The promise and peril of regional integration for East African factories
By Philip Mwangangi
Four years after the African Continental Free Trade Area commenced operations, East African manufacturers face a defining contradiction. The agreement promises the world’s largest free trade area by participating countries, 1.4 billion people with combined GDP exceeding $3.4 trillion, yet intra-African trade remains fixed at approximately 16–17% of total African commerce, far below Asia’s 60% or Europe’s 70%.
For manufacturers across Kenya, Uganda, Tanzania, Rwanda, Burundi, South Sudan, the Democratic Republic of Congo, and Somalia, the eight members of the East African Community, this gap between aspiration and achievement reflects a more complex reality than tariff schedules suggest. Whilst both the AfCFTA and the EAC Common Market Protocol establish ambitious frameworks for regional integration, implementation remains constrained by regulatory barriers that prove far more binding than duties ever were.
Agreement architecture: Overlapping ambitions
The EAC Common Market Protocol, operational since July 2010, established foundational mechanisms for free movement of goods, services, labour, and capital amongst member states. The protocol eliminated internal tariffs and instituted a Common External Tariff, creating what should theoretically function as a unified trading bloc. The region’s manufacturing sector contributed approximately 9.7% to GDP in 2023, with ambitions to reach 25% by 2032 under the EAC Industrial Upgrading and Modernisation Programme.
“The EAC’s Industrialisation Policy aims to increase the manufacturing sector’s contribution to GDP from 8.9% to 25% by 2032,” confirms Veronica Nduva, who assumed office as EAC Secretary-General in June 2024, becoming the first woman to hold the position.
The AfCFTA, which entered into force in January 2021, operates at continental scale. By October 2024, 37 state parties had completed ratification procedures, including major economies such as South Africa and Nigeria. The agreement mandates elimination of 90% of tariff lines over five to fifteen years, with member states maintaining flexibility on 10% of goods classified as sensitive or excluded.
Wamkele Mene, Secretary-General of the AfCFTA Secretariat since 2020, frames the challenge starkly: “We are overcoming 60 years of market fragmentation.” Speaking in October 2024, he acknowledged private sector scepticism but noted progress: “In 2022, seven countries were ready. By readiness, we mean they introduced the customs systems, they gazetted the AfCFTA into their national law. This October will be 37.”
Phase II negotiations—covering intellectual property, investment, and competition policy—have advanced substantially. Draft protocols were adopted in February 2024, including a Digital Trade Protocol addressing electronic commerce, cross-border data flows, data protection, and digital payments. Eight annexes were subsequently adopted in February 2025.
For Kenya, the intersection of these frameworks presents both opportunity and complexity. The country released its AfCFTA implementation strategy for 2022–2027, targeting 5% annual real value-added increases in manufacturing. To pilot the Guided Trade Initiative, Kenya exported batteries worth Ksh 9.3 million to Ghana under the AfCFTA framework, whilst the Kenya Revenue Authority procured 1,500 AfCFTA certificates of origin to facilitate exports.
The manufacturing opportunity: Scale economics and diversification
Economic modelling indicates substantial potential gains. Successful AfCFTA implementation could increase Africa’s combined GDP by $141 billion and intra-African trade by 45% by 2045. The manufacturing sector specifically stands to capture $110.3 billion in additional value, representing 8.1% growth compared to baseline trajectories.
“The single continental market is expected to create the economy of scale to attract large-scale investment in manufacturing, regional value chains, and industrialisation,” notes Stephen Karingi, director of the regional integration and trade division at the UN Economic Commission for Africa.
For the EAC specifically, the AfCFTA scenario would increase GDP per capita to $5,477 by 2050, representing a 121% increase over current path projections. This substantially exceeds gains from governance reforms (10% increase) or infrastructure improvements (7% increase).
Brookings Institution analysis suggests intra-African exports could increase 109%, led by manufactured goods, particularly if implementation includes robust trade facilitation measures. The composition matters: manufactured goods already dominate intra-African trade, creating a virtuous cycle where expanded regional markets incentivise industrial investment.
The agreements enable commodity-based industrialisation strategies. Lithium-rich nations such as the DRC and Zambia can move beyond raw material exports towards integration into global value chains for battery manufacturing. West African natural rubber producers can establish tyre manufacturing hubs. South African and Kenyan companies are deploying 3D printing for prototyping and spare parts production, reducing costs and lead times.
In Kenya specifically, manufacturing contributed approximately 7.6% to GDP in 2023, with industrialisation targets to reach 15% by 2030. Priority sectors include textiles, leather, pharmaceuticals, and light engineering, alongside support for micro, small, and medium enterprises, women, youth, and persons with disabilities.
The implementation deficit: Where theory confronts practice
The gap between potential and realisation stems from three structural constraints that tariff elimination cannot address.
Non-tariff measures constitute the binding constraint. UNCTAD assessments for 2023 and 2024 found that divergent sanitary and phytosanitary standards, technical barriers to trade, licensing requirements, and duplicative conformity assessments function as tariffs “in disguise”, imposing costs equivalent to 30–50% ad valorem in certain sectors.
The AfCFTA Secretariat’s Non-Tariff Barrier Reporting Mechanism recorded over 250 active complaints between 2021 and 2024, with resolution often requiring several months. Even where tariffs have been fully eliminated, firms encounter border delays. For manufacturers operating on tight margins and just-in-time delivery schedules, these delays translate into material competitive disadvantage.
Secretary-General Nduva highlights progress on this constraint: “The EAC’s progress in border efficiency through the implementation of One-Stop Border Posts has led to a 70% reduction in border crossing times and generated annual savings of over $63 million. Additionally, 274 non-tariff barriers have been resolved since 2007.”
The procedural dimension proves particularly burdensome for women-led enterprises. Compliance with non-tariff measures under customs clearance takes one and a half times longer for women-owned businesses compared to male counterparts, with female-to-male ratios of 156% for exports and 126% for imports in time taken to clear customs.
Rules of origin create compliance barriers for small firms. Whilst over 88% of rules of origin product lines had been agreed by 2024, utilisation remains extremely low. Small and medium enterprises lack the documentation systems, supply chain traceability, and compliance infrastructure required to qualify for preferential treatment.
This compliance gap undermines the agreement’s objectives. Exporters in textiles, agro-processing, and light manufacturing frequently default to most-favoured-nation regimes because rules of origin paperwork proves excessively complex or slow to certify. For manufacturers, this nullifies tariff preferences that should provide competitive advantage in regional markets.
Customs digitalisation remains uneven across member states. African Development Bank’s Trade Facilitation Index indicates less than one-third of members maintain fully operational single windows, with limited interoperability across borders. Whilst Kenya and Tanzania have developed more advanced customs systems, countries including Uganda and Burundi face institutional capacity constraints and infrastructure limitations.
This heterogeneity creates operational complexity for manufacturers pursuing pan-regional strategies. Each border crossing potentially requires different documentation, varying inspection protocols, and distinct regulatory compliance—precisely the friction that common markets should eliminate.
The EAC paradox: Deeper integration, limited results
The East African Community, with 15 years of customs union experience and 14 years under the Common Market Protocol, illustrates the implementation challenge. Intra-EAC trade declined from 16% to 14% of total trade in recent years, despite protocol commitments to eliminate tariff and non-tariff barriers.
Manufacturing contribution to GDP increased merely 1.2 percentage points between 2004 and 2022, from 10.6% to 11.8%, according to World Bank data. Uganda represents the lone exception, with manufacturing growing from 6.4% to 16.4% of GDP over this period.
The challenges mirror continental patterns but with greater institutional proximity. Labour mobility provisions remain incompletely implemented. Whilst Kenya, Uganda, and Rwanda permit travel using national identity cards, and Kenya introduced a free Class R work permit for EAC nationals in December 2024, Tanzania, DRC, Somalia, Burundi, and South Sudan continue charging EAC citizens for work permits.
Regulatory inconsistencies persist despite harmonisation efforts. The East African Standards Committee oversees development of new standards and harmonisation of existing ones, with the EAC catalogue containing 1,526 standards as of September 2018, of which 1,007 were international. Yet country-specific regimes remain predominant in practice.
Policy responses: Targeted interventions over grand harmonisation
Evidence from the first five years of AfCFTA operation suggests that successful implementation requires moving beyond comprehensive harmonisation towards strategic, sector-specific interventions.
Mutual recognition agreements for priority value chains. Rather than attempting continent-wide alignment of sanitary, phytosanitary, and technical barrier regimes—an administratively impossible task—governments should target high-potential value chains such as leather, pharmaceuticals, and agro-processing. Mutual recognition agreements for laboratories, packaging standards, and certification in these sectors would unlock trade more rapidly than general harmonisation.
East Africa’s success in harmonising pharmaceutical good manufacturing practice standards demonstrates feasibility. Similar approaches could apply to textiles, where Kenya seeks to expand exports beyond the EAC; automotive components, given the integrated motor vehicle industry emerging across the region; and processed foods, where compliance costs disproportionately affect small producers.
Trade finance and local-currency settlement infrastructure. Afreximbank’s Pan-African Payments and Settlement System became operational in West African countries by 2024, but requires continent-wide adoption to reduce dollar-denominated transaction costs. By January 2024, 44 countries had ratified the system, though South Africa maintains reservations regarding trade-payment risks and currency stability.
Dr Gainmore Zanamwe, acting director for trade facilitation at Afreximbank, articulates the institution’s strategic pivot: “We no longer want to see our natural resources exported to faraway lands without adding value. We are now focussing on promoting industrialisation and export development and intra-African trade and the implementation of the AfCFTA.”
Manufacturers consistently cite liquidity constraints and exchange-rate volatility as binding constraints. Pairing PAPSS with blended finance instruments providing pre-shipment and receivables financing for AfCFTA-certified exporters would address working capital gaps that prevent smaller firms from scaling production for regional markets.
Linking tariff preferences to supplier development and productivity support. Morocco and Rwanda demonstrate that effective industrial policy connects tariff preferences with investment incentives, quality-upgrade funds, and targeted skills programmes. These create firm-level productivity gains that make regional value chains economically viable rather than merely politically mandated.
Kenya’s implementation strategy prioritises this integration, though execution will determine outcomes. Supporting women and youth entrepreneurs requires not simply aspirational inclusion but concrete mechanisms: streamlined documentation, access to working capital, and technical assistance for quality certification.
Simplification and transparency for rules of origin. From 2022 to 2024, UNDP and partners supported over 12,000 micro, small, and medium enterprises across 30 African Union member states, with many now accessing new markets. Scaling this success requires reducing compliance burdens through digital certification systems, simplified documentation requirements for low-value shipments, and capacity building for trade facilitation officials.
Mene highlights operational progress: “The number of certificates of origin issued has surged from 13 in 2022 to over 2,600, demonstrating the growth in trade activity under the AfCFTA’s preferential tariff system. The AfCFTA is not only increasing trade volumes but also driving structural economic diversification, shifting economies away from commodity exports towards manufacturing and value-added industries.”
The AfCFTA online mechanism for reporting, monitoring, and eliminating non-tariff barriers provides infrastructure for addressing complaints. However, resolution depends on political will: African governments historically avoid formal disputes with neighbouring states, limiting the protocol’s effectiveness where national commercial interests conflict.
The governance dimension: Political economy of implementation
Implementation challenges reflect not merely technical capacity but political economy dynamics. National governments retain incentives to protect domestic industries through non-tariff mechanisms even whilst supporting regional integration rhetorically.
Kenya and Tanzania’s commercial rivalry illustrates these tensions. Despite decades of integration efforts, trust deficits and competitive dynamics constrain cooperation. The situation intensifies with recent EAC expansion: the Democratic Republic of Congo joined in July 2022, Somalia in March 2024. These states face substantial institutional development requirements before effectively participating in common market mechanisms.
Security concerns further complicate integration. Insecurity from Boko Haram, Al-Shabaab, Al-Qaeda, and Islamic State networks operating across the Sahel, alongside coup d’états and regional instability, undermines the business confidence required for manufacturers to invest in pan-regional production strategies.
The EAC’s November 2024 economic outlook indicates resilience despite these challenges. Regional growth projected at 5.7% for 2025, up from 5.1% in 2024, driven by public infrastructure investments and services sector expansion. Kenya’s GDP grew 4.6% in 2024, with manufacturing expanding 3.2% and contributing 456,000 jobs. The sector expects 3.5% growth in 2025, targeting 500,000 jobs.
“Intra-EAC trade currently stands at 15% of total trade, amounting to $12.2 billion in 2023, indicating that 85% of our trade is still with the rest of the world,” observes Adrian Njau, acting executive director of the East African Business Council. Nduva frames the strategic imperative: “The EAC Heads of State have set an ambitious and achievable target to increase intra-EAC trade from 15% to 40% by 2030.”
Infrastructure investments of $44 million in 2024 boosted intra-EAC trade by 13.4% to $74.03 billion. Projects including Tanzania’s Bagamoyo Deepwater Port and the Lamu Port-South Sudan-Ethiopia Transport corridor promise to transform regional connectivity, though timelines remain uncertain.
Mene articulates the broader vision: “The AfCFTA presents unprecedented opportunities for our continent to continue to break the legacy of colonialism. By eliminating barriers to trade in Africa, the objective is to significantly boost intra-Africa trade, particularly trade in value-added production.”
Implications for ethical business practice
For manufacturers and investors, these dynamics create both opportunities and obligations. The agreements provide legitimate market access and scale economies, but realising these benefits requires engagement beyond mere compliance.
Due diligence on supply chain integration. Pan-regional strategies must account for regulatory heterogeneity, border infrastructure quality, and political risk. Kenya’s relatively advanced manufacturing base and infrastructure provide regional hub potential, but firms must establish contingency plans for customs delays, documentation requirements, and non-tariff measure evolution.
Nduva emphasises the imperative for private sector adaptation: “To reduce protectionism by the EAC partner states, the private sector needs to embrace product diversification, specialisation, and value addition in manufacturing and take advantage of the over 300 million regional markets.” She frames this as requiring “a different drumbeat for intra-EAC trade to thrive under the clarion call of ‘Buy East African, Build East Africa.'”
Inclusive growth considerations. The 83.6% informal workforce in Kenya highlights broader challenges of ensuring trade benefits reach beyond established manufacturers. Supporting supplier development, particularly for women and youth entrepreneurs, represents both commercial opportunity—accessing diverse supplier networks—and ethical responsibility.
Mene underscores this dimension: “For the AfCFTA to deliver its promise for young people, it is critical to equip young people with the right skillsets and expertise to be competitive in the job market and to create a vibrant entrepreneurship ecosystem. Young people should be provided with the means to improve their capacity to produce and export products and services and to be integrated into regional and continental value chains.”
Sustainability integration. The EAC’s combined scenario for accelerated development would increase carbon emissions 67% to 214 million tonnes by 2050, compared to 128 million tonnes in baseline projections. Manufacturers pursuing regional strategies must integrate climate considerations: renewable energy adoption, circular economy principles, and efficiency improvements that decouple growth from emissions.
The path forward: Pragmatism over perfectionism
Five years into AfCFTA implementation and 14 years under the EAC Common Market Protocol, evidence suggests that trade integration delivers results through incremental, sector-specific progress rather than comprehensive harmonisation.
Economic modelling demonstrates substantial potential: the AfCFTA could lift 32 million Africans from extreme poverty by 2043, with manufacturing and services capturing the largest sectoral gains. For the EAC specifically, full implementation would reduce extreme poverty by 6.8 percentage points compared to baseline scenarios—exceeding gains from manufacturing policy alone (4.7 percentage points) or governance reforms (2.9 percentage points).
Yet potential remains contingent on execution. Manufacturers require functioning customs systems, workable rules of origin, and non-tariff barriers that reflect legitimate regulatory objectives rather than protectionist intent. Achieving these conditions demands sustained political commitment, technical capacity building, and institutional strengthening—unglamorous work that determines whether ambitious legal frameworks translate into commercial reality.
For Kenya and its EAC partners, the manufacturing opportunity is real but not automatic. Regional markets provide scale that no single country can offer. Raw materials, youthful demographics, and improving infrastructure create foundations for industrialisation. The question is whether institutions can evolve rapidly enough to match private sector ambition.
The answer will shape not merely trade statistics but development trajectories for a region where manufacturing employment, productivity, and inclusive growth remain interlinked imperatives.
Sources consulted include: AfCFTA Secretariat, African Development Bank, African Union, Afreximbank African Trade Report 2024, Brookings Institution, East African Community Secretariat, Institute for Security Studies African Futures, KIPPRA, UNCTAD, UNDP, UN Economic Commission for Africa, World Bank, and World Trade Organization.
Related SDGs: SDG 8 (Decent Work and Economic Growth), SDG 9 (Industry, Innovation and Infrastructure)
