What will it take to revive intra-EAC trade affected by Covid-19? | New times
East Africa’s intra-community trade (EAC) fell 5.5% to $ 5.9 billion in 2020 due to the Covid-19 pandemic, officials revealed on Wednesday (September 29) , during a webinar focused on regional trade and resuming investment in the midst of the pandemic.
As reported, intra-EAC trade figures stood at $ 6.3 billion in 2019, an improvement from $ 6.1 billion in 2018, indicating that the gains made in 2019 have been wiped out. in 2020.
East African Business Council CEO John Bosco Kalisa said the private sector is critical in driving the six-member bloc’s economic recovery agenda during the pandemic.
He said New times that intra-EAC trade is important as a measure of trade competitiveness and industrialization.
Once intra-regional trade grows, Kalisa said, it means more jobs are created and poverty is reduced across the region.
When asked what he believes would be the most important measures to revive intra-EAC trade affected by Covid-19, Kalisa said: Agribusiness sector. ”
“These sectors are important for stimulating the growth of our economies, the removal of various non-tariff trade barriers as well as the development of strong stimulus packages for SMEs, such as cheap and affordable access to finance as well as the removal of various taxes to allow companies to take over. “
The EABC, in partnership with partners including the African Economic Research Consortium (AERC), Kalisa told attendees during Wednesday’s webinar, conducted impact studies of Covid-19 to inform policies to trigger the rebound and recovery of sectors such as manufacturing, tourism and hospitality, agriculture and food security, in addition to transport and logistics, in the region.
The EAC’s post-pandemic economic stimulus plan is currently in consultation with countries, according to Alhajj Rashid Kibowa, director of trade at the EAC secretariat.
The pandemic has also had an impact on trade performance, with the EAC’s imports falling to $ 3.56 billion in 2020, from $ 3.95 billion in 2019.
Kibowa said foreign direct investment (FDI) in the EAC fell 43% to $ 4.9 billion in 2020 and jobs fell 2%, erasing gains made the year before. In 2019, the bloc recorded $ 8.66 billion in FDI, an increase of 375% compared to 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 to promote regional value chains; diaspora investments; innovation centers; elimination of non-tariff barriers; promotion of SMEs; access to new markets in the Tripartite Free Trade Area (FTA) and the African Continental Free Trade Area (AfCFTA); as well as export promotion; electronic commerce and the digitization of commerce; harmonization of standards; trade facilitation for the clearance of goods and stimulation of trade in services are others.
Alex Njombe, Senior Partner at KPMG Tanzania, urged regional businesses to embrace digital technology to strengthen business resilience in the new normal, supporting simulations to predict future risks and opportunities on finance and liquidity, operations , supply chain, trade and macro outlook of the economy.
Yves Ngenzi, regional coordinator of the East Africa Tourism Platform, said tourism has almost stopped due to the pandemic.
Ngenzi said the EA region has gaps in the Covid-19 protocols, as evidenced by the different test fees and the validity period of the Covid-19 test results for travelers.
He urged all partner states to adhere to the Single African Air Transport Market Protocol in order to reduce the cost of air transport. He called for innovation and diversification into new services such as sports tourism and the Meetings, Incentives, Conferences and Events (MICE) industry, in addition to promoting the EAC block as a unique tourist destination. Ngenzi said the East Africa Tourism Platform has launched the Tembea Nyumbani campaign to boost national and regional tourism.
According to him, the open skies, vaccination, harmonization of Covid-19 protocols, tax incentives, relaxation of Covid-19 restrictions and stimulus plans will improve the resilience and recovery of the hospitality sector and the hospitality industry. tourism.
Mary Ngechu, EABC Board Director, shared her thoughts on the impact of Covid-19 on SMEs and explained that partner states have introduced tax deferral, debt payments, revision of interest rates and sector-specific sinking funds to ease liquidity constraints for SMEs.
Ngechu noted that Kenya has offered 100% tax relief for “low-income people,” Uganda has deployed Management of Agricultural Revitalization and Transformation Support Facilities (START) and Rwanda has introduced a $ 200 million fund to support access to capital for SMEs.
“Simplifying the provision of loan guarantees allows commercial banks to extend lending to SMEs,” she said.
Ngechu added, “The EAC should harmonize and implement policies, legislation and regulation of e-commerce and cross-border payment systems. “
She explained that the poor application of consumer protection regulations, poor access to electronic transaction frameworks, complex cross-border administrative procedures and non-harmonized customs rules, high costs of delivery services, lack of a mechanism to process digital goods and data localization procedures are pushing back e-commerce in the region.