The Coronavirus pandemic (COVID-19) has become a fully-fledged global economic crisis with governments now issuing Level 4 Do Not Travel advisories, instituting curfews, partial and full lockdowns.
These lockdowns that started from Wuhan, China – the epicentre of coronavirus outbreak – are fast turning in to the safest way of life with Italy, Spain, India, South Africa, Uganda, Kenya, and Rwanda among countries administering shutdown doses.
A March 10, 2020 Baker-McKenzie report highlights that many African countries face a twin supply-demand shock, due to a decrease in imports of manufacturing inputs and supplies from China and reduced demand from exports in key sectors in various export markets. Reports from the Uganda Ministry of Trade, Industry and Cooperatives indicate that China is our leading import market, accounting for at-least 16 per cent or US$5.5 billion of Uganda’s total imports bill.
The continued persistence of the corona crisis will certainly curtail the sourcing of raw materials and capital goods, such as machinery, for Uganda’s domestic manufacturing sector.
The European Union (EU) market, which is also in various stages of lockdown, is a strategic market for Uganda’s exports and imports.
Uganda exported US$515 million worth of goods, over the past three years, whilst it imports totalled to US$ 561 million over the same period. The main exports to the EU market have been coffee, fish, flowers and hides and skins. Uganda mainly imports medical equipment, pharmaceutical products, petroleum and oils from the EU.
Generally, Africa is a net importer of medical equipment and pharmaceuticals, which are mainly supplied by Europe and India. Studies from United Nations Economic Commission for Africa (UNECA) indicate that Africa imports over 94 percent, or on average US$ 16 billion per annum, of its medical and pharmaceutical products. The current government lockdown in Europe and India are likely to increase the risk of drug shortages on the continent and specifically in Uganda.
Even more worrying for Africa is the fact that only 15 African countries are net exporters of food, with Uganda being one of them. If the COVID-19 pandemic results in to an economic crisis lasting for over a year, there will be serious food shortages in over 39 countries on the continent and this may unfortunately fuel civil unrest.
Huge blow to cross border trade.
In 2019 alone, Uganda’s formal exports to the Common Market for Eastern and Southern Africa (COMESA) amounted to US$ 1.23 billion. Whilst total exports to East African Community (EAC) amounted to US$ 1.15 billion, out of which US$ 537 million went to Kenya, US$ 409 million to South Sudan, US$ 95 million to Tanzania, US$ 54 million to Rwanda, and US$ 51 million to Burundi. Exports to the Democratic Republic of Congo were US$ 567 million.
The restriction of movement of people across borders, due to new health protocols that must be adhered to is also going to greatly impact Uganda’s trade volumes with neighbouring countries.
The East African Community had issued a joint communique on movement of people and goods with key guidelines that should always be adhered to by all countries. Bi-lateral modalities on the movement of goods and people in light of the COVID-19 crisis should also be worked out with DR Congo.
Nation Media Group