work and Economic Growth).

Strategic Investments in Infrastructure (SDG 7, SDG 9)

Tanzania is making significant investments in infrastructure, which are critical for achieving SDG 9 (Industry, Innovation, and Infrastructure) and SDG 7 (Affordable and Clean Energy).

• Transport Connectivity: Projects include a US$2.15 billion agreement for a Standard Gauge Railway (SGR) link with Burundi, upgrades to the Tanzania-Zambia Railway, and the expansion of Tanga Port. These initiatives enhance regional trade and connectivity.
• Clean Energy: The Julius Nyerere Hydropower project has achieved full operational capacity, and a US$12.9 billion plan to strengthen the power grid by 2030 will significantly boost access to clean and reliable energy (SDG 7), supporting industrialization and climate action (SDG 13).

Economic Management and Social Progress

• Fiscal Health (SDG 8): The government is managing its public debt, supported by an IMF extended credit facility, to maintain a stable macroeconomic environment conducive to growth.
• Trade Policy (SDG 17): As a member of the East African Community (EAC) and having ratified the African Continental Free Trade Area (AfCFTA), Tanzania is committed to strengthening regional and continental partnerships for trade and development.
• Human Capital (SDG 1, SDG 4): With a rapidly growing population, progress in education, as evidenced by rising literacy rates, is crucial for achieving SDG 4 (Quality Education). Growth in household income is a positive indicator for SDG 1 (No Poverty), although a large portion of the population remains employed in agriculture.

Uganda: Leveraging Resources for Inclusive Growth

Economic Outlook and Poverty Reduction (SDG 1, SDG 8)

Uganda’s economy is demonstrating resilient growth, supported by the services and industrial sectors. This growth is essential for progress on SDG 8 (Decent Work and Economic Growth). Initiatives like the Parish Development Model are specifically designed to reduce poverty at the local level, directly targeting SDG 1 (No Poverty) and SDG 2 (Zero Hunger) by moving households into the money economy.

Key Developments and SDG Implications

• Energy Sector (SDG 8, SDG 9): The development of the oil and gas sector, including the East African Crude Oil Pipeline (EACOP), is expected to be a major driver of economic growth and infrastructure development (SDG 9). This must be balanced with environmental considerations to align with SDG 13 (Climate Action).
• Monetary and Fiscal Policy (SDG 8): The Bank of Uganda is managing monetary policy to contain inflation while supporting investment. The government’s medium-term debt management strategy aims to ensure fiscal sustainability, creating a stable environment for continued economic activity.

Zambia: Green Ambitions and Debt Restructuring

Economic Recovery and Resilience (SDG 8, SDG 13)

Zambia’s economy is on a path to recovery, supported by a positive credit outlook from Moody’s and significant debt restructuring agreements. This progress is vital for restoring macroeconomic stability and advancing SDG 8 (Decent Work and Economic Growth). However, the country faces severe challenges from a drought that has devastated agriculture, highlighting its vulnerability to climate change and threatening progress on SDG 2 (Zero Hunger) and SDG 13 (Climate Action).

Strategic Focus on Green Economy and Mining (SDG 7, SDG 9, SDG 12)

Zambia is leveraging its mineral wealth to build a green and resilient economy.

• Mining Sector Revival: The revival of Konkola Copper Mines (KCM) and Mopani, alongside new investments like the Kansanshi S3 expansion and the Kitumba Mine, will boost copper production. This aligns with SDG 8 and supports the global energy transition, contributing to SDG 7 (Affordable and Clean Energy) and SDG 12 (Responsible Consumption and Production).
• Energy Infrastructure (SDG 7, SDG 9): Investments in the Maamba Energy Phase II power project and power interconnectors with Tanzania and other neighbors will enhance energy security and trade, directly supporting SDG 7 and SDG 9.

Fiscal and Monetary Reforms (SDG 8, SDG 17)

The government has undertaken significant reforms to stabilize the economy:

• Debt Restructuring: An agreement to restructure 90% of US$13.34 billion in debts is a landmark achievement, freeing up resources for development and strengthening partnerships (SDG 17).
• Monetary Policy: The Bank of Zambia has implemented tight monetary policies, including adjusting the policy rate and statutory reserve ratios, to combat inflation and stabilize the currency, supporting a predictable economic environment (SDG 8).

1. SDGs Addressed or Connected to the Issues Highlighted in the Article

The article discusses a range of economic, social, and environmental issues across several African nations, including Ethiopia, Kenya, Tanzania, Uganda, and Zambia. These issues directly and indirectly connect to several Sustainable Development Goals (SDGs). The most relevant SDGs identified are:

• SDG 2: Zero Hunger – Focuses on food security, nutrition, and sustainable agriculture.
• SDG 4: Quality Education – Aims to ensure inclusive and equitable quality education.
• SDG 7: Affordable and Clean Energy – Pertains to ensuring access to affordable, reliable, sustainable, and modern energy for all.
• SDG 8: Decent Work and Economic Growth – Promotes sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all.
• SDG 9: Industry, Innovation, and Infrastructure – Focuses on building resilient infrastructure, promoting inclusive and sustainable industrialization, and fostering innovation.
• SDG 10: Reduced Inequalities – Relates to reducing inequality within and among countries, particularly in terms of trade and financial flows.
• SDG 16: Peace, Justice, and Strong Institutions – Aims to promote peaceful and inclusive societies, provide access to justice, and build effective, accountable institutions.
• SDG 17: Partnerships for the Goals – Pertains to strengthening the means of implementation and revitalizing the global partnership for sustainable development, including finance, trade, and debt sustainability.

2. Specific Targets Under Identified SDGs

Based on the article’s content, several specific SDG targets can be identified as being directly addressed by the policies, projects, and economic situations described.

SDG 2: Zero Hunger

• Target 2.3: By 2030, double the agricultural productivity and incomes of small-scale food producers. This is relevant to the mention of Kenya’s economy, where “Agricultural productivity is expected to grow by 3%.”
• Target 2.a: Increase investment, including through enhanced international cooperation, in rural infrastructure, agricultural research and extension services, technology development… This is addressed by “Kenya’s National Fertilizer Subsidy Program,” which aims to boost the agricultural sector.

SDG 4: Quality Education

• Target 4.6: By 2030, ensure that all youth and a substantial proportion of adults, both men and women, achieve literacy and numeracy. The article references a World Bank blog about Tanzania showing “progress in education” and literacy.

SDG 7: Affordable and Clean Energy

• Target 7.1: By 2030, ensure universal access to affordable, reliable and modern energy services. This is connected to Ethiopia’s focus on its energy sector and various power projects mentioned, such as “Tanzania’s Julius Nyerere Hydropower” project.
• Target 7.b: By 2030, expand infrastructure and upgrade technology for supplying modern and sustainable energy services for all in developing countries. This is highlighted by Tanzania’s plan to invest “$12.9 billion to strengthen its power grid by 2030” and Zambia’s “major 330KV interconnector project.”

SDG 8: Decent Work and Economic Growth

• Target 8.1: Sustain per capita economic growth in accordance with national circumstances. The article provides multiple examples, such as the forecast for “Sub-Saharan Africa real GDP growth” and specific projections like “Kenya’s economy set for 5.3% growth in 2025.”
• Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading and innovation. This is reflected in “Kenya’s 10-Year Innovation Masterplan” and “Ethiopia’s effort to export value added coffee.”
• Target 8.9: By 2030, devise and implement policies to promote sustainable tourism that creates jobs. The article notes that “Kenya’s Travel & Tourism sector is projected to inject KSh1.2TN into economy” and that tourism is a key sector in Tanzania.
• Target 8.10: Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all. This is addressed by “Ethiopia’s financial sector liberalization” and the establishment of the “Ethiopian Securities Exchange (ESX).”

SDG 9: Industry, Innovation, and Infrastructure

• Target 9.1: Develop quality, reliable, sustainable and resilient infrastructure, including regional and transborder infrastructure, to support economic development. The article is replete with examples, including “Ethiopian Airlines expands cargo fleet,” the “Tanzania and Burundi sign US$2.15B SGR railway agreement,” the “upgrade in sight for Tanzania-Zambia railway,” and the “Tanga Port improvement and expansion.”

SDG 10: Reduced Inequalities

• Target 10.a: Implement the principle of special and differential treatment for developing countries… in accordance with World Trade Organization agreements. This is relevant to the discussion of trade barriers, such as when “Ethiopia hit with 10% duty as Trump imposes new global tariffs” and the “new 17% US tariff on Zambian imports.”
• Target 10.b: Encourage official development assistance and financial flows, including foreign direct investment, to States where the need is greatest. This is evident in the mentions of Foreign Direct Investment (FDI) and financial aid, such as the “IMF Executive Board approves four-year US$3.4 billion extended credit facility arrangement for Ethiopia.”

SDG 16: Peace, Justice, and Strong Institutions

• Target 16.6: Develop effective, accountable and transparent institutions at all levels. This is connected to Kenya’s efforts to prioritize “fiscal, governance, and structural reforms” and Ethiopia’s “Crackdown on parallel forex market.”

SDG 17: Partnerships for the Goals

• Target 17.3: Mobilize additional financial resources for developing countries from multiple sources. This is a central theme, with mentions of “Kenya’s $1.5bn Eurobond,” the “IMF approves Sh78.3 billion loan to Kenya,” and loans from the Trade and Development Bank (TDB).
• Target 17.4: Assist developing countries in attaining long-term debt sustainability through coordinated policies aimed at fostering debt financing, debt relief and debt restructuring. This is explicitly mentioned in “Ethiopia finalizes $8.4 billion debt relief agreement” and the claim that the “Zambian govt claims 90 percent of $13.34 billion debts restructured.”

3. Indicators Mentioned or Implied in the Article

The article provides several quantitative and qualitative indicators that can be used to measure progress towards the identified targets.

• Annual growth rate of real GDP (Indicator 8.1.1): The article frequently cites GDP growth figures, such as the forecast for “Sub-Saharan Africa real GDP growth” and the projection that “Uganda’s economy grows 6.1%.”
• Tourism direct GDP as a proportion of total GDP (Indicator 8.9.1): Progress in sustainable tourism is measured by its economic contribution, as noted for Kenya, where the sector “accounts for over 7% of the country’s GDP.”
• Debt service as a proportion of exports of goods and services (Indicator 17.4.1): The article implies this indicator through its focus on debt sustainability. The specific amounts of debt relief, such as Ethiopia’s “$8.4 billion debt relief agreement” and Zambia’s restructuring of “$13.34 billion debts,” serve as direct measures of progress.
• Total financial flows for infrastructure (related to Indicator 9.a.1): The article provides specific monetary values for infrastructure investments, such as the “US$2.15B SGR railway agreement” between Tanzania and Burundi and the “$292 million financing for Tanzania Power Interconnector” in Zambia.
• Investment in renewable energy (related to Indicator 7.a.1): Investments in clean energy projects like “Tanzania’s Julius Nyerere Hydropower” and Zambia’s “300 MW phase II power project” serve as indicators of progress towards sustainable energy.
• Proportion of tariff lines applied to imports (related to Indicator 10.a.1): The article mentions specific tariff rates, such as the “10% duty” on Ethiopia and the “17% US tariff on Zambian imports,” which are direct indicators of trade barriers.
• Total amount of financial resources mobilized (related to Indicator 17.3.1): The article quantifies financial mobilization through figures like the “US$3.4 billion extended credit facility arrangement for Ethiopia” from the IMF and “Kenya’s $1.5bn Eurobond.”
• Agricultural productivity growth (related to Indicator 2.3.1): The projection that “Agricultural productivity is expected to grow by 3%” in Kenya is a direct indicator for this target.

4. Table of SDGs, Targets, and Indicators

SDGs	Targets	Indicators Identified in the Article
SDG 2: Zero Hunger	2.3: Double agricultural productivity.	Kenya’s agricultural productivity is expected to grow by 3%.
SDG 4: Quality Education	4.6: Ensure literacy and numeracy for all.	Reference to a World Bank report on Tanzania’s “progress in education” and literacy.
SDG 7: Affordable and Clean Energy	7.b: Expand infrastructure for sustainable energy.	Tanzania’s Julius Nyerere Hydropower project achieving full capacity; Zambia’s $292M power interconnector project.
SDG 8: Decent Work and Economic Growth	8.1: Sustain per capita economic growth.	Real GDP growth figures for Sub-Saharan Africa, Kenya (5.3%), and Uganda (6.1%).
	8.9: Promote sustainable tourism.	Kenya’s tourism sector projected to inject KSh1.2TN into the economy, accounting for over 7% of GDP.
	8.10: Strengthen domestic financial institutions.	Establishment of the Ethiopian Securities Exchange (ESX) and financial sector liberalization.
SDG 9: Industry, Innovation, and Infrastructure	9.1: Develop quality, reliable, sustainable and resilient infrastructure.	Ethiopian Airlines expanding its cargo fleet; Tanzania and Burundi’s US$2.15B SGR railway agreement; Tanga Port expansion.
SDG 10: Reduced Inequalities	10.a: Implement special and differential treatment in trade.	Mention of a 10% duty on Ethiopia and a 17% US tariff on Zambian imports.
SDG 16: Peace, Justice, and Strong Institutions	16.6: Develop effective, accountable and transparent institutions.	Kenya’s prioritization of governance and structural reforms; Ethiopia’s crackdown on the parallel forex market.
SDG 17: Partnerships for the Goals	17.3: Mobilize additional financial resources.	IMF’s US$3.4B loan to Ethiopia; Kenya’s $1.5B Eurobond and Sh78.3B IMF loan.
	17.4: Attain long-term debt sustainability.	Ethiopia’s $8.4B debt relief agreement; Zambia’s restructuring of 90% of its $13.34B debt.

Source: deloitte.com