COMESA: recommendations to governments and the private sector

The COMESA Business Council has published a Business Insider Special Edition, “Business Insights of the COVID-19 Virus”. At the international level, a snapshot of trade disruptions between the Common Market for Eastern and Southern Africa (COMESA) and its key trading partners due to COVID-19 describes a significant drop in international trade (imports and exports) due to logistical and control measures put in place by export destinations. Kenya’s cut flower exports are singled out as a key example, with the Kenya Flower Council highlighting that exports of flowers to the European Union have reduced by almost 50%. The industry is estimated to support more than 500,000 people in terms of direct employment, some of whom are on the brink of investment and job losses. More generally, COMESA suggests that the disruptions caused by COVID-19 will lead to a decrease in the availability of import products, disrupting supply and value chain networks and increasing the cost of raw of materials, products and services to industry and consumers.

At the regional level, airline cancellations, port closures and other transport limitations are affecting the movement of goods. South Africa, a gateway to Southern Africa, has closed 35 ports, affecting trade with Eswatini, Lesotho, Mozambique and Botswana. Several countries in COMESA are landlocked and there is great reliance on corridor networks, cross-border transport and logistics services. Although some of the large borders and ports are still functioning, most are downscaling their services. Beitbridge, Chirundu and Malaba border posts are some of the busiest in Southern and East Africa, providing links across the North-South Corridors and Northern Corridors covering more than ten countries. Limiting these routes will have large effects on trade and the supply of products across countries.

COMESA makes the following recommendations to governments and the private sector to mitigate the drastic effects on businesses and the economy at large.

• National safety nets to support businesses. The World Bank Group has set aside US$8 billion as a stimulus package for financing companies in the wake of the pandemic to cushion its possible effects. It will be imperative to ensure some companies in Africa are able to access the financing options through this vehicle.
• Focus on alternative sourcing markets and intra-regional trade partnerships. The upcoming African Continental Free Trade Area presents an opportunity for maximising regional partnerships and trade.
• Focus on a business continuity plan that takes into consideration the newer models of digital meetings, remote operations managements, virtual office spaces, etc.
• Focus on restructuring business models.
• Focus on increased local production.
• Focus on access to credit and servicing of debt.
• Business readiness in the area of contractual obligations. Businesses should ensure a strong financial position so that they can still effectively carry out their operations, and should keep partners and stakeholders informed of any major changes likely to affect the business position.
• Increased engagement and open communication among all stakeholders.