Coronavirus: No gainsaying it could get worse Africa

The novel coronavirus, recently named Covid-19, has virtually shut down China where it started in the world’s second biggest economy.

While the situation is improving in the vast country, it has caused upheaval in stock markets and disrupting supply chains around the world.

Factories have been closed, events cancelled and flights grounded around the world. China-bound airlines from East Africa – RwandaAir, Kenya Airways – have ceased their flights to the country.

Tanzania has had to postpone its maiden flight there.

Airlines have been hit hard. The New York Times quotes a trade group saying the virus could wipe out up to $113 billion in worldwide revenues this year.

African airlines could suffer a big chunk of that. Kenya Airways has already reported a loss of $8 million.

Elsewhere, the economic impact of Covid-19 is already causing havoc with the disruption of supply of goods from China.

Up to seven countries in the larger Eastern Africa use the port to import their goods from the country – Kenya, Uganda, South Sudan, Rwanda and parts of Tanzania, Ethiopia and the Democratic Republic of Congo.

The goods they import include consumables, electronics, vehicle spare parts, construction materials and other raw materials, clothing, furniture, kitchenware and machinery.

These have now stopped. The four cargo ships that supply the goods have failed to dock at Mombasa port since January following the coronavirus outbreak. That is two months now, amounting to eight failed shipments.

This has predictably raised concerns of a possible surge in prices of consumer goods in the region.The failed shipments have taken a toll on the cost of inputs for companies. The Purchasers Managers Index (PMI) by Stanbic Bank and IHS Markit last month reports a drop in business activity that has led to a reduction of new orders.Stanbic Bank East Africa Regional Economist Jibran Qureishi is quoted confirming firms have faced a shortage of raw materials owing to reduced imports from China due to the virus outbreak.“This has increased output prices as alternative import markets aren’t as cheap as China.”In the meantime, the UK-based think tank, Overseas Development Institute (ODI), shows the East Africa Community as significantly at risk.Countries in the region – Kenya, Tanzania, Rwanda, Burundi and Uganda – are among the world’s 97 economies that are most exposed to a Chinese slowdown either directly or indirectly.The study shows that sub-Saharan Africa faces losses in exports of goods worth $4 billion and $600 million in tourism exports due to […]

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