The East African Community (EAC) is experiencing a wave of financial expansion, with broad money supply increasing by 10.1% in the first quarter of 2025 a sign of rising liquidity and confidence in the region’s economic outlook.
According to the latest EAC Quarterly Statistics Bulletin, the financial sector’s expansion has been bolstered by a significant increase in net credit to government, which jumped by 21.1% year-on-year.
This trend points to sustained fiscal stimulus and public sector borrowing across Partner States, even as trade performance also shows a historic turnaround.
The report, which covers the period January to March 2025, indicates that net foreign assets grew by 18.1%, largely driven by improved external inflows such as remittances and a narrowing trade deficit.
Meanwhile, private sector credit rose by a moderate 5.5%, reflecting a cautious but positive recovery in private investment and business activity.
Household Borrowing Leads as Sectoral Credit Patterns Shift
The household sector remained the EAC’s largest borrower, with outstanding loans reaching USD 13.8 billion.
This was followed by the wholesale and retail trade sector at USD 7.9 billion, underlining the strength of consumer-driven economic activity.
Credit to key economic sectors showed mixed growth. Lending to construction surged by 17.5%, and real estate by 4.8%, suggesting renewed interest in infrastructure and housing development.
Agricultural credit rose by 6.6%, pointing to increased investment in food systems and agro-processing sectors identified as crucial for economic resilience.
However, credit growth to the manufacturing sector was tepid, increasing by just 0.5%. Analysts say this reflects persistent structural challenges in regional manufacturing despite rising exports and trade competitiveness.
Strong Trade Performance Supports Financial Momentum
The Bulletin attributes much of the financial buoyancy to a remarkable recovery in trade. The EAC posted a USD 0.8 billion trade surplus in Q1 2025, a dramatic turnaround from a USD 4.0 billion deficit during the same period in 2024.
Total exports jumped by 47.3% to USD 17.7 billion, while imports rose only modestly to USD 16.8 billion.
The region also recorded its first trade surplus with China at USD 1.8 billion on the back of increased exports and slightly lower import volumes.
Intra-African and intra-EAC trade rose by more than 50%, signalling progress in regional integration and trade facilitation.
Inflation Still a Threat to Stability
Despite these positive developments, inflation remains a pressing challenge. Headline inflation stood at 27.0% in March 2025, down slightly from 30.6% in February, but still well above the 6.7% recorded a year earlier. Core inflation was reported at 28.9%, with food prices still sharply elevated.
The report warns that while financial indicators point to growing economic activity, persistently high inflation, particularly in food poses risks to consumer purchasing power and monetary stability.
South Sudan and Burundi continue to experience extreme inflationary conditions, with annual rates of 99.9% and 20.8% respectively, contributing significantly to the regional average.
The outlook
The combination of expanded money supply, growing credit flows, and improving trade dynamics paints a cautiously optimistic picture for the EAC economy in 2025.
However, policymakers will need to manage inflationary risks and ensure that liquidity translates into productive investment, especially in underperforming sectors like manufacturing.
The EAC Secretariat compiled the Bulletin in collaboration with National Statistics Offices and Central Banks across Partner States. It serves as a key tool for macroeconomic monitoring and regional policy coordination.