The COVID-19 pandemic has caused an impact on the East African Community (EAC) economies both directly and indirectly as a result of the measures being taken currently to contain the spread of the disease. Realizing that the spread of COVID-19 was mainly through travel, several measures were imposed. These include closing of airports and borders, curfews, social distancing necessitating the need to stay at home, reduction on movement and lock-downs. The closure of businesses has led to a near-collapse of the air travel industry, tourism and hospitality, agriculture, livestock and fisheries, industry and manufacturing, trade and distribution, cargo and passenger transport and logistics as well as the banking and other financial services sectors. The net result is unemployment, food insecurity and economic slow-down with a risk of total collapse if the situation is not arrested.

Initial projections indicate that as a result of the pandemic, economic growth in East Africa as well as other sub-Saharan African countries will decline from 2.4 percent in 2019 to between -2.1 to -5.1% in 2020 (World Bank predictions), depending on the success of measures taken to mitigate the pandemic’s effects. It is estimated that the Pandemic is costing the region between US$37 billion and US$79 billion in terms of output losses. The biggest impacts in terms of loss to GDP are reductions in household and business spending (about 50 per cent), disruption to supply chain for key inputs in machinery and chemicals (about 30 per cent), and tourism (about 20 per cent).

The result of business closures mean mass losses of livelihoods, factor employment, especially of labour, and disruption of supply chains for tradable goods and services. In some cases, such as the aviation, tourism and hospitality industries, entire sector value-chains have been rendered indefinitely dysfunctional.

As an illustration of economic impacts of the COVID-19 on companies operating in various economic sectors in the EAC Region, the estimated adverse effects of the pandemic on the various operating parameters are as summarized in the tables below.

Table 1: Estimated Effects of Covid-19 Pandemic on Company Cash Flows by Sector

The table below indicates how or in which ways businesses operating in the EAC region have been adversely affected by the COVID-19 Pandemic and its consequential effects.

Table 2: How Covid-19 and its Ripple Effects have impacted adversely on Businesses

EAC’s Response to the COVID-19 Pandemic

The EAC is responding strongly to the COVID-19 pandemic. All East Africans have a major stake in managing this outbreak and to contribute significantly to reducing the impact of COVID-19 in the region. In addition to the EAC Partner States’ own initiatives, the Ministers of Health, Ministers responsible for EAC Affairs and Ministers of Trade jointly coordinated the EAC response to COVID-19 Pandemic.[2]

At the EAC Secretariat, an EAC Ad-hoc Regional Coordination Committee (EARCC) on COVID-19 response has also been established at the regional level that is linked to the national taskforce of each Partner State through focal points, and works closely with implementing agencies including Development Partners. The EARCC coordinates, monitors and evaluates the implementation and effectiveness of the regional initiatives on COVID-19.

In the short term, some of the key actions taken to intensify and broaden the COVID-19 containment and mitigation regimes include the following:

• National Guidelines issued by all EAC Partner States containing measures to curb the spread of the pandemic and facilitate the flow of goods and services;
• EAC Administrative Guidelines whose objective is to ensure smooth and uninterrupted movement of goods and services, through trade facilitation, encouraging local production of essential products, handling of cargo at ports of entry/internal borders, facilitation of cashless payments, enhancing regional awareness on measures instituted against the COVID-19 pandemic; and mitigate the negative impact of COVID-19 on the movement of goods and services.
• Development of comprehensive COVID-19 Response Plan to further reinforce national measures to protect and prevent further spread of the novel coronavirus pandemic. key interventions are: strengthening sensitization programmes and awareness creation; access to Infection, Prevention and Control (IPC) materials, laboratory supplies and equipment by the EAC Partner States, EAC Organs and Institutions; strengthening the region’s capacity for COVID-19 surveillance, resource mobilization, research and other mitigation measures of the pandemic on the vital economic and social sectors of the region including Micro, Small and Medium Enterprises.
• Bilateral engagements between the Partner States to assess the multi-agency clearance processes of cargo and their coordination while combatting the spread of COVID 19 across borders, identify the challenges faced by the border agencies involved in clearance of goods and crew and agree on operational interventions.

All the EAC Partner States are also implementing guidelines from the World Health Organization and World Customs Organization on facilitating the movement of goods to contain COVID-19.

The EAC is a beneficiary of the Trade Mark East Africa (TMA) Safe Trade Emergency Facility to support a range of critical short to medium-term measures to ensure that trade in Eastern Africa continues and is safe, avoiding job losses and protecting livelihoods. Through this facility the EAC is set to obtain emergency short-term support aimed at making the ports, borders and critical supply chains safe for trade, ensuring food security and access to critically required medicines, and supporting measures that prevent jobs losses and make the region more resilient to any future crisis.

Moving forward from the short-term into the medium-term: The rampant disruptions of business supply chains, imminent closure of some businesses and in some cases entire sector value-chains rendered dysfunctional, require the EAC and Partner States to embark on medium term measures for the regional economy to recover.

In the above regard, the EAC Secretariat is developing a comprehensive COVID-19 Recovery Plan to direct efforts towards medium-term interventions (2-3 years) that is aimed at mitigating the fundamental impacts of the pandemic on the various vital economic and social sectors of the EAC region on a continuous and progressive manner. It is hoped that the EAC COVID-19 Recovery Plan will assist in restoring the pre-COVID-19 status of the region in terms of trade and investment and facilitate the full recovery and off-take of growth trajectory and facilitate a harmonized and coherent implementation of priority activities that will promote economic recovery and ensure the future prosperity of the EAC region.

The key drivers of the COVID-19 economic recovery plan include: Improving the investment climate; enhancing and strengthening trade (intra- and inter-trade); trade facilitation and transport; support to key services sectors for trade development and investment; agriculture; and manufacturing.

As part of the Tripartite Task Force (TTF), the EAC Secretariat together with COMESA and SADC Secretariats have issued a  pdfjoint statement of solidarity (124 KB) with Member/Partner States on COVID-19 pandemic in which they have urged the Member/Partner States to remain proactive and united in the fight against COVID-19, to minimise disruptions in livelihoods, businesses and transit trade. The TTF has expressed commitment to sharing of information and best practices among the Member/Partner States and also facilitate coordination of responses to the pandemic.

Source: Tralac

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.