The Invisible Billions: How East Africa’s Agro-Processing Wealth Vanishes from Farm Budgets — and Why It Matters for 100 Million Farmers

Nakuru, Kenya — When Florence Namukasa harvests her sorghum in Soroti, eastern Uganda, she sells each kilogram at the farm gate for around 1,200 Ugandan shillings. By the time that same sorghum has been malted, brewed, bottled, distributed, taxed, and served in a Nairobi bar as a cold Senator Keg, it has generated wealth worth hundreds of times that price. Yet in the national accounts of both Uganda and Kenya, not a single shilling of that downstream value is counted as agriculture.

It is one of the most consequential accounting blind spots in African economic policy — and it affects virtually every farmer, policymaker, and investor across the East African Community.

A comprehensive new analysis of how international statistical standards classify agro-processed beverages across the EAC has laid bare the staggering cost of this measurement failure. The findings are as striking as they are urgent: because processing, brewing, and distribution are classified under ‘manufacturing’ and ‘services’ rather than agriculture, governments are systematically undervaluing the sector that employs the majority of their citizens — and chronically underfunding the infrastructure that could transform rural livelihoods.

The Statistical Vanishing Act

The root of the problem lies in the International Standard Industrial Classification of All Economic Activities (ISIC Revision 4), the United Nations framework that governs how economic activity is categorised worldwide. Under these rules, agriculture ends at the ‘farm gate’ — the precise moment a biological product is harvested. The instant that barley is malted, bananas are fermented, or cassava is processed into traditional beer, the economic value shifts to ‘Section C: Manufacturing.’

This is not a theoretical problem. Across East Africa, national statistical offices — the Kenya National Bureau of Statistics, Tanzania’s National Bureau of Statistics, and Uganda Bureau of Statistics — all follow this framework. The result is a paradox: when a country succeeds in moving its farmers from subsistence production into supplying a local brewery or processing plant, the resulting increase in national wealth is recorded as industrial growth. Agriculture, by the official numbers, appears to be stagnating or declining.

The implications cascade through every layer of public policy. Agricultural ministries, tasked with modernising the very value chains that generate this wealth, find themselves unable to statistically track their own success. Budget committees, seeing a shrinking share of GDP attributed to farming, allocate fewer resources to rural development. International donors measure their agricultural interventions by farm-gate yields alone, missing the multiplier effects that ripple through processing, distribution, and trade.

What Happens to a Grain of Sorghum

The journey of a single agricultural commodity through the statistical system illustrates the scale of the disconnect:

Only the first row — the lowest-value stage — counts as agriculture. Every subsequent stage, where the majority of the wealth is generated, vanishes from agricultural GDP.

The 10% Budget Betrayal

Under the Maputo Declaration of 2003 and the subsequent Malabo Declaration, African Union member states committed to allocating at least 10 per cent of their national budgets to the agricultural sector. Two decades later, the reality across East Africa remains one of persistent underinvestment. In some years, the agricultural sector has received as little as 1.4 per cent of the total state budget. Uganda’s agro-industrialisation budget share recently declined from 3.3 to 3.0 per cent.

The statistical disappearance of agro-processing value plays a direct role in this funding gap. When a government builds an agro-industrial park or incentivises a brewery to source local sorghum, that expenditure typically falls under ‘Industry’ or ‘Trade’ ministries. Agricultural ministries appear less productive and less central to the economy than they truly are.

The opportunity cost is enormous. Research shows that a 1 per cent increase in the agricultural budget share produces a 1.96 per cent increase in Total Factor Productivity Growth the following year, with cumulative impacts reaching 7.21 per cent over seven years. By failing to capture the full scope of the agri-food economy, governments are systematically underestimating the return on investment for agricultural spending.

The Informal Giant Hiding in Plain Sight

If the formal agro-processing sector is statistically invisible, the informal sector is a phantom. Traditional beverages — urwagwa (banana wine) in Rwanda, tonto in Uganda, mbege and pombe in Tanzania, kimpumu in the DRC — represent the vast majority of alcohol consumption across the region. In Uganda, informal production accounts for an estimated 89 per cent of the total alcohol market. In Tanzania, the figure is roughly 75 per cent.

These are not marginal economic activities. Households involved in home-brewing report that the cash income generated covers school fees, medical treatments, and agricultural inputs for the next season. This production occurs beyond the farm gate but outside the formal manufacturing sector, creating a policy blind spot that leaves millions of rural producers without access to credit, technology, or higher-value markets.

In Tanzania alone, the informal sector is estimated to account for as much as 60 per cent of all business activity. The challenge is particularly acute in the eastern Democratic Republic of Congo, where traditional cassava-based beers are staple products but conflict and lack of formal infrastructure make statistical capture nearly impossible.

Borders, Breweries, and Broken Metrics

The beverage sector is one of East Africa’s most integrated regional industries — yet the statistical framework treats it as fragmented national activity. Cross-border trade in barley, sorghum, and maize is the lifeblood of regional giants like East African Breweries Limited and Tanzania Breweries Limited. In 2024, maize and sorghum accounted for 42 per cent of the major staple foods traded within the region, driven by both food security needs and industrial processing demand.

When a Kenyan brewery sources sorghum from a Ugandan smallholder, the transaction is recorded as an agricultural export for Uganda and an industrial input for Kenya. The deep regional integration inherent in the beverage sector is thus statistically invisible. The EAC Industrialisation Strategy identifies agro-processing as one of six strategic industries, yet the tracking of cross-border agro-industrial clusters remains virtually impossible under the current framework.

The disconnection extends to tax policy. Alcoholic beverages are a critical fiscal lever for EAC governments, generating substantial excise revenues. But these taxes are collected at the point of manufacture or service, further distancing financial gains from their agricultural origins. The revenue is rarely reinvested directly into the irrigation, rural roads, or extension services that would support the very farmers producing the raw materials.

Nation by Nation: The Scale of the Challenge

Kenya’s beverage sector is a central pillar of the Big 4 manufacturing agenda. EABL’s Senator Keg has become a celebrated model for local sourcing, shifting thousands of sorghum farmers from supplying the illicit brew market to the formal economy. Yet when agricultural GDP recovered by 6.5 per cent in 2023, analysts attributed it to favourable weather — not to the booming agro-industrial linkages that the statistics simply cannot capture. Meanwhile, sudden excise tax hikes on value-tier beers can immediately suppress demand for local grains, hurting farmers’ incomes through a mechanism that agricultural policymakers have no statistical line of sight to anticipate.

Uganda is caught in a debate over its income classification, with the Uganda Bureau of Statistics and the World Bank disagreeing on GDP and population measurements. Beneath this dispute lies a deeper problem: the Parish Development Model aims to drive grassroots transformation, yet the massive informal production of tonto and banana wine — a vital rural cash economy — remains largely outside the GDP framework. The agro-industrialisation budget share is declining, not rising, suggesting that processing is still seen as a secondary priority to primary production.

Agriculture contributes as much as 28 per cent of Tanzania’s GDP, making it the economy’s backbone. The Kilimo Kwanza initiative and ASDP II strategy have sharpened the focus on productivity, but the exclusion of small-scale brewers from formal statistics remains a major gap. While Tanzania Breweries Limited dominates the formal market, the informal pombe market is where the majority of rural value addition actually occurs. Formalising even a fraction of this sector could reshape budget conversations.

Rwanda has emerged as a continental leader in agricultural technology, deploying satellite imagery and machine learning to monitor crop growth with remarkable precision. Yet this digital sophistication stops at the farm gate. High-value agro-processors like Skol and Bralirwa remain statistically cordoned off in manufacturing. Rwanda’s PSTA 5 strategy envisions an inclusive innovation system, but measuring its holistic success remains a structural challenge.

The DRC’s entry into the EAC brings enormous agricultural potential alongside formidable data challenges. In conflict-affected eastern provinces, cassava is both a food security crop and a base for traditional brewing — yet the value added beyond the farm gate is almost entirely absent from official accounts. As the DRC integrates into the EAC Customs Union, this statistical gap will complicate tariff negotiations and cross-border value chain development.

The AfCFTA Moment: Now or Never

The implementation of the African Continental Free Trade Area offers a pivotal opportunity to fix what decades of inherited statistical convention have broken. Under AfCFTA’s Rules of Origin, products must typically demonstrate a minimum of 40 per cent local content or substantial transformation to qualify for preferential tariffs. For the beverage industry, this creates a powerful incentive to source raw materials within the continent.

But there is a catch. If national GDP accounts continue to split agriculture and manufacturing into separate silos, governments will struggle to assess whether they are meeting AfCFTA’s goal of productive integration. A country could dramatically increase local sourcing for its brewing industry and see no improvement in its agricultural metrics.

The solution gaining traction among economists and statisticians is the creation of ‘Agricultural Satellite Accounts’ — supplementary statistical frameworks that re-aggregate all activities related to the food and beverage system into a single ‘True Agri-Food Economy’ indicator. This would capture the value created by a grain of sorghum from the moment it is planted in a Ugandan field to the moment it is served as a beverage in a Kenyan bar.

Five Steps to Make the Invisible Visible

First, adopt Agricultural Satellite Accounts. National statistical offices should develop supplementary frameworks that capture the entire agri-food value chain — from the field to the factory floor to the final consumer — as a single economic system. This would give ministries of agriculture the statistical ammunition to advocate for the budgets their sectors deserve.

Second, formalise the informal beverage sector. With informal production accounting for up to 89 per cent of alcohol consumption in some countries, governments must move beyond enforcement-only approaches. Simplified licensing, quality standards support, and integration into formal supply chains would bring millions of rural producers into the economic mainstream — and into the statistics.

Third, unify EAC agricultural and industrial policy. The current disconnect between the EAC Agricultural Policy (2018–2030) and the Industrialisation Strategy (2012–2032) must be bridged. A single agro-industrialisation framework that treats the farmer, processor, and distributor as one economic unit would end the artificial policy divide.

Fourth, reinvest excise revenues in agricultural infrastructure. If beverage excise taxes originate from agricultural raw materials, a portion of those revenues should flow back to the rural infrastructure — irrigation, rural roads, storage facilities, and extension services — that sustains the entire value chain.

Fifth, align measurement with AfCFTA objectives. As the continental free trade area scales, EAC states must be able to track the impact of Rules of Origin compliance on their agricultural sectors. The ‘True Agri-Food Economy’ indicator should become a standard reporting metric alongside conventional GDP breakdowns.

The Wealth Is Real. The Numbers Must Follow.

The structural transformation of East African economies is not a distant aspiration — it is already happening, one fermented grain at a time. From the sorghum fields of Soroti to the breweries of Nairobi, from the banana plantations of Bukoba to the bars of Kigali, agricultural raw materials are being transformed into industrial products, employment, tax revenue, and trade.

The tragedy is that our statistical systems were designed for a world in which farming and manufacturing were separate activities, carried out in separate places by separate people. In East Africa, they are not. The farmer’s sorghum and the brewer’s lager are stages of a single value chain. Until our numbers reflect that reality, the region will continue to underinvest in its most powerful engine of inclusive growth.

The invisible billions must be made visible. For the 100 million farmers whose livelihoods depend on what happens beyond the farm gate, nothing less than a statistical revolution will do.