AfricaPress-Tanzania: The East African Community (EAC) partner states have been advised to offer fiscal incentives to sectors, mainly tourism, which have been critically affected by Covid-19 outbreak that has devastated lives and economies around the world.
In a just-released situational analysis report by the East Africa Business Council (EABC), an apex body of private sector associations and corporates, swift measures are sought from regional governments to protect tourism, the leading sector in foreign exchange earnings for the region but severely hit due to restricted travel across the globe.
EABC has been giving updates on Covid-19 since economic impacts started to bite. The latest updates released on April 9 included the Private Sector Response Initiatives to combat Covid-19, the impact of Covid-19 on the EAC financial sector and Impact of Covid19 on the tourism sector.
The regional business body explains in its updates that for the partner states to mitigate the impact of the pandemic to trade, they need to diversify their sources of imports other than China, one of the countries gravely affected by the disease.
“… seeking new markets should be done jointly by the public and private sectors,” the EABC said in the update.
Further, the EABC cautioned against over dependency on the Chinese market.
The report says already some EAC states have started to experience declines in imports from China, including raw materials and capital goods.
It warned the situation was likely to get worse since prices of critical imports from China have started to rise due to supply shortages.
Due to Covid-19 crisis, the EAC countries have registered a decline in export values attributed to the reduction of demand from Asia, mainly China.
These include a consignment of coffee and other products from Rwanda worth $10 million to 20m sold to China’s Ali Baba T-Mall but now stuck.
“To lessen the impact of Covid-19, EAC governments should devise alternative means of sourcing products locally and explore new markets,” the report insisted.
The construction sector is cited as among those to be seriously affected as numerous mega infrastructure projects in the region are carried by Chinese firms. “Most of these projects will slow down due to the disruption of the flow of capital goods from Asian economic giant where coronavirus was first detected.
The financial solutions to the crisis calls on the governments to set aside ‘stimulus package’ to bail out financial institutions that may collapse.
EABC also wants the central banks in the bloc to set up a lending facility that would enable the commercial banks to have sufficient funds to lend to the private sector.
Tourism is one of the fastest growing economic sectors in the six nation EAC with Asia lately considered one of the most lucrative and profitable routes.
According to recent statistics, the sector earned the bloc 12 per cent of their combined GDP and 18.8 per cent of their total exports in 2017.
