The Covid 19 pandemic is gaining prominence as a game changer that will trigger regional economies in producing industrial products that are not easily available from the traditional markets due to interruption in the supply chain and the high global demand that has led to scarcity.
When Covid 19 cases started being reported, the regional economies were confronted by a two-pronged supply chain crisis- initially, there was limited supply of stock due to closure of key source markets due to lockdown and disruption of the supply chain. The manufacturers also faced a crisis since they could not access markets such as AGOA, which were closed.
The Kenya Association of Manufacturers (KAM) did a survey about a month and a half ago that revealed that 76 percent of the manufacturers in Kenya found it hard to source materials locally or imports with 67 experiencing challenges of accessing markets for their stock.
The Brookings Institute projects that Africa will record a loss of 2.1% points or more in GDP growth if the novel coronavirus takes hold. Other estimates predict that Africa’s economies could record a loss of between $90 billion and $200 billion this year (2020). According to a recent publication by the African Union, the pandemic could cause up to 20 million job losses.
These two supply chain challenges that faced the economies in Africa opened up the eyes of the industry stakeholders who have now made some significant strides on how to produce essential products especially medical related commodities.
Dr. Christopher H. Onyango, Director, COMESA Trade and Customs said that the block adopted Covid 19 guidelines on May 14 this year, to prevent the spread of Covid 19 as well as stimulate economic growth, which have since brought significant gains. He said this in a virtual meeting hosted by KTN News, a Kenya TV stations, to discuss regional trade and Covid 19.
The guidelines were also established to safeguard the gains that had been made with the COMESA trade agreements to ensure that they were not eroded by the restrictions member states had put in place to prevent the spread of Covid 19, which Onyango said were justifiable based on the then prevailing circumstances.
“The guidelines focused on facilitating Member States to produce and trade amongst themselves. This was a wakeup call that in as much as we have an external market, our markets were equally important,” Onyango said.
The KAM Chief Executive Officer (CEO) Ms. Phyllis Wakiaga noted that the COMESA intra-trade stood at an abysmal level of only 10 percent, which compares poorly with the European Union (EU) that has an intra-trade that stands at 60 percent. Kenya imports about 50-60 percent of its machinery and industrial inputs.
With the introduction of the COMESA guidelines, the movement of the cargo across the borders has eased out and increased intra-trade within the COMESA region for both essential and non-essential goods, according to Onyango said.
“Members are talking to each other more and more and there is better coordination at the border crossing points,” Onyango said.
There exists a huge opportunity for local sourcing of materials, which COMESA region should expand amongst the states, according to Wakiaga.
“COMESA has really shaken us out of our comfort zone. We have seen things moving very fast on the ground in innovation and adaptability of businesses,” Wakiaga said.
The government has in the recent months taken deliberate measures to procure locally with standard procedures that would ordinarily take two months being executed in just a week, which is very encouraging, according to Wakiaga.
Predictable and stable policies such as those on taxation would be a major boost for long term investors, she noted.
According to Betty Maina, Cabinet Secretary in the Ministry of Industrialization, Trade and Enterprise Development, the region has potential to produce for external markets as well. The supply chain is being re-organized in the wake of Covid 19 in the global arena, she said, with many centres seeking to diversify sources, which the region can take advantage of.
“But we need to produce competitively,” Maina said.
She added that the Covid 19 pandemic has taught us that when we are confronted by insecurity in the supply chain, we can manufacture locally.
“Not only in Kenya, almost every country in the region has become comfortable with the supply of their medical commodities,” Maina said, adding that the region can utilize trade agreements between them to increase production of industrial goods we import.
The region has already created supportive infrastructure, which must be put in good use to lay down a foundation for Africa to produce locally, according to Silvester Kasuku, Lamu Port South Sudan Ethiopia Transport (LAPPSET) corridor Director General.
He blamed undue competition for the influx of imports in the region. Citing the example of China, which in the late 1970s adopted a more protectionist approach, that encouraged local manufacture of goods consumed in huge volume, the region can as well learn vital lessons for the there.
The region has already created policies such as Special Economic Zones (SEZs) and others which we can use to help produce the goods we consume in huge volume locally at competitive costs as has been demonstrated in Personal Protection Equipment (PPE) being produced locally.
