East Africa service industry booms amidst Covid Pandemic

East Africa’s economies are slowly transitioning from agriculture to services. The contribution of agriculture to the region’s GDP went down from an average of 33.4 percent at the turn of the millennium to 28.3 percent in 2018.This was against an increase in the contribution of services to GDP from 44.6 percent in the early 2000s to 53.8 percent in 2018. This movement is more prominent in Seychelles, Eritrea, Kenya and Rwanda where services contribute 80,67, 60 and 47 percent of GDP, respectively. However, services are not the higher value-added activities in the region to trigger the desired structural transformation. In line with this shift, the ILO had estimated that the number of employment opportunities in the region’s service sector would have more than doubled to 40.8 million while those in agriculture would have increased at a slower pace from 56.7 million to 97.6 million in 2020. These estimates are no longer tenable given the ongoing supply and demand shocks related to COVID-19-business disruptions have lowered production while the loss of income, fear of contagion and heightened uncertainty has made people to spend less, thus lowering aggregate demand with the service sector being hit the hardest