When the COVID-19 pandemic crisis started, most people were extremely pessimistic. They thought that the region would drown in terms of trade declining catastrophically. But in actual fact the East Africa Community economies, including Kenya, Rwanda, Tanzania and Uganda have, by global standards, proven to be relatively resilient.
The newly launched joint report by UN Economic Commission for Africa (UNECA), TradeMark East Africa (TMEA) and African Economic Research Consortium (AERC) entitled “Waving or Drowning? The Impact of the COVID-19 Pandemic on East African Trade” notes that declines in imports broadly reflected the adverse trade performance of the EAC’s main trading partners during the early phases of the pandemic in April and May 2020, 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.
Nonetheless, despite showing resilience, COVID-19 has reversed some of the gains made in trade facilitation.
Immediately after COVID-19 outbreak, the ship dwell time at Mombasa port increased by 48% and Berth time increased by 52%. Cargo transit from Mombasa Port to Malaba (the border between Kenya and Uganda) increased from 7 days to 11 days by the second quarter of 2020. The time taken to transport goods via the Mombasa-Busia route was nearly three times higher. On the Central Corridor, the transit time from Dar-es-Salaam to various cities in the neighbouring countries more than doubled. The marked increase in transit times highlights the challenges at border points.
Another major casualty from the crisis has been informal cross-border trade, which has struggled to recover from the regional restrictions on cross-border travel. For example, data from Uganda suggests that even the reopening of Uganda’s borders in September 2020 did not revive informal cross border trade. The resultant impacts include loss of income in border communities and a reversal of women economic empowerment.
The report provides a set of recommendations for public and private sector to steer the region’s economies to greater stability post COVID-19. One of the key recommendations is for the EAC Partner States need to diversify their economies. This because excessive commodity export dependence still exposes the regional economy to unnecessary risks. The African Continental Free Trade Area (AfCFTA) could be instrumental in making this happen.
The reports urge policy makers to support development and implementation of technological innovations to address the bottlenecks that have arisen during the crisis along the Northern and Central Corridor. Such include the Regional Electronic Cargo Tracking System which has enabled issuance of jointly recognised health certificate by EAC partner states thus eliminating the need for multiple tests for truck drivers. This has contributed to reduction in time taken to transport goods. Other technological innovations that support paperless trade will deliver time and cost benefits to the region post-COVID19 as well as support regional integration.
The resilience exhibited by EAC intra-regional trade and the opportunities this has revealed should power efforts to strengthen regional value chains, especially through implementation of African Continental Free Trade Area (AfCFTA), says the report.
From a trade perspective, the region is still not out of the woods. The pandemic’s rapidly evolving nature and its spill over effects may still present a significant threat to trade and commerce within the EAC over the coming years. Partner States must continue with a tightly coordinated approach to addressing the pandemic’s challenges.
Learn More: UN Economic Commission for Africa