Restrictive legal and regulatory policies coupled with poor infrastructure and logistic services are holding back East Africa’s manufacturing sector, says the Africa Development Bank. The East Africa’s manufacturing sector report released on Friday shows manufacturers continue to experience problems in cross border trading and starting and closing a company.

It shows productivity remains inhibited by a problematic energy supply and costly transport due to poor road network, limited availability of rail transport and poor logistics in ports. “From a regional perspective... the poor performance on trading across borders is particularly detrimental to the prospects for achieving rapid industrialisation,” it reads.

The countries that were covered include Kenya, Rwanda, Burundi, Ethiopia, Uganda, Tanzania and Seychelles. According to the report, the contribution of manufacturing in the economies of these countries is relatively small, ranging from 3.8-11 per cent of the gross domestic product, compared to the levels between 30-40 per cent in industrialised countries like China and South Africa.

The report shows manufacturing in East Africa is dominated by food and beverages, largely basic processing of agricultural output and the production of more refined consumer products such as soaps, perfumes and cosmetics.

It shows Kenya has a comparative advantage in food and beverages, leather products, textiles and clothing, and in non-metallic mineral products including cement and ceramics. Rwanda has an edge in processed tea, Tanzania in textiles, Uganda in cement, clay and ceramics and the Seychelles in processed fish products, mainly tuna.

According to the report, the limited role that manufacturing currently plays in Eastern Africa should be a potential source of concern for policy makers and their development partners.

It shows the seven countries will need to address the multiple binding constraints in the legal and regulatory operating environment and in the infrastructure and logistics services in a bid to expand manufacturing to other sectors like electronics and vehicles.