UNECA - United Nations Economic Commission for Africa

02/17/2021 | Press release | Distributed by Public on 02/17/2021 18:52

Economic diversification in East Africa: Time to redouble efforts

Nairobi 17 February 2020 - When the COVID-19 pandemic crisis started; most people were extremely pessimistic. They thought that the the region would drown in terms of trade declining catastrophically. But in actual fact the the East Africa Community economies (Burundi, Kenya, Rwanda, South Sudan, 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 casuality 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 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 (RVCs), 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 spillover 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.

ENDS

Notes to the Editors

About African Economic Research Consortium (AERC)

Established in 1988, African Economic Research Consortium is a premier capacity building institution in the advancement of research and training to inform economic policies in sub-Saharan Africa. AERC's mission rests on two premises: first, that development is more likely to occur where there is sustained sound management of the economy; second, that such management is more likely to happen where there is an active, well-informed cohort of locally based professional economists to conduct policy-relevant research. AERC builds that cohort through a programme that has three primary components: research, training, and policy outreach. The organization integrates high quality economic policy research, postgraduate training, and policy outreach within a vast network of researchers, universities, and policy makers across Africa and beyond. Learn more at www.aercafrica.org and follow us on Twitter @aercafrica.

About TradeMark East Africa

TradeMark (Trade and Markets) East Africa is an aid-for-trade organisation that was established in 2010, with the aim of growing prosperity in East Africa through increased trade. TMEA operates on a not-for-profit basis and is funded by the development agencies of the following countries: Belgium, Canada, Denmark, Finland, Ireland, Netherlands, Norway, United Kingdom, United States of America as well as the European Union. TMEA works closely with Regional Intergovernmental Organisations, like the East Africa Community, national governments, the private sector and civil society organisations. The first phase of TMEA (2010-2017) delivered results which contributed to gains in East Africa's trade and regional integration in terms of reduced cargo transit times, improved border efficiency, and reduced barriers to trade.

TMEA has its headquarters in Nairobi, Kenya, with operations and offices in EAC-Arusha, Burundi (Bujumbura), Tanzania (Dar es Salaam), Democratic Republic of Congo (Bukavu), Ethiopia (Addis-Ababa), Malawi, Zambia, South Sudan, Uganda (Kampala) and Rwanda (Kigali).

To find out more, please visit our website www.trademarkea.com

About UNECA

The Office for Eastern Africa of the UN Economic Commission for Africa (UNECA) supports countries through providing a set of comprehensive impact assessments of AfCFTA, highlighting the issues at stake, identifying areas where governments and the private sector will need to focus their energies as the region moves forward to action.

The work of the office informs policy and decision-making, contributes to the harmonization of national policies in support of regional integration efforts, and generates quality knowledge products which cater to the needs of our member states and Regional Economic Communities.

The Office for Eastern Africa serves 14 countries: Burundi, Comoros, Democratic Republic of Congo, Djibouti, Ethiopia, Eritrea, Kenya, Madagascar, Rwanda, Seychelles, Somalia, South Sudan, Tanzania and Uganda. Learn more at www.uneca.org

For further information or to request for interviews with TMEA, UNECA or AERC experts, please contact:

- For TMEA: Ms. Ann Mbiruru, +254 784880181; [email protected]

- For UNECA: Mr. Didier Habimana: Tel: +250 788493377; [email protected]

- For AERC: Mr. Charles Owino; Tel: +254 722205272; [email protected]