Analyses & Studies

Report | EAIO Economic Newsletter - Artificial Intelligence

The monthly East Africa and Indian Ocean (EAIO) study has been published by the French Treasury. This month's letter focuses on artificial intelligence in EAIO.

Here's a brief description:

Artificial intelligence in EAIO: A developing sector offering opportunities and challenges, with uneven progress across countries.

Artificial intelligence represents a significant economic and social development opportunity for the East Africa and Indian Ocean (EAIO) region. However, its adoption remains highly unequal across countries. While Mauritius, Rwanda, and Kenya are at the forefront of AI innovation on the continent, countries like Comoros and Uganda rank among the lowest globally in AI readiness. At the regional level, East African countries support the African Union’s AI strategy, having endorsed the Nairobi Declaration in 2024. Recognizing AI’s economic potential, all EAIO countries have developed strategic plans, yet their success depends on digital infrastructure and a skilled workforce—often supported by international donors. Kenya has positioned itself as a low-cost hub for moderating and training generative AI models, leveraging its predominantly renewable electricity as a competitive advantage. However, significant challenges persist, including the lack of a unified legal framework, limited availability of usable data, connectivity issues, and insufficient research investment.

Focus on Tanzania: progress in AI development but structural challenges remain.

Tanzania has begun to explore AI’s potential, but progress remains limited compared to regional leaders like Kenya and Rwanda. The country benefits from growing digital infrastructure and an increasing number of AI-related initiatives, particularly in agriculture and financial services. However, challenges such as limited internet penetration, a shortage of AI-skilled professionals, and the high cost of electricity hinder large-scale adoption. While Tanzania has expressed interest in aligning with regional AI policies, the absence of a clear national AI strategy and regulatory framework slows progress. International support, including funding for digitalization projects and start-up incubation, provides opportunities for growth. To fully capitalize on AI, Tanzania needs targeted investments in education, infrastructure, and governance to foster an innovation-friendly environment.