UNDP: Trade Reforms May Boost Horn of Africa GDP 3.9%

New York, 12 December 2024 - The Horn of Africa (HoA) holds great potential to drive transformative growth and resilience through stronger trade, better resource management, and enhanced governance, according to the first-ever Human Development Report for the subregion, which presents a bold roadmap for Djibouti, Eritrea, Ethiopia, Kenya, Somalia, South Sudan, Sudan, and Uganda to harness their resources for lasting development.

The United Nations Development Programme (UNDP) launched the report today during a global webinar featuring speakers from the Office of the UN Secretary General's Special Envoy for the Horn of Africa, the Intergovernmental Authority for Development (IGAD), the International Food Policy Research Institute (IFPRI), the Ministry of Economy and Finance of Djibouti, the Federal Ministry of Family and Human Rights of Somalia and the Ministry of Water and Environment of Uganda.

"Countries of the Horn of Africa have abundant human and natural resources that remain untapped. Seventy percent of the region's population is under the age of 30," said Abdallah Al Dardari, United Nations Assistant Secretary General and Director of UNDP's Regional Bureau for Arab States. "If the subregion leverages well its tremendous renewable energy and water management opportunities into providing its youth with quality education and employment, it could make a forward leap on inclusive growth, unlock great development potential, and build resilience to future shocks."

The Horn of Africa Human Development Report 2024, "Enhancing Prospects for Human development through regional Integration," examines key challenges to human development in each of the eight countries and in the subregion, as well as prospects for addressing those challenges to advance development progress.

The Report notes that Human Development Indices (HDI) in the subregion fall below Sub-Saharan and global averages-revealing significant disparities. Only Kenya and Uganda rank as medium human development countries, while South Sudan and Somalia rank last out of 193 countries. And when adjusted for inequalities (gender, income and education) HDI scores are further diminished.

From vulnerability to opportunity

The Report highlights key challenges in the subregion, including high unemployment, especially for youth, due to limited socio-economic opportunities, informal labour markets, and inadequate vocational training; gaps in access to water and energy, with over a third lacking safe drinking water, and wide dependence on biomass for cooking; wide-spread food insecurity exacerbated by drought, conflict, and economic instability; and prolonged conflicts, climate shocks, and resource disputes displacing millions, undermining livelihoods and stability. Yet, the report also points to promising, interconnected solutions that could transform the region.

"The Horn of Africa is often only seen as a region of vulnerability, but this must change," said Ahunna Eziakonwa, United Nations Assistant Secretary General and Director of UNDP's Regional Bureau for Africa. "This report shows how the subregion can pivot towards opportunity, stability, and inclusive growth, putting its people on the path to achieving the 2030 Agenda for Sustainable Development. The future of the Horn of Africa lies in unity, bold reforms, and shared opportunities."

Promising triad: Potential for prosperity and human development

The report presents three priority areas that can accelerate human development, build resilience, and buffer against future shocks and challenges, namely increasing intra-regional trade; enhancing collaboration in the interlinked water, energy and food sectors; and promoting governance and peace. All three areas require regional cooperation to be effective.

Increasing intra-regional trade: Currently complex regulations, inadequate infrastructure, informality, political instability, and conflict curtail trade between countries of the subregion to just 12% of exports and 6% of imports. Yet, the Report highlights that complementary export profiles among HoA countries, especially in agriculture and light industry, offer opportunities to enhance food security, reduce trade deficits, and diversify economies. It also suggests that if fully implemented, the African Continental Free Trade Area agreement, which became effective since 2021, could boost trade by eliminating tariffs and reducing non-tariff measures.

Using economic modelling, the report suggests that trade liberalization within the sub-region, with removal of tariffs and non-tariff measures, can increase regional GDP by 3.9% and create one million new jobs by 2030. Redirecting half of such GDP gains towards public education and health could significantly advance human development. To unlock these benefits, HoA countries need to prioritize regional cooperation, effective policy implementation, and substantial investment in infrastructure that can foster economic interdependence and facilitate trade, such as investments in transport and logistics.

Collaborative natural resource management: Severe droughts, including the worst in 40 years (2018-2023) have plagued the subregion and caused significant livestock losses and acute food insecurity for millions. Significant gaps in energy access remain despite the high share of renewables in the subregion's energy mix, largely from hydropower but with growing investments in solar, wind and geothermal.

The report highlights that improved regional collaboration on resource management and infrastructure development along the water-energy and food nexus is critical for fostering sustainable growth and climate resilience - improving access to energy, especially electricity; shared transboundary water systems and strengthening food value chains by leveraging frameworks like the African Continental Free Trade Area agreement.

Fostering effective governance and peacebuilding: the Report highlights that enhancing governance and peacebuilding in the HoA will require prioritizing inclusivity, accountability, and human rights, while leveraging regional mechanisms to ensure sustainable development and stability. It points out that local governance efforts in some HoA countries, such as devolution and decentralization, have empowered citizens and improved accountability, while transparent and inclusive electoral processes have helped build citizens' trust in the State. It further suggests that stronger economic ties between HoA countries can deepen commitment to regional stability while border governance initiatives, like the African Union's Border Governance Strategy, can help prevent militarization and foster transboundary cooperation.

The Report calls on governments, regional organizations, and development partners to prioritize investments in infrastructure, resource management, and policy frameworks that advance human development and resilience. The evidence is clear: a collective commitment to regional integration, sustainable resource management, and improved governance can turn the Horn of Africa into a model of resilience and progress.


For more details, please review the full report here

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