The African Development Bank (AfDB) has released its 2026 East Africa Economic Outlook and 2026 Kenya Country Focus Report, presenting a roadmap to help the region sustain strong economic growth while mobilising the finance needed to create jobs, strengthen resilience and accelerate structural transformation, according to a press release. The combined report launch was held on 28 July at the Bank Group’s East Africa Regional Office in Nairobi. East Africa remains the continent’s fastest growing region for the second consecutive year. Regional growth accelerated from 4.3 percent in 2024 to an estimated 6.6 percent in 2025. Growth is expected to moderate to 5.9 percent in 2026 as higher energy prices, geopolitical tensions, and tighter global financial conditions weigh on economic activity.
The 2025 acceleration was supported by resilient private consumption, increased public and private investment, stronger agricultural production and a continuously growing services sector. Despite this resilience, East Africa must fundamentally change how it finances development, the regional outlook pointed out. The region faces an annual development financing gap of $119 billion. The report notes that stronger domestic resource mobilisation, deeper capital markets, improved public financial management and greater private sector participation will be essential. These measures are needed to finance infrastructure, industrialisation, climate resilience and employment over the coming decade.
Across the region, the report highlights diverse economic opportunities. Burundi is gradually strengthening economic activity despite fiscal constraints, while Comoros is making gradual progress despite its small economic base. Djibouti continues to leverage its strategic logistics position, and Eritrea continues to record substantial current account surpluses. Ethiopia continues to benefit from strong investment and reform driven growth, while Rwanda remains among the region’s strongest performers. Seychelles maintains sustained growth through tourism, Somalia is pursuing recovery amid continued structural challenges, and South Sudan is benefiting from renewed oil production but remains vulnerable to instability.
Sudan is showing signs of modest recovery supported by agriculture, services and localized reconstruction activities, while Tanzania maintains robust expansion supported by infrastructure and services, and Uganda continues to post resilient growth backed by investment and domestic demand. Panelists said weak institutional frameworks was the primary constraint to transformational growth. “Resilience cannot be achieved through isolation,” Eva Ruganzu, the Bank’s East Africa Regional Implementation Support Manager, said during her opening remarks on behalf of Director General Alex Mubiru. She added that it requires countries to strengthen their domestic capabilities, while also deepening regional cooperation, pooling opportunities, and mobilising capital at greater scale. Betty Maina, East Africa Director for Genesis Analytics, also called for a regional value chain mindset to reduce fragmentation.
The economic outlook recommends a phased reform agenda to spur widescale economic growth. In the short term, East African governments are encouraged to strengthen tax administration, improve public expenditure efficiency and reduce illicit financial flows. Medium term priorities include expanding public private partnerships, mobilising pension and diaspora capital, and developing stronger pipelines of bankable projects. Over the longer term, the region should deepen financial integration, strengthen local currency capital markets and reinforce regional financial institutions. For Kenya, which faces an annual development financing need of approximately $14.2 billion and an annual estimated financing gap of $12.5 billion by 2030, the Bank recommends restoring fiscal credibility, strengthening domestic revenue mobilisation and expanding infrastructure and green finance.