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EAC and Industrialisation & SME Development

The EAC Partner States aspire to transform their economies to a modern and industrialised status that can sustainably generate sufficient outputs to satisfy both domestic and export markets and rapidly increase per capita incomes to improve the living standards of their people. The industrial sector has the potential to contribute significantly to the economy by creating jobs, stimulating the development of other sectors like agriculture and services, increasing foreign exchange earnings, and modernising the lives of people. To address the challenges of industrial development, regional cooperation needs concerted efforts to create an effective policy coordination framework geared towards eliminating barriers to growth and enterprise upgrading at national and regional level. These efforts will also facilitate the identification of leverage elements that can be harnessed to accelerate the industrialisation process in each Partner State.

EAC-GIZ SUPPORT

Pharmaceuticals


The pharmaceutical manufacturers operating within the EAC region generally produce at a cost disadvantage to larger international generic product manufacturers due to a variety of reasons including scale, expensive asset bases coupled with older technology, higher financing costs plus a lack of integration with active pharmaceutical ingredients suppliers. Other challenges facing the local pharmaceutical production industry in East Africa include shortages of skilled professional personnel and unreliable supporting infrastructure such as electricity, water and transport. To change this, the EAC has prioritised the pharmaceutical sector in the EAC Regional Industrialisation Policy and Strategy (2012-2032). Furthermore, the EAC aims to reverse dependency on pharmaceutical imports from more than 70% currently to less than 50% by 2027.

Projects:

Objective: Strengthening regional industrial value addition in the pharma sub-sector.

Approach: SEAMPEC supports the EAC Secretariat in implementing the EAC Regional Pharmaceutical Manufacturing Plan of Action 2017 -2027 with the goal of removing barriers to market access for pharmaceutical manufacturers and enhancing the supply of high-quality medicine in the region. The project works closely with the respective Technical Committees of the EAC Secretariat, the Regional Steering Committee, and the six National Coordination Committees. Additional key actors include the Federation of East African Pharmaceutical Manufacturers (FEAPM), national ministries, national medicines procurement agencies, regulators and pharmaceutical manufacturers.

SEAMPEC offers technical support and guidance to strengthen institutional capacities of key actors. Additionally, the project facilitates and strengthens multi-sectoral stakeholder platforms, supports policy dialogue by building FEAPM’s capacities to promote the interest of EAC pharmaceutical manufacturers and facilitates consultative meetings at national and regional levels. SEAMPEC focuses on monitoring and evaluation to monitor the progress achieved and cooperates with related programmes within German Development Cooperation and beyond to create positive synergies and maximise the project’s impact.

This part of SEAMPEC is implemented by GFA Consulting Group.

Find more information on SEAMPEC here.

Leather Agro-Processing


The leather sub-sector is strategic to the agro-processing/manufacturing priority of the EAC and constitutes more than 22% of intra-EAC trade. The industry faces many challenges, including poor production and processing practices, resulting in variable quality, high value leakage, environmental contamination, and low investment – all of this compounded by a weak enabling environment. The EAC is addressing those challenges through the newly developed EAC Strategy and Implementation Roadmap for Leather, Leather Products and Footwear. EAC-GIZ is supporting the strategy implementation through multiple initiatives aimed at improving production skills and quality, export and cross-border trade. A focus lies on priority regional framework conditions for value addition to improve the sub-sector’s competitiveness. Beyond this, German companies have provided coaching and mentoring in production skills and new design ideas facilitated by EAC-GIZ and are partnering with local companies to create top quality leather products together.

Projects:

Objective: Strengthening regional industrial value addition in the leather sub-sector.

Approach: SEAMPEC supports priority regional framework conditions for value addition to improve the leather industry’s competitiveness through:

  • Supporting the implementation of the EAC Strategy and Implementation Roadmap for Leather, Leather Products and Footwear (2019-2029).
  • Facilitating implementation of harmonised leather products standards such as Good Manufacturing Practices and Codes of Practices.
  • Assisting the implementation of harmonised trade facilitation processes (customs procedures).
  • Support to private sector value addition and trade initiatives in the sub-sector for deepening inclusivity and partnerships.

This part of SEAMPEC is implemented by GFA Consulting Group.

Find more information on SEAMPEC here.

Fruits and Vegetables Agro-Processing


The agricultural sub-sector of fruits and vegetables presents strategic opportunities for deepening regional cooperation. It offers the most direct employment of agro-manufacturing industries – employing more than 85% of rural households and providing high per unit resource productivity and returns. Furthermore, the sub-sector provides raw materials for processing industries and high product export value. It contributes more than 4% of intra-regional trade and 32% of EAC export trade, earning the region an average annual revenue of more than USD 134 million. Projections foresee a compound annual growth rate of 6% to reach some USD 1.3 billion in the next ten years. For those reasons, the F&V sub-sector is a priority in all EAC Partner States since it provides potential for addressing employment challenges especially among youth and women. However, the lack of vertical integration in the sector is quite significant in almost all Partner States due to the prevailing initial development process of industrialisation in the region. In addition, the sub-sector suffers from limited processing technologies for value addition. Preservation is often difficult as the raw material base is very expensive given the fragmented nature of small-scale producers. The packaging activities are underdeveloped, and the sector has not attracted significant investments. To tackle those challenges and utilise the opportunities offered by the sub-sector the EAC has developed and is now implementing the EAC Fruit & Vegetable Strategy and Action Plan.

Projects:

Objective: Strengthening regional industrial value addition in the fruits & vegetables sub-sector.

Approach: SEAMPEC supports improved framework conditions through the development of the EAC Fruit & Vegetable Strategy and Action Plan (F&VSAP 2020-2030). This plan aims at:

  • Better coordination and steering of the future development of the EAC F&V sub-sector. 
  • Identifying and prioritising regional trade promotion in high value processed products through identifying gaps, training and implementation of select product standards and transparency measures.
  • Strategic training and implementation of harmonised customs procedures.
  • Support to inclusive private sector networking and advocacy to promote trade integration for sustainable and equitable industrial development.

This part of SEAMPEC is implemented by GFA Consulting Group.

Find more information on SEAMPEC here.

RESULTS OF INDUSTRIALISATION AND SME DEVELOPMENT

The implementation of the EAC roadmap for pharmaceutical manufacturing contributes to an efficient regional pharmaceutical industry supplying national, regional and international markets with locally produced quality medicines
For the leather sector, a joint strategy has been developed to increase employment in the sector and along the value chain from 18 million people in 2018 to 25 million people by 2027
A newly established regional action plan for fruits & vegetables lays the foundation to raise the total revenue for the sector from USD 134 million in 2018 to USD 1.3 billion by 2027

SECTORS