African countries can seize coronavirus crisis to expand intra-continental trade: COMESA

Shaimaa Al-Aees
5 Min Read

As the spread of the novel coronavirus (COVID-19) accelerates across the globe, the level of infection in the African continent has been relatively low, compared with other continents. This may partly be attributed to the comparatively low integration of Africa with the rest of the world, Secretary-General of Common Market for Eastern and Southern Africa (COMESA) said.

Currently, the most affected regions and countries are, incidentally, the major trading partners for COMESA that is Europe, China, and the United States. Consequently, any economic slowdown in these countries has global repercussions given the interconnectedness and fragmentations in production, trade, and investments.

“African countries can seize the opportunity and expand intra-African trade currently standing at barely 15% of their total trade. Given the relatively weak and overstretched public healthcare systems in Africa, the current low spread of COVID-19 is likely to change in the coming weeks and maybe catastrophic,” COMESA elaborated. There are cases where the impacts of the pandemic could be positive, and countries could take advantage of following the economic integration initiatives in Africa. First, the reduction of international crude oil prices provides an opportunity for improvement of the balance of payment position of nonoil producing countries and could drive down production costs and enhance competitiveness and general welfare.”

Furthermore, COMESA called on central banks in member states to keep interest rates low to encourage the private sector (including SMEs) borrowing to stimulate domestic production and consumption. 

Additionally, African governments must provide and sustain a conducive environment to the private sector to expand production capacities and enhance competitiveness and reduce over-reliance on extra-African imports even for basic commodities, COMESA recommended.

“Our countries are encouraged to learn and apply best practices that have worked elsewhere in slowing the spread of the COVID-19. These include restrictions on travel and congregational gatherings, working from home, encouraging cashless transactions, disinfecting public places, enhanced screening and intense public awareness among other measures,” COMESA said.

COMESA added that the magnitude of the effects on trade and investments for African countries will depend on the sizes and economic structures as well as characteristics of the various economies. Thus, commodity-dependent countries in COMESA like DR Congo and Zambia are likely to be hit harder by the crisis following China’s reduced demand for copper and cobalt. 

Services-oriented economies, such as Egypt, Ethiopia, Rwanda, and Kenya where air transport services, financial services and tourism services are relatively strong are more vulnerable, given the nature of the epidemic.

Latest statistics indicate that the EU, South Africa, and China are the leading export destinations for COMESA exports and accounted for 32% ($36.1bn), 13% ($14bn) and 6% ($7.3bn) share of total exports, respectively during 2018. Reduction of consumption demands in these markets coupled with low diversification implies cut down of export earnings from these markets in the short to medium term. At the same time, the EU, China, and the US are the biggest sources of imports into COMESA countries accounting for 32% ($48bn), 20% ($29.4bn) and 8% (12bn) share of total imports respectively (2018), according to COMESA.

COMESA highlighted that the manufacturing and industrial sectors in Africa will be impacted by a decreased supply of key components from China, Europe, and America. It is expected that there would be reductions in foreign direct investment (FDI) inflows to Africa in the immediate future as the most affected countries in Asia, Europe, and the US shift focus to address the health and economic impacts caused by the COVID-19 crisis. 

It further noted that reductions in investments in the tourism sector in several African countries are inevitable following massive restrictions on travel and social activities across the world. 


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