AfDB Report: Kigali and Dar es Salaam Lead East Africa's Economic Growth in 2026 Premium

Rwanda and Tanzania showed strong regional performance in 2026, with Rwanda projecting a GDP growth of 7.0 percent and Tanzania moderating to 5.4 percent. Rwanda entered 2026 with strong economic momentum and a generally stable macroeconomic outlook as real GDP growth reached 9.4 percent in 2025, according to the African Development Bank Group. The 2026 African Economic Outlook (AEO 2026) report with its theme, ‘Mobilising Africa’s Development Financing at Scale in a Fragmented World’, attributes Rwanda’s growth to the strong performance across services, construction, tourism, and agriculture. The country has also continued to benefit from sound economic management, International Monetary Fund engagement and access to concessional financing. “Real GDP growth rose to 9.4 percent in 2025 from 7.2 percent in 2024, driven by strong performance in services, construction, manufacturing and agriculture, with domestic demand and public investment underpinning growth,” part of the report reads in part. The outlook remains positive but more constrained, as the Middle East conflict and insecurity in the Democratic Republic of Congo weigh on activity. However, a major challenge to the economic growth was posed by inflation, which increased to 7.2 percent from 4.7 percent, caused by higher oil, fertiliser and transport costs. “However, a proactive monetary stance should reduce inflation to 5.6 percent in 2026 and 4.8 percent in 2027, within the 2–8 percent target range,” the report reveals. Rwanda remains among the East African region’s strongest performers through sustained reforms and investment. Tanzania maintained a strong growth trajectory, with real GDP expanding by 6.0 percent in 2025, up from 5.5 percent in 2024, driven on the supply side by agriculture, mining, construction, and financial services, and on the demand side by robust investment and consumption. The banking sector performed strongly, with private sector credit expanding by 20.3 percent in 2025 and non-performing loans declining from 4.4 percent in 2024 to 3.1 percent in 2025. Tanzania’s real GDP growth is projected to moderate to 5.4percent in 2026, down from 6.0 percent in 2025, driven by global trade tensions and the Middle East conflict, according to the African Development Bank (AfDB) in its Country Focus Report 2026. However, Tanzania’s downside risks include the impact of the Middle East conflict and the global geopolitics that could increase oil and food prices and disrupt export and import supply chains, climate change vulnerabilities, and lingering effects of socio-political tensions. Inflation is projected to rise to 3.8 percent in 2026 and 3.7 percent in 2027 due to the global supply chain disruptions, but remain within the Central Bank’s target. Tanzania maintains robust expansion supported by infrastructure and services. “The 2026 African Economic Outlook (AEO 2026) calls for a fundamental rethinking of Africa’s development financing and policy management,” said Dr Sidi Ould Tah, President, African Development Bank Group during the release of this year’s report. “Its theme, Mobilizing Africa’s Development Financing at Scale in a Fragmented World, underscores an urgent shift from fragmented, policy responses, toward coordinated strategies that unlock the continent’s fiscal, financial, natural, and human resources.” The Bank advised its members to reduce the scale of informality in African economies, which has currently constrained resource mobilisation. On average, the informal sector accounts for nearly 40 percent of Africa’s GDP and could be as high as 50–60 percent in some countries. The AfDB also called for the mobilisation of resources from Africa’s domestic financial institutions, including banks, pension funds, and sovereign wealth funds (SwFs), to manage sizable and growing asset pools, estimated at up to $4 trillion. But out of the $4b, less than 2.7 percent of assets on institutional balance sheets are deployed into long-term productive infrastructure in domestic markets. AfDB therefore advised African countries to address regulatory, market, and pipeline bottlenecks that could catalyse and direct these resources toward infrastructure financing.