THE East African Community (EAC) economy will rebound in 2021 if partner states strengthen macro-economic policy coordination and adopt a regional coordinated approach in handling the Covid-19 pandemic.
Disruptions brought about by the pandemic last year provided a learning curve on the need to have sustainable EAC regional value chains integration for the development of finished products with a view of reducing industrial and trade risks arising out of external shocks.
East African Business Council (EABC) Chairman Nick Nesbitt has noted that the region is projected to recover steadily but it was dependent on how the pandemic is handled.
He was speaking in Nairobi at a media breakfast meeting on the state of EAC economies amid the Covid-19 pandemic.
According to the African Development Bank (AfDB) East Africa Economic Outlook 2020, the East Africa region is projected to recover to 3.7 per cent in the baseline scenario and 2.8 per cent in the worst-case scenario under the assumption that Covid-19 would be contained in the short-to-medium term.
Mr Nesbitt emphasized the need for the EAC secretariat to fast-track a regional harmonised approach to promptly facilitate interventions at EAC border points to unclog trade blockages and facilitate faster clearance of goods.
EABC has been emphasizing the need for EAC partner states to harmonise Covid-19 related charges and stop testing at border posts to avoid delays in truck and cargo clearance.
This year, East Africa's inflation is projected to stand at 15.4 per cent in the baseline scenario and 16 per cent in the worst-case scenario. This, with Kenya's inflation, projected to stand at 4.9 per cent in the baseline scenario and 4.6 per cent in the worst-case scenario in 2021 according to AfDB.
EABC Chief Executive Officer and Executive Director Dr Peter Mathuki noted that macro-economic policy coordination in the EAC with a tighter monetary policy stance is necessary to control inflationary pressure and foreign exchange volatility.
“Containing inflationary pressures will reduce the overvaluation of national currencies and improve export competitiveness,” he said.
Dr Mathuki noted that while it was critical for Kenya to sign an Economic Partnership Agreement (EPA) with the UK, to avoid losing out on trade, the region's enjoinment to the deal will enable the bloc to export larger volumes of goods and enjoy economies of scale by marketing as one investment destination.
“It is more beneficial if the EAC region is marketed as a single investment destination,” he said.
Dr Mathuki urged EAC Partner States to take advantage of the new USA government and approach it with a bid to revive the negotiations and implementation of the EAC-US Trade and Investment Partnership which were stalled since 2016.
“Given that both US and EAC have already agreed on some areas under EAC-US Trade and Investment Partnership, the approach will aim at enhancement of the implementation of the agreed areas and move forward on areas this two parties have not agreed,” Dr Mathuki added.
He further appreciated TradeMark East Africa (TMEA) for the continued partnership and support to the East African Business Council towards advancing Public-Private Sector Dialogue and safeguarding intra-EAC trade & investments amidst Covid-19.
The meeting was also attended by regional business leaders and other development partners.