22 July 2020 (ECA) - At a time when global trade seems so uncertain because of COVID-19 pandemic crisis, a recent paper strikingly highlights that Kenya experienced a significant improvement in exports in early months of 2020 together with the moderation of imports, leading to a marked decline in the trade deficit.
The paper published by Brookings and written by Andrew Mold, Senior Economist at UN Economic Commission for Africa and Anthony Mveyange Director of Research at TradeMark East Africa used Kenyan trade data published up through May 2020 to provide a preliminary evaluation of the impact of the COVID-19 crisis on regional trade in the East African Community (EAC).
According to the paper, the curfews, lockdowns, and cross-border disputes linked to the crisis provoked a sharp decline in intra-regional trade, with a dramatic fall in Kenyan exports to Uganda, Tanzania, and Rwanda. These trends are worrisome because Kenya is the major exporter and importer of the East African Community (EAC), accounting for around 46 per cent of exports and 41 per cent of imports for the whole region.
Recent trade evidence from East Africa
Kenyan textile exports to the United States and flowers and shipments of vegetables to the European Union were severely affected, largely due to both suspensions of international flights and the collapse of demand in target markets.
The paper notes, however, that despite these disruptions, not all supply chains were affected. Kenyan tea exports peaked at just under 58,000 tonnes in April – a record high. Similarly, the volume of fruit exports surpassed the level reached during the 2019 season. Most of these products were shipped to countries like Egypt, Pakistan, the United Arab Emirates (UAE), and the U.K.
Data from Ugandan authorities reveal that informal trade collapsed in April 2020, as cross-border small-scale trading was prohibited. Border communities are highly dependent on this trade, and the closure of the frontiers has entailed additional hardship in these communities.
Coordinated intra-regional trade is critical
Another important theme highlighted in the paper is the necessity of a coordinated EAC-wide approach for intra-regional trade in these challenging times, ensuring that countries in the region are cushioned from the COVID-19 crisis fallout.
The paper stresses that the urgency of implementing the African Continental Free Trade Agreement (AfCFTA) is even more palpable. Its rapid implementation, accompanied by additional trade facilitation measures, could significantly mitigate COVID-19's negative impact on the continent’s economy.
The paper also praised Kenya and Rwanda’s strategies to retool its passenger aircraft for cargo. Rwandair cargo (imports and exports) increased from $57 million in April to $134 million by May 2020.
Whereas in May 2019, just 18 per cent of Rwandan exports were shipped by air, by May 2020 that figure had reached 73 per cent.
The paper also calls for policymakers to implement safety measures such as controls and surveillance on trade in a way that does not unduly affect the flow of trade.
Challenges to the recognition of COVID-19 certificates for truck drivers should also be addressed, aiming at speeding up port and border clearance procedures in East Africa.
Read the paper from :
https://www.brookings.edu/research/the-impact-of-the-covid-19-crisis-on-...
Issued by:
The Sub-Regional Office for Eastern Africa
UN Economic Commission for Africa (ECA)