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Hope for trade as East Africa exports rebound from lockdowns
External trade in East Africa saw a sharp decline at the onset of the COVID-19 pandemic. However, exports defied the effects of the pandemic, surpassing 2019 levels by the third quarter of 2020. For more on trade performance in the region, CNBC Africa spoke to Andrew Mold, Chief of Regional Integration & AfCFTA Cluster at UNECA.
Thu, 18 Feb 2021 11:03:03 GMT
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AI Generated Summary
- East Africa experienced a significant rebound in exports surpassing pre-pandemic levels in 2020, showcasing resilience amidst the global economic downturn induced by the COVID-19 pandemic.
- A shift in export composition towards mineral exports and interventions to address logistical challenges contributed to the recovery of regional trade in East Africa.
- Accelerating the implementation of the AfCFTA and prioritizing intra-Africa trade are crucial for enhancing East Africa's trade potential and economic resilience in the face of global uncertainties.
East Africa's external trade faced a significant challenge at the onset of the COVID-19 pandemic, as exports and imports experienced a sharp decline in the second quarter of 2020. However, by the third and fourth quarters of the year, there was a remarkable rebound in regional trade that surpassed 2019 levels for some countries in the East African Community (EAC). To delve deeper into the trade performance in the region, CNBC Africa spoke with Andrew Mold, the Chief of Regional Integration & AfCFTA Cluster at the UN Economic Commission for Africa (UNECA).
Mold highlighted the positive trend in East Africa's trade sector, revealing that four out of the five EAC countries with available trade data showed an increase in exports over the course of 2020. This recovery was particularly notable given the significant shock to the global economy induced by the pandemic. The region's ability to surpass pre-pandemic export levels showcases resilience and adaptability in the face of adversity.
One of the key factors attributed to the rebound in exports was a shift in the composition of exports, with a notable increase in mineral exports driven by the high price of gold in certain countries like Tanzania. Additionally, efforts to address logistical challenges, such as border delays and disruptions in the supply chain, played a critical role in facilitating the recovery of interregional trade. Government interventions, coordinated policy responses, and support from organizations like Trademark East Africa helped mitigate the initial adverse impacts of the crisis on trade.
Looking ahead, Mold emphasized the importance of accelerating the implementation of the African Continental Free Trade Area (AfCFTA) to leverage the region's trade potential. The formal commencement of trading under the AfCFTA on January 1, 2021, presents opportunities for East Africa to expand its market access within the continent. Policymakers are urged to prioritize intra-Africa trade to strengthen regional economic resilience and reduce reliance on traditional high-income export markets.
Despite the positive trade performance, challenges such as trade disputes among member states, like the recent conflicts between Uganda and Kenya, persist in the region. Mold acknowledged that regional integration processes often encounter setbacks but emphasized the need for sustained political will and collective action to advance the regional trade agenda. The crisis underscored the significance of unity and cooperation in navigating challenges of a global scale.
As East Africa looks towards the future, there is optimism for a strong rebound in trade performance, aligning with the forecasted global trade recovery for the year. The forthcoming regional growth forecasts by the International Monetary Fund (IMF) are anticipated to shed more light on the economic outlook for East Africa. The rollout of vaccinations and easing of restrictions are expected to drive economic activity, although concerns linger around the recovery of service sectors, particularly tourism, which have been severely impacted by the pandemic.
In the midst of ongoing uncertainties, East Africa's trade landscape shows resilience and potential for growth, underpinned by collective efforts to enhance regional integration and capitalize on intra-African trade opportunities.
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