Intra-East African Community (EAC) trade dropped by 5.5 per cent, to $5.9 billion in 2020 due to the Covid-19 pandemic, officials revealed Wednesday, September 29, during a webinar focused on regional trade and investment recovery amidst the pandemic.
As noted, intra-EAC trade figures stood at $6.3 billion in 2019, an improvement from $6.1 billion in 2018 – indication that the gains made in 2019 were wiped out in 2020.
The East African Business Council CEO, John Bosco Kalisa, said the private sector is central in driving the economic recovery agenda for the six-member bloc during the pandemic.
He told The New Times that intra-EAC trade is important as the measure for trade competitiveness and industrialization.
Once the intra-regional trade grows, Kalisa said, it means more jobs are created and poverty is reduced across the region.
Asked what he thinks will be the most important measures to revive the Covid-19 hit intra-EAC trade, Kalisa said: "The following are key: rolling vaccinations especially for key sectors such as tourism, logistics and transport, light manufacturing as well as agribusiness.”
"These sectors are important in kick staring the growth of our economies, removal of various nontariff trade barriers as well as crafting sound stimulus packages for SMEs such as cheap and affordable access to finance as well as removal of various taxes to enable businesses recovery.”
The EABC in partnership with partners including the African Economic Research Consortium (AERC), Kalisa told participants during Wednesday’s webinar, conducted Covid-19 impact studies to inform policies in order to ignite the rebound and recovery of sectors including manufacturing, tourism and hospitality, agriculture and food security, in addition to transport and logistics, in the region.
The EAC post pandemic economic recovery plan is under country consultation, according to Alhajj Rashid Kibowa, the Director of Trade at the EAC Secretariat.
The pandemic impacted trade performance too, with EAC imports declining to $3.56 billion in 2020 from $3.95 billion in 2019.
Kibowa stated that Foreign Direct Investments (FDI) in the EAC dropped by 43 per cent to $4.9 billion in 2020 and jobs declined by 2 per cent, wiping out the gains made in previous year. In 2019, the bloc recorded $8.66 billion in FDI, a 375 per cent rise from 2018.
Kibowa said the EAC post Covid-19 economic recovery plan sets out key strategies that include: attracting investment in ICT manufacturing and health; incentives for promotion of regional value chains; diaspora investments; innovation centers; elimination of non-tariff barriers; SMEs promotion; access to new Tripartite Free Trade Area (TFTA) and the African Continental Free Trade Area (AfCFTA) markets; as well as export promotion; e-commerce and digitalization of trade; harmonization of standards; trade facilitation for cargo clearance and boosting services trade, are others.
Alex Njombe, Senior Partner at KPMG Tanzania, urged regional companies to adopt digital technology to build enterprise resilience in the new norm, supporting simulations to predict future risks and opportunities on finances and liquidity, operations, supply chain, commerce and macro-perspectives of the economy.
Yves Ngenzi, Regional Coordinator of the East Africa Tourism Platform, said tourism nearly came to a standstill due to the pandemic.
Ngenzi said the EA region has gaps in Covid-19 protocols evidenced by the different testing fees and the validity period of Covid-19 test results for travelers.
He urged all partner states to sign up for the Single African Air Transport Market protocol to reduce the cost of air transport. He called for innovation and diversification to new services such as sports tourism and the meetings, incentives, conferences and events (MICE) industry, in addition to marketing the EAC bloc as a single tourist destination. Ngenzi said the East African Tourism Platform has rolled out the Tembea Nyumbani campaign to boost domestic and regional tourism.
According to him, open skies, vaccination, harmonization of Covid-19 protocols, tax incentives, easing of Covid-19 restrictions and stimulus packages will improve the resilience and recovery of the hospitality and tourism sector.
Mary Ngechu, EABC Board Director, shared insights on the impact of Covid-19 on SMEs and explained that Partner States introduced deferral of tax, debt payments, review of interest rates and sector-specific cushioning funds to ease liquidity constraints for SMEs.
Ngechu noted that Kenya proposed a 100% tax relief for "low-income earners”, Uganda rolled out Support to Agricultural Revitalization and Transformation (START) facility management and Rwanda introduced $200 million fund to support access to capital for SMEs.
"Simplifying the provision of loan guarantees enables commercial banks to expand lending to SMEs,” she said.
Ngechu added: "EAC should harmonize and implement e-commerce and cross-border payment systems policies, legislation, and regulation.”
She explained that poor enforcement of consumer protection regulations, low access to electronic transaction frameworks, complex cross-border administrative procedures and unharmonised customs rules, high costs of delivery services, absence of a mechanism to address digital goods and data localization procedures set back the e-commerce in the region.