Introduction

This update — the 3^rd of its kind — contains an overview of the flow of goods in and out of the 24 respective countries forming part of the East and Southern Africa (ESA) region for June and July of 2020. The outbreak of the novel coronavirus, COVID-19, has been impacting business and life on all levels of society for the last couple of months, for many, recalibrating their understanding of normalcy at every possible juncture. Globally, countries have closed borders, suspended many flights, and have gone into lockdown in an attempt to contain the virus. Since the initial impact of COVID-19, a large number of countries have subsequently started re-opening their borders in an attempt to kick-start their respective economies.

On a humanitarian note, the ESA region currently accounts for approximately 50% of the COVID-19 cases in Africa, with the share having steadily increased over the course of the last couple of months due to the initial delayed infection rate. Nonetheless, there are some positive factors to reports, as the rate of increase has subsided in recent weeks, currently at around 15% increase per week, compared to a high of 40% increase per week, approximately a month ago. With that being said, it is important to carry on with the measures put in place by the respective country’s authorities across the region. However, there has been a concerted effort towards the accelerated opening of economies, as the preservation of livelihood of many citizens is now also paramount, which includes many people involved in regional cross border trade.

The aim of this paper is therefore to provide an update on the current situation across the ESA region regarding the movement of goods, consisting of a (1) Continent summary; a (2) Regional summary; a (3) Country summary; (4) ESA COVID-19 Statistics; and lastly, a (5) Updates and recommendations from Regional Economic Communities in ESA.

Continent summary

After the delayed reaction of the spread of the virus, the concern is mounting as infections in Africa started accumulating (note the comprehensive table below). Alarms have been raised since the continent is already plagued with a plethora of issues (such as unemployment, a poor standard of living, lack of medical infrastructure, etc.). A large share (71% in fact) of employment in Africa is informal, which means that the majority of the continent’s people have not been able to earn a living in many countries due to the strict lockdown regulations imposed. Moreover, since access to medical treatments is sporadic in many areas throughout African, the concern of the spread of the COVID-19, therefore, remains real and apparent for many Africans.

In terms of trade-related operations throughout the region, COVID-19 effects have accentuated the reliance on road transport throughout the region, since approximately 80% of intra-Africa trade is transported by road. Regionally vulnerability and overall supply chain security consequently exist, with the IRU (World Transport Organization) reporting that the road transport industry is one of the sectors most impacted by COVID-19. “This is caused by transport and movement restrictions put in place by countries to manage the pandemic, resulting (in) disruptions to supply chains and (mobile) networks and the overall economic slowdown.[1]”. Accordingly, a need exists to continually focus on improvements at respective regional border posts, especially with the motivation towards improving border operations and reducing transaction costs for trade and facilitating intra-Africa trade.

To provide an overall economic overview, the African Development Bank (AfDB) published its African Economic Outlook 2020 Supplement on 7 July 2020, cautioning the fact that the continent’s GDP would fall by at least 1.7% in a best-case scenario. Alarmingly, in the worst scenario — as calculated on the presumption that the coronavirus pandemic continues into the second half of 2020 — the continent’s GDP could contract up to 3.4%. The following excerpt succinctly emphasizes the revised outlook due to the effects of the pandemic:

“Real GDP in Africa is projected to contract by 1.7% in 2020, dropping by 5.6 percentage points from the January 2020 pre-COVID-19 projection of the virus, if the virus has a substantial impact but of short duration. If it continues beyond the first half of 2020, there would be a deeper GDP contraction in 20202 of 3.4% down by 7.3 percentage points from growth projected before the outbreak of COVID-19.”

The figure below illustrates the AfDB’s projections for Africa’s GDP growth for the coming years:

Figure 1 – Potential impact of Covid-19 on Africa’s GDP growth

Whichever scenario pans out, the African continent is sure to feel the lasting and devastating economic effects of the virus.

Regional summary

After experiencing the delayed effects of the COVID-19 pandemic compared to the rest of the world, a higher level of preparedness is urgently required to prevent and mitigate further spread (and subsequent effects) of the COVID-19 pandemic in the ESA region. This includes increasing resources for testing and other areas of public health; as well as concerted efforts to reduce the impact on households and the economy in general. Especially for the poorest citizens in the region.

Compared to the rest of Africa, the projected economic impact of COVID-19 is even worst for the greater Southern Africa region. The AfDB projects that in the worst-case scenario, growth will fall to -6.6% in 2020 before recovering to 2.2% in 2021. Furthermore, the impact of COVID-19 in South Africa — the region’s largest economy, as well as an important gateway — is projected to trickle to the rest of the Southern African economies. For SACU specifically, Botswana, eSwatini, Lesotho, and Namibia are seen as being very vulnerable to South Africa’s impending economic contraction, while Mozambique’s sales of gas and electricity could also be adversely affected due to its reliance on South Africa as a provider thereof.

On the other side of the region, economic impacts will also be noteworthy in East Africa. This is due to several of macroeconomic factors, most notably: lower demand among trading partners, disruptions in supply chains, lower domestic production, and reduced tourism and hospitality activities[2]. Fortunately, East Africa is projected to have the most resilient performance throughout Africa amid the pandemic. This can largely be attributed to the fact that entering the crisis, economic growth was particularly strong at around 5.2% in 2019. The AfDB reports that, in the baseline scenario, growth is projected to be 1.2% in 2020, and in the worst-case scenario, projected growth at least remains positive for the year, at around 0.2%. Overall, the region is better safeguarded against the effects of COVID-19 due to its wider economic diversification and its lower reliance on primary commodities.

Noting these potential adverse economic effects, what the crisis has emphasized is that improving business environment competitiveness in the region is crucial, especially in terms of regional integration. Here, the conversation once again turns towards intra-African trade with the African Continental Free Trade Area (AfCFTA). The AfCFTA is projected to provide medium- and long-term opportunities for markets to spur economic growth. “The intra-African market is expected to mitigate some of the negative effects of Covid-19.[3]”

ESA COVID-19 statistics

The following table summarizes the COVID-19 statistics for the ESA region as of August 5, 2020, as well as indicating the current state of border closures and lockdown status for the respective countries. The WCO ESA RPSG extends its condolences to all families affected by COVID-19.

Table 1 – Covid-19 spread and border closures in East and Southern Africa – 5 August

Country	Infections	Deaths	Border closure	Lockdown status
Angola	1 280	58	Borders are open to all cargo and commercial travel.	Partial lockdown (28 June)
Botswana	804	2	Only cross-border cargo movement is allowed.	Partial lockdown, Gaborone in full lockdown (31 July)
Burundi	395	1	Movement of cargo across borders is allowed along with essential travel.	No lockdown (15 June)
Comoros	386	7	Borders remain close to all traffic except for trade activities.	Partial lockdown (30 April)
Djibouti	5 248	8	Port and Corridor are operational. Only commercial traffic is allowed between Djibouti and Ethiopia.	Partial lockdown (31 July)
Eritrea	282	0	Borders remain closed to all movement except for the movement of cargo.	Full lockdown (31 July)
Eswatini	2 856	49	Cross-border trade is expected to operate normally, limited movement of people across borders.	Full lockdown (31 July)
Ethiopia	19 877	343	Borders are open to all cargo as well as commercial and leisure travel.	Full lockdown (31 July)
Kenya	23 202	388	Ports are operating at a reduced capacity. All travel is permitted.	Partial lockdown (31 July)
Lesotho	726	21	Borders remain close to everything except trade.	Partial lockdown (31 July)
Madagascar	11 895	123	Ports are operating as normal for the movement of goods.	Partial lockdown, with full lockdown in selected areas (31 July)
Malawi	4 361	128	Trading across borders is allowed along with the movement of essential workers across borders, leisure travel is prohibited.	No lockdown (27 July)
Mauritius	344	10	The movement of cargo and essential travel is allowed. All other travel is still prohibited.	Partial lockdown
Mozambique	2 029	15	Only the movement of cargo and essential travel is allowed.	No lockdown (29 July)
Namibia	2 470	12	The movement of cargo across borders remains operational. A trial period (3 Aug to 17 Sept) will allow several visitors from selected countries into Namibia.	Partial lockdown (lowest level of lockdown)  (3 August)
Rwanda	2 092	5	Ports are open to all cargo and tourists.	Partial lockdown (full lockdown in selected areas)
Seychelles	114	0	Ports operate normally for cargo. Passengers from low and medium risk countries are allowed to travel to Seychelles.	Partial lockdown (1 June)
Somalia	3 220	93	Borders are only open to trade.	Partial lockdown
South Africa	516 862	8 539	All cargo is allowed to move across borders. Essential travel is allowed	Partial lockdown
South Sudan	2 437	47	Trade operates as normal. Commercial flights are limited to repatriation.	Partial lockdown (3 August)
Tanzania	509	21	Borders have opened completely to all travelers.	No lockdown
Uganda	1 203	5	Free movement of cargo across borders, the movement of pedestrians is prohibited. The border with DRC was open for three days to allow refugees entry into Uganda.	Partial lockdown (31 July)
Zambia	6 793	173	Only commercial flights are operational. Movement of cargo across borders is operating.	Partial lockdown (31 July)
Zimbabwe	4 075	80	Borders remain open to all cargo.	Partial lockdown

The following section summarizes some policy actions of ESA governments to counter COVID–19 effects.

Country summary

1. Angola

The Angolan government reiterated that they would continue their commitment to the fiscal consolidation reforms, moving towards a better private-sector oriented economy. Some of the measures the government employed to support businesses during the pandemic include easing access to credit. Approximately 40% of the sovereign wealth fund’s net financial assets of $1.5 billion can complement efforts to mitigate the impact of COVID–19.

2. Botswana

Throughout the duration of the COVID-19 pandemic, Botswana’s government has made it a priority to impose and execute preventative measures. Some of these restrictions include travel restrictions, border closures, and suspension of public gatherings. The government has set up a COVID-19 relief fund (financed privately and publicly), to assist businesses, support employment, purchase strategic supplies, and finance a recovery plan post-COVID-19.

3. Burundi

The government of Burundi adopted a national contingency plan for preparedness and response to COVID-19 to the cost of $26 million. Although the economy has shown a 7.6% increase in the consumer price index in the end of April no specific economic policies have been adopted thus far. Monetary authorities in the country have also not implemented any specific mechanisms to support the economy.

4. Comoros

The government has focused on improving or implementing health policies strengthening prevention, response, and care measures. This is done using border surveillance, raising public awareness, ensuring compliance with preventative measures, and securing effective care for infected patients. In an attempt to alleviate some of the financial strain caused by the virus the government has committed to reducing taxes and customs duties by as much as 30% and simplifying customs clearance procedures for essential goods. There have also been packages amounting to about $220 000 per month is granted to companies that have been severely affected by the restriction of airport closures.

5. Djibouti

The Ministry of Health mobilized students of the faculty of medical and general practitioners to increase its human resources. Seven sites have also been established for quarantine and isolation. Approximately $11.2million has been allocated to small businesses in catering and tourism in the form of micro-credits. Payments to certain government institutions have been suspended for households that have been seriously affected by the virus.  

6. Eritrea

Although a national response plan has not yet been announced, authorities are following the WHO’s preparedness guidelines and response actions. Access to credit has been increased for small and medium enterprises, hopefully preventing complete closure.

7. eSwatini

The government of eSwatini has imposed a partial lockdown with travel restrictions along with social distancing policies in an attempt to reduce contagion. A tax relief fund of $5 million aimed at small and medium enterprises was enacted. The planned increase in electricity tariffs has been deferred and fuel prices have been reduced.

8. Ethiopia

The Ethiopian government has prepared a $1.6 billion emergency response plan, focusing on the health sector, social protection, and sustainable economic activities. The government allocated $156 million to the health sector to strengthen the capacity of the health sector to better respond to the pandemic and contain the spread of the virus. Existing schemes to protect the livelihoods of the most vulnerable people have received special attention and development. The economic management measures aim to protect jobs, ensure critical imports continue, sustain production, and protect livelihoods.

9. Kenya

The Kenyan government has introduced a variety of measures to mitigate the impact of the virus in the economic, social, and health fields while attempting to stimulate growth. Resources are being rechanneled to the health sector to hire additional workers, increase bed capacity, and enhance research capacities at medical facilities. Soft loans have been provided to the tourism sector while SMEs are receiving seed capital. Income tax and VAT rates are being cut in an attempt to protect the income of households.

10. Lesotho

The government has set up the Private Sector Economic Relief Fund ($33 million) and Disaster Relief Fund ($47 million). These funds are to support micro, small and medium enterprises. The government also created a food security scheme to the value of $80 000 to improve food security and nutrition in poor households.

11. Madagascar

The government severely restricted travel and public gatherings. The government also adopted a traditional plant-based treatment. Public authorities established a six-month tax break for tourism businesses.

12. Malawi

The government of Malawi’s health measures includes increased spending to purchase testing equipment and ventilators, to refurbish quarantine centers, build capacity, and recruit healthcare workers. They have also prioritized the support of livelihoods, social protection, and economic stabilization measures. The fuel price has been cut, loan allocations to small and medium enterprises have been reduced and tax cuts have been imposed on mobile money and electronic payment systems.

13. Mauritius

The government introduced the Plan de Soutien, aimed at supporting economic operators across all sectors, along with a Wage Support and Assistance Scheme to provide financial support to private sector employees who become unemployed as a result of COVID-19. A solidarity fund has been established to support the vulnerable portion of the population.

14. Mozambique

He government of Mozambique is focusing on providing support in strengthening social protection and easing credit constraints. The Monetary Policy Committee is forgoing fines on delayed tax payments. It is also easing import licensing, exempting the payment of import duties for medical equipment and supplies, and suspending VAT on hygiene products.

15. Namibia

An economic stimulus and relief package of $450 million was created to mitigate the economic and social impact of the pandemic. Wage subsidies have been granted for the sectors that suffer the most under the pandemic. The Bank of Namibia allowed banks to grant moratoriums of between 6 and 24 months on loan payments.

16. Rwanda

The government has designed and approved a national preparedness plan amounting to $73.5 million, which will be funded by the government as well as donors. Strict social distancing measures have been employed and the lack of intensive care beds is a prominent point of discussion. There has been a suspension of tax audits and an extension of the tax filing and payment deadlines

17. Seychelles

Travel restrictions and curfews have been imposed to curb the spread of the virus. A special allowance is given to frontline workers and customs officers, among others. Budgets for key government schemes and agencies have been increased. The president also announced that the budget for 2020 will be increased by $67.4 million.

18. Somalia

$2.5 million has been allocated for loans to small and medium enterprises. There are also tax exemptions that will be provided for basic consumables such as rice, dates, flour, and cooking oil. Social safety nets are being developed as both informal and private sector employees for the largest part do not have pension funds.

19. South Africa

South Africa has been placed under one of the strictest lockdowns in the world, with a ban on alcohol and cigarette sales. Authorities have allocated $1.6 billion to a special National Disaster Benefit Fund and a Solidarity Fund. The COVID-19 pandemic stimulus package ($26.3 billion) is distributed as a loan guarantee scheme, job protection, and worker income, tax relief, social grants, COVID-19 health-related services, and municipality emergency services.

20. South Sudan

A Public Health Emergency Operations Center has been established to deal with disease-specific emergencies. Other interventions include procuring critical medical supplies and testing kits, enhancing the capacity of healthcare workers, and rehabilitating health infrastructure.

21. Tanzania

The Tanzanian government has imposed travel restrictions and restricted public gatherings, although the government did not impose a full lockdown. A loan moratorium has been put in place for businesses that are experiencing financial problems.

22. Uganda

A social mitigation measure, aimed at supporting the most vulnerable households has been implemented by the government, with a special focus on food distribution. Additional resources have been mobilized for testing, community engagement, and PPE. Credit relief for up to 12 months is given to businesses that are under financial stress.

23. Zambia

The Zambian government was quick to impose travel restrictions in an attempt to contain the spread of the virus, closing all airports except the main airport in Lusaka. Penalties and interests on outstanding tax liabilities were waived and excise duties on critical goods were suspended. Custos duties and VAT were suspended on medical supplies crucial to combatting the virus. The government provided $645 million to alleviate economic pressures and liquidity constraints in financial institutions.

24. Zimbabwe

One of the Zimbabwean government’s main priorities is improving the overall health system. The Ministry of Health has funded additional employment costs, recruitment of additional staff, capacity building, and PPE procurement. ZW$32.8 million ($90 600) has also been provided for e-learning. Foreign permits have been extended, along with tax filing deadlines. The Zimbabwean government has committed to assisting vulnerable families to the value of ZW$200 ($0.55).

Updates and recommendations from Regional Economic Communities in ESA

1. COMESA:

The COMESA Extra-Ordinary Council of Ministers issued a set of guidelines for the movement of goods and services across the COMESA region during the COVID-19 pandemic. The report continuously emphasizes the importance of cooperation and free movement of goods in the region, especially to ensure the effectiveness of supply chains.  Some of these guidelines include:

1. Prioritizing the clearance of essential goods and relief consignments within the region.
2. Facilitate the movement of essential products, food supplies, pharmaceuticals, and medical equipment, including PPE into the region.
3. Apply risk management and perform inspections on essential products only when deemed high risk.
4. Encourage coordination of inspections by Customs Authorities and other government agencies to speed up the process.
5. Facilitate and encourage the use of e-commerce and electric payment platforms to reduce the use of cash and curb the spread of the virus.
6. Ensure that the implementation of COVID-19 mitigation measures does not create unnecessary obstacles in the supply chain.

2. EAC:

The EAC’s COVID-19 response plan includes a list of areas to focus on once the basic steps for curbing the spread of the virus has been implemented[2]. These focus areas include:

1. Develop and share guidelines to partner states to support and maintain quality care.
2. Provide information to the staff of EAC organs and institutions and people in the community to help them manage the risk of exposure and reduce the spread of the virus.
3. Capacity strengthening for the EAC partner states in various areas.
4. Share relevant scientific knowledge and conduct regional research to guide policy and practice.
5. High-level advocacy for resources.
6. Facilitate the movement of goods and services in the region, including support to MSMEs.

3. SACD:

The SADC Regional Response to COVID-19 Pandemic has released its 8^th report, listing a range of key recommendations for the region along with an update on the progress of treatment testing[3].

Health

1. Member States are being called on to coordinate, communicate, collaborate, and cooperate to support the PACT Initiative to control COVID-19 in Africa.
2. Member States are urged to adopt the recommended guidelines on criteria for releasing COVID-19 patients from isolation as well as the guide on breastfeeding for mothers with suspected or confirmed COVID-19 as a reference, to address the emerging health issues as they arise.
3. Member States are urged to note the disease interactions between HIV, TB, COVID-19, and other diseases and ensure that caution is taken to ensure strengthening of health systems to ensure that patients living with these pre-existing conditions are well managed at health facilities to reduce mortality incidence.

Economic and Financial Sectors

1. Member States are urged to ensure that Monetary policies remain accommodative where inflation pressures are low, to maintain financial sector stability.
2. Member States are urged to implement structural reforms to put their fiscal positions on a path consistent with debt sustainability
3. As the economies start to recover, Member States are urged to shift policy focus from broad fiscal support to more affordable, targeted policies.
4. Member States are urged to increase investment in, and adopt renewable energy technologies, in keeping with the SAPP’s Climate Change Mitigation and Adaptation Strategy, as part of their economic stimulus and recovery plans.
5. Member States are urged to use the opportunity to invest in improving their national grids.

Natural Resources and Conservation Sector

1. Member States are urged to increase joint Transboundary Conservation activities to complement efforts in the region and increase effectiveness against illegal activities.

Conclusion

This update — the 3rd of its kind — contained an overview in respect of the flow of goods in and out of the 24 respective countries forming part of the East and Southern Africa (ESA) region. Several ESA countries have eased lockdown measures in an attempt to reboot their respective economies as the infection rates have started to slow down. Nonetheless, striking the balance between life and livelihoods remains very important.

Most countries throughout the region still have some level of lockdown in place which has been a substantial strain on the region’s economic activities and overall collective health of its people. The concerns for food security, income generation, and — in some countries — even social unrest with reports of police brutality remains as apparent as previously reported on.

Internationally, McKinsey and Company have indicated that global trade demand is projected to decline by 13-22% in Q2/Q3 2020, depending on the macro-economic scenario. This will also have a lasting effect on trade throughout the region, however, some countries will be worse affected than others.

Ultimately, the size of impact and path of recovery could vary greatly across commodity groups, depending on the supply and demand shocks. Economic recovery for the region’s supply chain broadly depends on international trends and the recovery of each respective country’s resilient trading community. Importantly, the aforementioned matters need to coincide with the ability of the economic support measures to make a significant impact, as well as the successful implementation of a phased and carefully planned lockdown exit strategy for international trade to return volumes to ‘normal levels’.