Kenya’s economy is falling behind Tanzania’s due to its heavy dependence on raw exports, according to the 2025 African Union Continental Integration Report. The report highlights that Kenya’s limited industrial sophistication and manufacturing growth are key factors slowing down its economic progress and worsening unemployment and poverty levels.
The African Union (AU) notes that the East African Community (EAC) as a whole is performing below the continental average in diversifying its economies and building industrial capacity. The EAC’s diversification score stands at 0.3920, slightly lower than Africa’s average of 0.4072.
Trade within the region remains dominated by raw material exports (0.68), while manufacturing exports (0.3420) significantly lag behind manufacturing imports (0.5986). This imbalance highlights the region’s dependency on importing processed goods rather than developing homegrown industries.
Among EAC countries, Tanzania leads in diversification (0.4457), followed by Burundi and Kenya. On the other hand, Uganda (0.2848), Rwanda (0.2241), and South Sudan (0.2116) trail behind, underlining the need for stronger regional value chains and industrial collaboration.
The AU report recommends that the bloc focus on intra-regional sourcing and manufacturing development to bridge the trade gap. It calls for investment in regional value chains, especially in agro-processing and light industries, to spur job creation and economic resilience.
Improving transport corridors such as the Mombasa and Dar es Salaam routes, the AU says, would also enhance regional integration and competitiveness. Fragile states like Somalia and South Sudan need tailored support in infrastructure and security to participate effectively in regional trade.
Additionally, the AU urges member states to accelerate services trade through digital trade facilitation, skills development, and innovation partnerships building on Tanzania’s industrial success to strengthen the EAC’s overall economic position.
