Our team is busy working to help people, governments and firms tackle the huge challenges caused by the COVID-19 crisis in the sectors we support.
The environment is uncertain and fast-moving – requiring a dynamic and flexible approach informed by solid evidence and up-to-date intelligence.
We are gathering information and talking to partners to help stakeholders coordinate and ensure sectors are in the best possible position to mitigate the impact, survive the crisis and thrive in the future. We will share more about our response as the situation evolves.
On this page we will also share useful information we have collected from other sources – we hope this may be helpful to others.
COVID-19 IMPACT ON EAST AFRICA – FORTNIGHTLY BRIEFING
Every two weeks we are working with our partners Msingi and Gatsby Africa to produce a briefing on the impact of the crisis in East Africa. This covers information on the macroeconomic impact, how the sectors we work in are being affected, and the donor response. It also includes links to useful trackers and sources of further information.
Week Commencing 6th July Summary
The macroeconomic impact
According to the World Bank, the world is facing the worst recession in 80 years, despite the massive stimulus measures instituted by governments. The Institute for Security Studies believes the COVID-19 crisis may yet trigger a debt emergency across Africa, as governments appear set to lose $45B in revenue this year. Within the East African Community (EAC), trade has fallen 30-40% over the last 3 months as the global demand / supply shock puts $25.3B of annual regional exports at risk. The IMF believes Kenya’s economy may contract for the first time since 1993, although the country’s crop output has been strong this harvest. It is against the backdrop of the pandemic that Kenya prepares to start talks with the US over a Free Trade Agreement. The Bank of Tanzania has stated that the economic impact of COVID-19 has been reduced by the low price of oil (which makes up 20% of imports) and the high price of gold (+22%). Rwanda is being hailed as a health technology success story, as the country digitally maps the spread of the virus in real-time and invests in telemedicine. Fitch has negatively revised its outlook for Uganda, forecasting low GDP growth and an increase in foreign borrowing to make up for the shortfall in revenue. President Museveni has stated the country needs to reduce its import bill, signalling support for industrialisation driven by import substitution.
The sector impact
The projected decline in worldwide lint consumption (-11.3%) and mill use (-15%) suggests low cotton prices are set to continue this year. In positive news for the global textiles & apparel sector, China recorded an increase in new orders last month, which has not happened since January. In Kenya, the COVID-19 enforced ban on second-hand clothes remains a contested issue, as domestic apparel manufacturers advocate for the temporary embargo to become permanent. The impact of the crisis on Kenya’s livestock sector is becoming clearer – Kajiado County estimates its losing KSh 549M in revenue every month owing to the closure of open-air markets. Once restrictions are lifted, the price of livestock is expected to plummet as herders rush to sell. The price of tea at Mombasa’s auction reached a 6-year low, owing to strong supply, disrupted shipments and disappointing demand. Global tea prices are expected to fall 10% in 2020 – before recovering in 2021. In a worrying sign for next year’s crop, tea farmers in Kenya are claiming they are unable to afford fertiliser, which has increased in price significantly since the onset of the pandemic.
The donor response
USAID has announced an additional $50M in support for Kenya, which will be used to strengthen health & water systems; keep SMEs in business; and enable more young children to participate in distance learning. The World Bank has made $43M available for Kenya’s counties, as governors seek to bolster the local health response. In addition, the World Bank is loaning Uganda $300M for general budget support. To receive the loan, the government in Uganda has pledged to enact an array of pro-poor policies, which include improving the targeting of farmer subsidies and investing more in the country’s social protection system.
You can download the latest briefing for the week commencing 06th July by visiting the Gatsby Africa Website.