The East African Business Council (EABC) has recommended a raft of measures the regional states should adopt to cushion agri- businesses from the Covid-19 shock. It is vital that the efforts and strategies put in place to tackle the pandemic are implemented at a regional level rather than national scale, the council said.
“Collective action can help protect the most vulnerable countries and prevent the economic and social kick-back from the pandemic being a real disaster. Further, funds are needed from financial institutions, to provide liquidity to struggling agri-businesses to recover from the pandemic” EABC said in a recent brief on the impact of Covid-19 on agriculture.
There is a clear opportunity for both technology companies and investors to not just help revolutionize Africa’s agricultural industry and food supply systems but also tap into a potentially lucrative market. There is also need for the liberalization of the East African Community (EAC) airspace, such that regional and international cargo carriers can pick consolidated products for export from each Partner State to Europe, Asia and America where they have substantial and consistent demand.
EABC is also pushing for an economic stimulus to help agricultural producers and traders to recover from production and export shocks and need for concerted effort to ensure employers in the sector protect jobs in a way to maintain available skills and promote continuity and sustainable growth of the sector.
Restrictions on movement of people has prevented farmers from accessing markets resulting in food waste. In many countries, farmers are now unable to sell their produce in local markets or to local schools, restaurants, bars, hotels and other leisure establishments, which have been temporarily closed.
There are fear of massive loss of exports markets in the affected regions that include East Asia, middle East and Europe due to the current trade and travel restrictions. The exports likely to be affected most include horticultural produce, tea and coffee, mineral ores, fruits, among other products.
With local food supply chains disrupted, many would naturally rely on imports but many governments around the world have closed their borders to trade and travel. This has prevented farmers from being able to distribute their raw or processed foods both nationally and internationally.
For instance, the recent temporary suspension of one of the world’s largest tea auctions in Mombasa, Kenya, where tea from many eastern African countries is traded, if arises again, could have a devastating effect on local, national and regional economies.
The East Africa Tea Trade Association, postponed auction-12, the secondary auction of Monday 23rd and primary auction of Tuesday 24th April. This auction has offerings from Kenya, Uganda, Tanzania, Rwanda, Burundi, Democratic Republic of Congo, Malawi, Madagascar, Mozambique, and Ethiopia. The disruptions of the tea auction would have great repercussions on the entire value chain of tea across the region.
The immediate impact has been felt in various supply chain, including factories, warehouses and transporters, as well as farms, which have been forced to stop production and lay off pluckers, who are often among the most disadvantaged workers and highly vulnerable to economic recess.
In Kenya alone, tea provides livelihoods to some 600,000 small-scale farmers and wage workers; whereas in Malawi, the sector is the second largest formal employer after the government.
In March 2020, Kenya’s 170 horticultural farms ran seriously low on cash losing over 250 million shillings ($2.3 million, 2.1 million euros) a day.
According to World Food Programme (2020), Economic and food security implications of COVID-19, the countries in the region are highly exposed to spillover effects of demand shocks in export destinations as most of East African exports go to China, Europe and America.
With the ongoing global economic crisis, any disruption in exports is likely to have serious adverse impacts on local economies and livelihoods. This could result in economic decline with South Sudan and Kenya likely to be most affected.
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