How to Make Trade Safe in Africa

Frank Matsaert and Erastus Mwencha

On February 27th, 2020 Nigeria confirmed the first case of COVID-19 in Sub-Saharan Africa. Since then, the COVID-19 virus has spread to all corners of the Continent with the number of infections increasing exponentially, according to the World Health Organization (WHO) Regional Director for Africa, Matshidiso Moeti.

Even before the first cases were recorded, COVID-19 was already having an impact on international demand for exports in key sectors such as textiles and floriculture, have severely threatened businesses and fuelled unemployment. Flower exports are down by more than 90% and tourist arrivals have ground to a halt. In the largest economy in East Africa, the Kenya National Bureau of Statistics reported that imports have dropped by more than 20% in the first two months of 2020, with Chinese imports plummeting around 37%. 

As the pandemic continues, the projected losses grow. Trade volumes in the East African Community (EAC) are down by up to 25% since the beginning of 2020, with even worse reductions in the informal sector. 

African countries, conscious of the fragility of their public health systems and limited intensive care capacity, have had to move quickly to try and protect their people by instituting strict measures to stem the spread of the virus. However, in doing so they are faced with a dilemma. For many in the region their livelihood depends on being able to move about freely. There is no work from home option for the hundreds of thousands of small-scale traders that are in many ways the lifeblood of their economies. A day of work missed often translates to a day without food on the table.

While health considerations are of primary importance, the prospects for tackling the challenges the pandemic presents are inextricably linked to trade and the economy.

Continued trade at this time is crucial for three main reasons. First, trade is essential in ensuring people and Governments have what they need to weather the pandemic, from food, to medical supplies and hygiene products. Efficient and expedited trade is critical to solving problems the region is facing given the high levels of unanticipated demand for a host of related products and the speed at which COVID-19 has spread in many countries. 

Second, trade is already playing a key role in helping to provide some of the answers to the crisis. While many businesses have seen demand collapse overnight, some have been able to adapt their offering and switch to the production of essential items. For example, in Uganda drinks company Rwenzori Beverages Limited has started producing hand sanitisers, while Nice House of Plastics and Crest Foam are working to deliver Personal Protective Equipment for healthcare workers. In Kenya, the Kitui County Textile Centre transformed almost overnight from producing gardening clothing to churning out 30,000 surgical masks per day. There are a few examples of innovation and adaptation taking place in every country across the region. It is important that where successful such businesses can easily transport their goods across the region to meet the urgent demand. The longer-term development of regional manufacturing capacity is an opportunity that our region needs to grasp, reducing our over-reliance on imports and supporting job creation. The Africa Continental Free Trade Area will also provide us opportunities for goods made in Africa, for Africa. 

Third, trade is important in preparing our countries for recovery once the pandemic is over. The more economic activity that can be maintained the better positioned they will be to bounce back. The crisis provides us with a challenge but also an opportunity to adapt to a changed world.

While it is clear that trade must be protected and promoted during this time it should not, however, mean business as usual. In recognition of the fact that transport and trade routes can be major infection conduits, there needs to be a strong and urgent focus on how we can make trade safe in this context. Measures must be instituted that protect both the livelihoods and the health of our traders, businesses, and their employees. We need to start thinking about Safe Trade Zones in addition to Special Economic Zones. 

Measures such as the introduction of hygiene facilities and testing at key border crossings and ports, the provision of protective equipment for staff at border posts, the purchase of mobile testing labs for use along major transport corridors, and surveillance systems and quarantine facilities for truck drivers. 

The deployment of technology, e-commerce and digital solutions also have important roles to play, reducing the need for physical human contact. Mobile money is a critical driver and Kenya’s largest telecommunications firm Safaricom has already implemented a fee-waiver on its M-Pesa product in recognition of its potential impact.

To help the impressive response of our Governments, TradeMark Africa is launching a US$20 million Safe Trade emergency facility, which combines a range of short to medium-term measures in support of continued trade to protect livelihoods and avoid job losses. The objective is to ensure containment of COVID-19, whilst still enabling trade to flow between countries – critical for resumption of economic activity, food security and social stability, jobs, and economic recovery. We are grateful to our established development partners who have committed to support the Safe Trade initiative, especially the EU and UK and others joining in the coming week.

The Safe Trade facility has three main elements and focuses on making the ports, borders, and critical supply chains safe for trade; ensuring food security and access to critically required medicines; and, supports measures that prevent job losses and increase resilience.

These interventions will not only help East Africa to weather the current crisis, but also open up opportunities for the region to reduce its dependence on external suppliers by boosting both domestic and regional production of goods and inputs. Working to strengthen regional value chains during this crisis will bring benefits for years to come, as well as making sure East Africa is better positioned to tackle future crises. We face challenges that we have not seen in a generation, with millions laid off in key export industries, and we need to grasp new ways of transacting business and producing goods. Trade will be key to recovery in Eastern Africa, and TradeMark Africa is committed to playing our part with the new Safe Trade initiative. 


About the Authors:

Ambassador Erastus Mwencha is the Chairman of TradeMark Africa and former Deputy Secretary of the African Union, and Secretary General of the Common Market for Eastern and Southern Africa.

Frank Matsaert is the CEO of TradeMark Africa and former Senior Regional Growth, Trade, and Investment Adviser for the UK’s Department for International Development in East Africa.