East African Community partner states need to immediately source for alternative markets for their imports and exports to reduce dependency on a few countries, for their trade to recover from the impact of the ongoing pandemic. This is one of the immediate recovery strategies proposed by a regional business body, in addition to urging countries to embrace use of technology (online transactions) in sourcing products from outside the EAC. Peter Mathuki, CEO of the East African Business Council (EABC), told The New Times that: “These are some of the observations we are making as EABC and indeed the impact will inform a recovery strategy.” “But I still insist on an EAC coordinated approach both for combating COVID-19 and recovery of our economies.” As immediate recovery strategies, the Council had also stressed that countries need to; among others, consider a regional coordinated approach on mitigating the impact of COVID-19, and allow free movement of essential and non-essential goods within and out of the six-member bloc. The EABC also insists that countries consider full liberalization of open skies for free movement of cargo within and out the region. It has also urged states to consider adding health workers at borders to facilitate movement effective and efficient cargo movement. Mathuki emphasized that they propose that economic recovery will “be informed by our EAC trade and investments coordinated approach.” “We appreciate that economic growth for the region will adversely be affected by the slowing down occasioned by the Covid19,” he said. “EAC partner states economic growth may contract to range between 1.5 per cent to a maximum of 3.8 per cent and this is true in most parts of Africa. The recovery will therefore require a deliberate coordinated approach.” Medium to long term strategies In the medium and long-term, the EABC boss noted, partner states need to consider improving the business and regulatory environment to ensure formalization of businesses. There is a need for EAC Partner States to push for Buy East Africa Build East Africa (BEABEA). “Partner States need to provide support to key industries to expand their capacity and establish new industries to manufacture import substitutes in the region. This will cushion the EAC economies from the negative impact of COVID-19.” Another long term recovery strategy being mooted is for Partner States to facilitate the private sector to increase production of manufactured goods in the region. Following the outbreak there was a significant disruption in the global value chains. The virus started in China, the hub of manufacturing for most business operations. According to the EABC, the spillover effect of this disruption was felt by African economies and largely by regional businesses being suppliers and importers of goods and services in the global economy. Contribution of trade However, it is noted that trade has emerged as a remedy that could reduce the adversity through flow of essential goods like food, medical supplies and other hygiene products. Its importance to regional economies is due to the characteristic nature of cross‐border trade being conducted informally and mostly occupied by the vulnerable, small, unregistered traders. Statistics by the EABC indicate that this contribution is estimated to account to an average of 50% of the GDP in EAC economies. The EAC Trade and Investment Report 2018, notes that main exports from the EAC in 2018, included minerals (mineral ore, gold and diamond), tea, coffee, cocoa and horticultural products. Similarly, total EAC imports grew by 19.2 percent to US $38.3 billion in 2018 from US$ 32.2 billion in 2017. The main source of imports from the rest of the world are Asia and the Middle East. This signifies the importance of countries like China, India and UAE as trading partners. According to the ITC Trade Map, EAC imports from China increased by 6 percent from US $6.9 billion in 2017 to US $7.3 billion in 2018. On other hand the EAC exports to China increased by 22 percent from US $1.5 billion in 2017 to US $1.9 billion in 2018. As regards cross-border informal trade, the EABC notes that the estimation of the trade value in some Partner States is approximately US$145.4 million in Rwanda and US$606.6 million in Uganda. Cross border trade is estimated to account for the livelihood of about 60 per cent of EAC residents. The EABC notes that due to the pandemic, there have been increased restrictions on the movement of goods and people across borders “threatening the livelihoods of traders and their families, and reduced revenue for Partner States.”
