East African Business

Intra-EAC trade thins as Covid-19 lockdowns restrict movement



East African Community intra trade volumes have reduced to about 40 per cent due to Covid-19 measures as the World Trade Organisation warns of a worldwide drop in merchandise goods.

According to the International Trade Centre, in 2018, Kenya imported products valued at $175.9 million from Tanzania and exported $293.5 million while Rwanda imported products worth $134.5 million and $2 million from Kenya and Tanzania, respectively.

But these imports have significantly dropped since February, due to the Covid-19 pandemic, which has triggered a range of border controls meant to curb the spread of the virus.

Though most border closures took place in the second half of March, there is limited data to capture major effects.

“Intra trade volumes in the EAC have dropped to between 30 and 40 per cent in the past three months,” said Kenneth Bagamuhunda, EAC Director General, and Customs & Trade.

“This can be attributed to the restrictions imposed on the movement of cargo trucks from the ports of Mombasa and Dar es Salaam to Malaba, Busia, Mutukula, Rusumo and other border points within the community.”

Advertisement

All six EAC partner states have closed land borders to travellers, while still allowing freight to pass under tighter controls, which sometimes allow the movement of only agricultural and food products.

Initially all the partner states suspended the arrival of international flights. But Tanzania and Burundi have since reopened their airlines. There are plans to reopen air travel in Kenya and Uganda by mid-July.

SIGNIFICANT SHARE

In addition, prohibiting people from crossing the border stops informal trade, widely practiced in the community and often the main source of income for many a family.

This type of trade accounts for a significant share of recorded trade, for example, between 15 per cent and 30 per cent of official exports in Uganda.

“Even shipping has been affected. The region no longer receives imported goods due to the lockdown. The EAC has now to either manufacture what it can or do without those goods,” Mr Bagamuhunda explained.

He added that he had visited all border posts over the past three months to inspect Customs operations.

“The Rusumo border from Rwanda to Tanzania was also affected when Rwanda insisted on testing truck drivers for coronavirus thus affecting the smooth flow of goods to Kigali,” said Mr Bagamuhunda.

“Malaba and Namanga borders were in a crisis. But we have since installed a testing facility even though tests results take some time leading to long queues on both sides of Kenya-Uganda and Kenya-Tanzania borders.”

While a truck driver transported goods between Mombasa and Malaba thrice in a week, the situation is now different.

“Covid-19 has adversely affected EAC intra trade and cross border movement of goods,” said Dr Peter Mathuki, chief executive of East African Business Council.

“The reduction of volumes across borders is by 90 per cent. Before Covid-19, over 3,000 trucks used to be cleared at Namanga border. But currently only 500 trucks or less are being cleared — a huge concern to the EAC business.”

According to the Trade Organisation, world trade fell sharply in the first half of the year, as the Covid-19 pandemic upended the global economy.



Source link

Related posts

World Bank gives Uganda $300m to fight Covid-19

New Kenyan

Dangote to test $90m power plant

New Kenyan

Pakistan overtakes Uganda as top Kenyan goods buyer

New Kenyan

Uganda opens MTN share sale to East African investors

New Kenyan

Ethio Telecom reports revenue boom in pandemic season

New Kenyan

EA banks turn to global financiers for lending funds after local money markets run dry

New Kenyan