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THE STATE OF EAST AFRICA REPORT SERIES

The State of East Africa Executive Report-2013

The State of East Africa 2013 11
Economic policy: Strengthening the local economy, raising domestic demand,
increasing value addition.

A major economic policy objective should be to increase productive capacity and promote product diversification (what to produce), foster horizontal and vertical integration across and among sectors (how to produce), multiply growth poles across the East African region (where to produce), engage in market development, trade promotion and facilitation (where to sell).

The average size of economic actors in East Africa is either very large or very small. The presence of a “missing middle” is a strong indicator of how difficult it is for the majority of economic actors, such as subsistence farmers and informal traders, to move beyond survival entrepreneurship. A new approach could be that of creating and promoting a new generation of economic actors who are skilled competitive and “fit to run” on a playing field that is level due to regulatory clarity and fairness.

Governments could invest in capabilities (such as vocational training, skill development, technology transfer), create mechanisms for start-up and scale-up support (including business incubation units, incentives, new financial instruments), and actively engage in market development and trade facilitation (using pro-youth and pro-women public procurement policies, minimum local content regulation, product cluster promotion boards and export consortia).