A detailed report on the impact of COVID 19 in the East African Community (EAC) has offered a raft of measures to safeguard the gains made as the region proved relatively resilient to vagaries of pandemic compared to global standards.
Findings of the report indicates a region rapidly bouncing back to recovery. Although aggregate exports from the region declined sharply in April, shortly after the region reported its first pandemic cases, most of the EAC Partner States’ exports surpassed their 2019 levels, by the third quarter.
Mombasa and Dar es Salaam ports also recorded significantly low volumes of imports in the month of April and May, due to the lock down measures that the partner states adopted.
“But the imports of all the EAC Partner States subsequently recovered to pre-pandemic levels by the second half of 2020, after governments’ lockdown restrictions were eased and a broader global trade recovery started to take place,” the report ‘ Waving or drowning? The impact of COVID 19 on East Africa Community trade said in part.
In the initial months after its onset, the pandemic triggered massive supply and demand shocks in China- the country where the virus was first detected. Due to the complexity of integrated value chains between China and the rest of the world, the pandemic’s adverse impact on the Chinese economy had an almost immediate ripple effect on global trade.
By the second quarter of 2020, the virus had spread globally, provoking stringent border controls, a generalised economic activity slowdown and provoking a global trade contraction.
Currently, about 20 percent of global trade in manufacturing intermediate products originates in China, up from 4 percent in 2002. Similarly, imports of manufactured products from China to EAC account for about 32 percent of the total, compared to the 6 percent of the total in 2002.
The report, done with the support of TradeMark East Africa (TMEA); the United Nations Economic Commission for Africa; Sub-Regional Office of Eastern Africa (UNECA SRO-EA) and the African Economic Research Consortium (AERC) observed that despite this recovery, the pandemic has had some significant negative impacts on other aspects of regional trade.
For instance, in Uganda, informal cross border trade collapsed from an average of USD 44 million in the first quarter of the year to USD 1.15 million by the end of November 2020.
“Regional borders remained closed for most informal cross-border traders, impacting negatively on the livelihoods of the communities that depend on such trade,” the report observed.
Too, the crisis has negatively impacted on some traditional exports such as tea, which dropped from May. Coffee exports from Kenya and Tanzania followed a similar trend. Nonetheless, Burundi, Rwanda, Uganda, and Tanzania registered large increases in mineral exports.
The report calls for urgent policy action from the EAC Partner States in several areas. It notes that despite the growing fiscal pressures, regional governments should continue to provide financial and regulatory support to key export sectors.
“The pandemic is far from over, and ring-fencing crucial export sectors from lockdown measures may still be necessary,” it said.
The pandemic has exposed the vulnerability of certain global value chains and the relative resilience of intra-regional trade attests to the importance of strengthening regional value chains (RVCs), particularly as the region moves into the implementation stage of the African Continental Free Trade Area (AfCFTA), which commenced in 1st January this year.
Governments and other relevant stakeholders should address the challenges facing informal cross-border traders, the report offers. The pandemic has had a severe negative impact on communities that are heavily dependent on informal cross-border trade, exacerbating, particularly, the challenges faced by women traders.
The report further recommends that the EAC Partner States should support the development and implementation of technological innovations to address the bottlenecks that have arisen during the crisis along the Northern and Central Corridor.
“One case of good practice is the Regional Electronic Cargo and Driver Tracking System (RECDTS), which facilitates the issuance of the EAC COVID-19 digital certificates mutually recognised by the Partner States, and thus contributes to reducing delays at border points.
The report warns that, from a trade perspective, the region is still not out of the woods. The pandemic’s rapidly evolving nature and its spillover effects may present a significant threat to trade and commerce within the EAC over the coming years. Partner States must continue with a coordinated approach to addressing the pandemic’s challenges.
