Last Updated on September 5, 2022

East African Community battles Trade Disruptions

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The East African Community (EAC) is one of Africa’s most integrated regional blocs. However, the Covid-19 pandemic has caused massive disruption to both its internal and external trade

During the initial stages of Covid-19, queues of lorries stretched up to 65km at the Kenya-Uganda border towns of Malaba and Busia. This is as a result of  Ugandan authorities imposing compulsory coronavirus tests on Kenyan lorry drivers before entering the country. 

Kampala implemented the measure in late April when it became clear that truck drivers were key vectors of transmission. As governments failed to harmonise preventative measures at the regional level, similar issues unfolded at busy border crossings across the six countries that make up the East African Community.

For example, at the Rwanda-Tanzania border crossing of Rusumo, Tanzanian drivers were forced to hand cargo over to Rwandan counterparts. The Rwandans then take the cargo onwards to Kigali. 

The sudden disruption spelt disaster for the industries and businesses that rely on fluid borders in a region routinely heralded as the most integrated in Africa. According to TradeMark East Africa (TMEA), the cost of moving goods around the region rose by an initial 30%. Although the trade body believes this figure has since decreased as the EAC adopts a more coordinated response. 

TMEA’s CEO Frank Matsaert said: “Covid-19 has been really disruptive in terms of cost structures. I expect things to normalise now that we have much more agreement between EAC member states. The tailbacks at the Ugandan border are down to 15km – that’s more than it’s been in many years – so there are still things to be done. However, I believe that it will happen by the end of July.” 

Disruptions within the EAC

Most of East Africa’s imports pass through Kenya’s port of Mombasa or Tanzania’s port of Dar es Salaam. Both ports have seen trade volumes fall during the initial stages of the virus. 

Mombasa, which accounts for roughly 60% of regional imports, saw a 4.7% reduction in volumes between January and May. This is due to the fall in Chinese exports of raw materials and capital goods.

While this affected Kenya’s manufacturing sector and other industries, it spelt greater trouble for landlocked countries. This is because these landlocked countries in the EAC rely on the port of Mombasa for imported goods. 

Around 85% of the cargo landed at Mombasa is loaded onto Kenya’s standard gauge railway (SGR) and transported to Nairobi before it is moved by truck to Uganda and beyond via the “northern corridor”. Kenya is the main transit hub for the EAC region, accounting for around 46% of total exports and 41% of total imports. 

While most countries allowed nationwide logistics to continue despite implementing widespread lockdowns, much of the intra-regional activity was greatly reduced due to border issues. 

Before Covid-19, it had taken cargo around 3.5 days to be transported from Mombasa to Kampala. Another 7 days to Kigali, 10 days to the DRC and 14 days to South Sudan. The virus more than doubled the length of time taken to transport goods. The journey to Kampala extended to 10 days, while it took 21days to Kigali and far longer to the DRC. 

According to the CEO of the Shippers Council of Eastern Africa: “Before Covid-19 we were able to get cargo to Kampala for between $2,000 to $2,200. Now, it has increased to $3,200”. 

Technology offers solution to the East African Community

The delays were largely driven by regulatory changes implemented by each country to minimize the risk of foreign lorry drivers spreading the virus. A Kenyan truck driver driving to Rwanda via Uganda would likely need to be tested for Covid-19 three times. Once in each country – rather than being able to use paperwork accepted across the entire region. At the beginning of the pandemic, these tests were analysed in urban centers far from national borders. This leaves truck drivers stranded for days in inhospitable border towns. 

This level of mistrust, lack of coordination led to calls for a regionally mandated response from the Arusha-based EAC Secretariat. The regional body published a set of “administrative guidelines” for the movement of goods and services during Covid-19. The guideline included advising countries to use gazetted routes. Also it encourages truck drivers to travel with a maximum of three people.  Many however believed it did not go far enough. 

To facilitate border crossings, TMEA has worked with EAC member states to develop an app. This app that stores health certificates issued by test centers working to agreed standards.

According to Matsaert, “The test results are put on the app, which is recorded on blockchain so it can’t be faked. Then the truck driver is tracked all the way. They can only stop at certain places along the corridor so that the driver does not pick up an infection. It should create a lot more trust between partner states.” 

More Details on the App

The app was rolled out in late July. Matsaert hopes it will have an immediate impact on some 10,000 trucks operating in the region. 

While it is initially being offered as a bilateral agreement between states, it is hoped that it will eventually be adopted at the regional level. This could offer a model for how the East African Community looks to overcome logistical challenges in the future. The region could adopt using what TMEA calls safe trade zones (STZs). These zones would implement agreed health and safety measures between countries, allowing traders who meet requirements to cross borders.

Along with the impact on established businesses, the border closures have been disastrous for informal traders. Most informal traders have been barred from making crossings. Around 90% of informal cross-border trade has ceased since Covid-19. 

Now that countries are beginning to lift lockdowns and resume international and domestic air travel – despite rising cases – informal trade is expected to resume. 

Landlocked economies will be hardest hit

The recent report from the Brookings Institution on the effects of Covid-19 on trade in East Africa identifies “a concerning scale of disruption to intra-regional commerce”. It also identifies some particularly worrisome trends for the landlocked countries of the EAC.

Authors Andrew Mold and Anthony Mveyange cite figures from the Economist Intelligence Unit predicting that Uganda and Rwanda’s imports will fall by 18.8% and 14.1% respectively in 2020 as a result of the restrictions on trade. In contrast, Kenya and Tanzania’s access to international trade via the ports of Mombasa and Dar es Salaam will help to minimise the costs of such restrictions on their economies – their imports fall by just 2% and 6.2% respectively.

The authors conclude that “a coordinated EAC wide approach is critical for intra-regional trade to remain buoyant. It would also ensure vulnerable countries are cushioned from the Covid-19 crisis fallout.”

Also, it highlights the urgency of implementing the African Continental FreeTrade Area to mitigate the effects of Covid-19 on trade.

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