Introduction: A Region Forging Its Own Path
May 2026 will be remembered as a month when East African business leaders and policymakers demonstrated remarkable resilience in the face of external shocks. While the closure of the Strait of Hormuz continued to disrupt global supply chains and drive up energy costs, the region responded with a flurry of bilateral agreements, infrastructure investments, and strategic pivots toward intra-African trade. From a $500 million Kenya-Tanzania trade pact to a proposed $17 billion regional oil refinery, and from record-breaking investment conferences to the establishment of major financial hubs, East Africa proved that necessity—and crisis—can indeed be the mother of invention. This article examines the most significant business developments across the region over the past month.
Part 1: Kenya-Tanzania $500 Million Trade Pact
The most headline-grabbing development of May 2026 was the dramatic rapprochement between East Africa’s two largest economies. During President William Ruto’s state visit to Dar es Salaam, Kenya and Tanzania prepared trade and investment agreements worth approximately $500 million, signaling a renewed push to strengthen one of the region’s most active economic corridors .
The agreements emerged from the Tanzania-Kenya Business Forum 2026, which brought together policymakers, investors, and business leaders from both countries. Officials said the platform was designed to translate long-standing diplomatic relations into tangible commercial outcomes, with more than 20 agreements expected across transport, tourism, digital connectivity, agriculture, energy, and logistics . In addition, over 200 business-to-business meetings were scheduled, giving private-sector players opportunities to forge partnerships and secure new contracts.
Bilateral trade between the two countries has already surpassed $1 billion, underscoring their role as central players in the region’s economic landscape. Tanzania contributes natural resources and agricultural output, while Kenya anchors the region’s financial services and manufacturing base .
Most significantly, President Ruto and his Tanzanian counterpart Samia Suluhu Hassan directed the removal of all non-tariff barriers to trade between their countries by the end of May 2026 . Non-tariff barriers—such as customs delays, regulatory inconsistencies, and administrative bottlenecks—have long been cited as key impediments to trade within the East African Community (EAC). Their removal is expected to significantly reduce the cost of doing business and accelerate the movement of goods and services across borders.
Analysts described the engagement as a shift from diplomatic goodwill to implementation-focused economic diplomacy, as East African states seek greater competitiveness amid global supply chain realignments .
Part 2: Kenya-Tanzania Economic Corridor Deepens
Beyond the headline agreements, the Kenya-Tanzania corridor is being positioned as a driver of regional growth. Tanzania’s High Commissioner to Kenya, Dr. Bernard Kibesse, described Ruto’s visit as a defining moment in bilateral relations, highlighting shared history and economic interdependence .
Kenya remains the leading African investor in Tanzania, with firms active in banking, tourism, manufacturing, and agriculture. Officials also highlighted progress in addressing non-tariff barriers, noting that more than 50 have already been removed, with both governments targeting full resolution by mid-2026 .
This deepening relationship has implications far beyond the two countries. The Kenya-Tanzania corridor serves as a gateway for goods destined for Uganda, Rwanda, Burundi, and the Democratic Republic of the Congo, making its efficiency critical to the entire region’s supply chains.
Part 3: AVCA Conference in Nairobi – $4.1 Billion in Regional Investment
Late April, spilling into early May, Nairobi hosted the 22nd Annual AVCA Conference & VC Summit, organized by the African Private Capital Association. The gathering brought together more than 800 leaders from around the world, including CEOs, prominent investors, and senior political leaders, to reshape the forces shaping local and global growth .
The timing was significant. AVCA’s CEO, Abi Mustapha-Maduakor, revealed that East Africa attracted $4.1 billion in investments between 2021 and 2025, with the region’s private capital market undergoing a decisive evolution in recent years. The conference highlighted opportunities across mobility, clean energy, agribusiness, and more .
One of the most noteworthy developments was the inclusion of a dedicated Private Credit Summit for the first time. According to new data from AVCA’s “Private Capital in East Africa” report, total private debt deal volume rose 30% year-on-year in 2025, giving the East Africa region a 36% share of Africa’s total private debt transactions .
Nadia Kouassi Coulibaly, AVCA’s Head of Research, explained: “Constrained domestic lending conditions are set to accelerate the role of private credit in Africa as local-currency structuring gains become more attractive” . This trend is particularly significant for businesses that have struggled to access traditional bank financing.
East Africa is one of the world’s fastest-growing regions, with GDP projected at approximately 6% across 2026-2027—with Ethiopia, Uganda, and Rwanda among the strongest performers globally .
Part 4: AFC Establishes Nairobi Regional Hub
In another vote of confidence for Kenya’s role as the region’s financial gateway, the Africa Finance Corporation (AFC) signed a Host Country Agreement establishing its first regional office in Nairobi during “The Africa We Build Summit” in late April .
AFC plans to deploy and mobilize more than $2 billion across the region over the next three to five years. Focus sectors include logistics and trade corridors, power and transmission, special economic zones, digital infrastructure, and climate-resilient assets .
Since Kenya joined AFC in 2017, the Corporation has committed over $1.3 billion across energy, transport, and industrial projects in the country. Current initiatives include the development of the Dongo Kundu Integrated Industrial Park and Naivasha Special Economic Zone II, as well as ongoing support for the expansion of Jomo Kenyatta International Airport .
President Ruto described the signing as “a pivotal moment in Kenya’s economic development journey,” reinforcing Kenya’s position at the forefront of infrastructure and industrial transformation in Africa .
Part 5: KIICO 2026 – $2.9 Billion in Investment Deals
The Kenya International Investment Conference (KIICO 2026), held in late April, opened with the announcement of over $2.9 billion in investment deals, expected to generate more than 63,000 jobs. The deals span critical sectors including agriculture, manufacturing, mining, healthcare, ICT, real estate, and energy .
Key highlights included:
- $890 million in agriculture and agro-processing projects
- $600 million in manufacturing investments targeting export-driven industries
- $350 million in mining through the Buru rare earth project
- $630 million in real estate developments transforming urban infrastructure in Nairobi and Mombasa
Healthcare investments announced at KIICO 2026 will expand specialized medical services and reduce outbound medical travel, while the deals’ scale and sector diversity signal a maturing investment landscape with increasing alignment to global value chains under frameworks like the African Continental Free Trade Area (AfCFTA) .
Part 6: Trade Diversification Amid Middle East Crisis
Perhaps the most strategic business story of the past month has been East Africa’s response to the ongoing Middle East crisis. With the closure of the Strait of Hormuz pinching import-dependent nations across the region—including Kenya, Ethiopia, Uganda, and Zambia—countries have been forced to adapt .
Speaking at the GTR East Africa conference in Nairobi, Allen Asiimwe, deputy CEO of TradeMark Africa, noted that “new trade routes are being created and new trade partners are being sought” . Phanice Mokua, head of trade at Stanbic Bank Kenya, added that East Africa is “discovering trade corridors we didn’t have 18 to 24 months ago.”
The region is looking to ramp up trade with Asian economies such as China, which last year announced duty and quota-free access for 53 exporting countries in Africa, as well as strengthen commerce with established European partners. There is also “a lot of renewed interest in resource minerals,” with a focus on shifting regional value chains internally—particularly in fish and horticulture .
Intra-East Africa trade hit $7.2 billion in 2024 after a decade of 11.4% annual growth, driven largely by gold, rice, and cement exports. Data from the African Export-Import Bank shows total intra-African trade reached $220 billion in 2024 and is projected to hit $230 billion in 2026 .
Part 7: Dangote’s $17 Billion East Africa Refinery Proposal
In a development that could fundamentally transform the region’s energy landscape, Nigerian industrialist Aliko Dangote proposed a $15-17 billion regional oil refinery during a meeting with Ugandan President Yoweri Museveni in mid-May .
The proposed facility would have a planned processing capacity of 650,000 barrels of crude oil per day and would serve Uganda, Kenya, Tanzania, Ethiopia, South Sudan, the Democratic Republic of the Congo, and other regional markets. Dangote said consultations with governments in the region were ongoing, adding that several locations—including Tanga, Mombasa, and Lamu—were under consideration .
President Museveni expressed strong support for the project, stressing the need for African countries to move away from exporting raw materials and instead focus on local processing to create jobs and strengthen their economies. The regional initiative comes at a time when Uganda is preparing for its first oil production, with development work at the Kingfisher Oil Field nearing completion .
If brought to fruition, this refinery could dramatically reduce East Africa’s vulnerability to external energy shocks—a lesson painfully learned during the current Hormuz crisis.
Part 8: Uganda’s Oil-Centric $20 Billion Budget
Uganda is pivoting toward an oil-driven growth strategy with its proposed $20 billion budget for the 2026/27 financial year. The government expects its first major oil revenues—estimated at over $594 million—to begin contributing directly to national financing as production comes online .
This transition is backed by major upstream and infrastructure developments, including progress on the East African Crude Oil Pipeline (EACOP) and plans for a domestic oil refinery. The strategy aims to reduce reliance on external borrowing while unlocking new funding for infrastructure, industrialization, and long-term economic expansion .
For foreign investors, this marks a shift toward resource-backed economic expansion, where early entry into the oil and gas ecosystem could provide access to large-scale, long-term returns.
Part 9: EAC AI Fund Launched
Beyond traditional sectors, East Africa is making bold bets on technology. The East African Community launched a regional Artificial Intelligence technologies fund aimed at fostering home-grown research and commercializing bankable projects across the bloc .
Announced at the 4th EAC Regional Science, Technology and Innovation Conference in Kigali, the fund signals a strategic shift from merely consuming digital technologies to owning and monetizing AI-driven solutions. EAC member states intend to pool resources to create a unified AI ecosystem, attracting large-scale investment and promoting cross-border ventures .
The fund will finance flagship programs spanning agriculture, fintech, healthcare, and trade, enabling local innovators to transform ideas into commercially viable enterprises. This represents a major opportunity for private investors seeking exposure to high-growth technology sectors in Africa.
Part 10: Digital Integration Agenda Advances
Complementing the AI initiative, EAC Partner States reaffirmed their commitment to advancing regional digital integration as a key driver of economic growth, trade, and innovation. The 3rd Project Steering Committee Meeting of the Eastern Africa Regional Digital Integration Project (EARDIP) was held in Nairobi in early May, bringing together representatives from all eight EAC Partner States .
A parallel media training workshop urged journalists to play a leading role in advancing regional digital transformation by promoting accurate, inclusive, and impactful reporting on digital integration initiatives. The workshop brought together media practitioners from EAC and IGAD member states, communication experts, and digital integration specialists .
Part 11: Intra-EAC Trade at 12.3% – The Challenge Ahead
Despite the positive developments, a sobering statistic emerged from the East African Business Council. According to Ahmed Farah, the Council’s Executive Director, intra-EAC trade reached $19.3 billion in 2025 but still accounted for only 12.3% of total trade .
“Put simply, East Africa is growing, but it is not trading enough with itself,” Farah wrote in an analysis published in mid-May. He warned that fiscal fragmentation—differences in excise duties, VAT treatment, and national levies—continues to keep businesses national when the opportunity is regional .
The EAC Common External Tariff, designed to support industrialization and encourage value addition, has been weakened by multiplying exceptions. By FY2025/26, analysis showed 2,464 tariff lines—more than 41%—affected by stays of application and duty remissions. Farah called on Partner States to publish a CET compliance roadmap and phase out unilateral stays of application .
Part 12: Rwanda Tops Global Profitability Index
In a remarkable achievement, Rwanda was ranked first globally in the 2026 Baseline Profitability Index (BPI) , surpassing India to become the most attractive destination for foreign direct investment. The index evaluates over 100 countries based on factors such as property rights, political stability, corruption levels, and exchange rate reliability—measuring how much profit investors can realistically repatriate over a five-year period .
Rwanda scored 1.27, narrowly ahead of India (1.26), with countries like Malaysia, Botswana, and Qatar following closely behind. Analysts attribute Rwanda’s rise to consistent reforms in governance, fiscal transparency, ease of doing business, and strong enforcement of property rights .
This ranking sends a powerful signal that returns, stability, and policy consistency are increasingly outweighing market size in investment decisions—a lesson for the entire region.
Part 13: The CMA CGM $820 Million Mombasa Port Investment
French shipping and logistics company CMA CGM announced an $820 million investment to modernize and expand two terminals at the Port of Mombasa. This investment will bolster cargo-handling capacity and strengthen regional trade corridors, particularly important given the disruptions to traditional shipping routes caused by the Middle East crisis .
According to projections from the UN Economic Commission for Africa, full implementation of the AfCFTA agreement could boost intra-African exports by 45% by 2045—an additional $275.7 billion—with the biggest gains in industry (48%) and agrifood (60%) .
Part 14: The Road Ahead – Resilience and Opportunity
As May 2026 draws to a close, the picture of East African business is one of cautious optimism tempered by real challenges. The region is growing—projected at 5.6% for the EAC in 2026, above the continental average of 4.3% . Trade is expanding, with total EAC trade rising by 25.4% from $124.9 billion in 2024 to $156.6 billion in 2025 .
Yet the external environment remains volatile. The Hormuz crisis continues to disrupt energy supplies and drive up costs. Fiscal fragmentation within the EAC keeps intra-regional trade stubbornly low. And implementation of signed agreements—from the Kenya-Tanzania barrier removal to the CET compliance roadmap—will determine whether policy intentions translate into business realities.
Still, the past month has demonstrated East Africa’s capacity for strategic adaptation. New trade routes are being forged. Historic rivals are becoming partners. Massive infrastructure investments are moving forward. And the region is making deliberate bets on technology, energy independence, and digital integration that will shape its economic trajectory for decades to come.
As Gabrielle Reid, head of advisory at consultancy Pangea-Risk, noted: “We are in a short-term pinch because of the crisis, but the work is being done for East Africa to benefit in the medium and long term from the opportunities at play” . For businesses and investors watching the region, the message is clear: East Africa is open for business—and it is building resilience on its own terms.
