AU report gives major reason why Kenya’s trade is lagging behind Tanzania’s
By Aloys Michael, October 28, 2025Kenya trails Tanzania in trade diversification, clinging to raw exports that stifle growth and entrench poverty, an African Union report warns.
This comes even as President William Ruto continues to raise caution about over-reliance on food imports, costing the country over Ksh500 billion annually, which he says is not just economically unsustainable, but a serious threat to national sovereignty.
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“We cannot speak of prosperity while spending over 500 billion shillings every year importing food into Kenya, including maize, wheat, rice, sugar, edible oil, among many. This is not just an economic burden to us. It is a threat to our sovereignty,” he said during the Mashujaa Day fete in Kutui on Monday, October 20, 2025.
To reverse this trend, Ruto said the government plans to modernize agriculture through irrigation, aiming to bring at least 2 million acres under irrigation by constructing 50 mega dams countrywide.
Even so, the 2025 African Union Continent Integration Report says the East Africa region is generally punching below the continental average in accelerating its economy through sophistication and expanding its economy.
Kenya is particularly doing poorly in the bloc, with a less sophisticated economy that trades mainly on raw inputs, it says.
This means the country is doing poorly in industry and manufacturing development, hence generating fewer jobs, which are crucial in fighting joblessness and poverty.
The EAC’s diversification score (0.3920) remains slightly below the African average (0.4072). Trade is still dominated by raw materials (exports: approximately 0.68), while manufacturing exports (0.3420) lag behind imports (0.5986).
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) score low, highlighting the gap between trade intensity and sophistication, the report says. Intermediate goods trade remains weak, and regional production networks are underdeveloped.
Trade imbalance
The report recommends that the regional bloc should address its trade imbalance by promoting intra-regional sourcing and boosting manufacturing capacity.
“Regional value chains in agro-processing and light industry could help close the import-export gap. Enhancing transport corridors (eg, Mombasa and Dar es Salaam routes) is vital for deeper integration,” it reads in part.
“Services trade should be accelerated through mutual recognition of qualifications and digital trade facilitation. Finally, industrial coordination focused on skills and innovation, building on Tanzania’s strengths, could improve regional competitiveness.”
AU says that fragile states like Somalia and South Sudan require tailored support, including infrastructure and security cooperation.