The five individual member states of the East African Community will lose more than $5 billion (roughly Rwf4.7 trillion) from agricultural exports, this year due to the coronavirus pandemic, according to McKinsey & Company's latest report released in June.
"Africa's exports of food and agricultural products are worth an estimated $35 billion to $40 billion a year, and some $8 billion a year flows through intra-regional trade in these products," the report reads in part.
However, as a result of the coronavirus crisis, there is already reduced food demand, disruption of trade in export crops even within regions, and severe crop production and processing shocks.
The supply disruptions could result in a severe economic blow for countries such as Kenya, Tanzania, and Uganda which rely on agricultural exports as primary or secondary source of export earnings.
Additionally, the report, Safeguarding Africa's Food Systems Through and Beyond the Crisis revealed that "Africa's food and agricultural imports amount to between $45 billion and $50 billion a year along with $6 billion a year in imports of agricultural inputs and if measures are not checked, we are likely to lose the foreign earning from agricultural products."
The report noted that the disruption follows various coronavirus containment measures including the suspension of flights and ultimate reduction of about 75 per cent in available cargo capacity and a twofold increase in cargo costs among others.
Statistically, around 80 per cent of agriculture exports from Africa are to four regions; Western Europe (around 45 per cent), South and East Asia (20 per cent), the Middle East (10 per cent), and North America (five per cent) and all the markets were inaccessible due to lockdowns and suspended flights.
On the other hand, the report warned of food price volatility and nutritional problems due to lack of adequate nutritional foods as a result of increased food insecurity due to affordability of agricultural inputs, and depreciating currencies.
In Rwanda, the Economic Recovery Plan Blueprint, noted that since the Covid-19 outbreak, the weekly volume of exports had dropped to 30-34 MT but was optimistic that it would pick up in coming days.
However, among the ongoing interventions is working with the national carrier, RwandAir to deliver goods to some markets in Europe which has allowed producers maintain delivery of fresh produce to a number of markets in Europe.
The report suggests that safeguarding food security through understanding and managing the forces that shape demand, and ensuring agricultural production is sustained. Adding that "It will also be important to maintain trade flows, and keeping borders open for trade as far as possible"
To resume normalcy of horticulture export, the volumes of weekly exports will have to rise from a current export capacity of 30-35 Metric tonnes to between 80-100 Metric tonnes as was the case prior to the Covid-19 pandemic.
NAEB is working with exporters to consolidate demand in markets served to ensure that there are volumes available to respond to demand.
This has ensured that producers and exports are in position to respond to demands collectivity as opposed to individual efforts which can be challenging for operations.
Other interventions including input support such as subsidization for products such as fertilizers to ensure that farmers can be able to maintain productivity to respond to demand in global markets. The support also includes training on best farming practices to improved productivity and compliance to global market standards.
The agency will also rollout marketing and promoting local produce globally for market linkage as well as work with producers to facilitate compliance and certification.
The intervention is also in the form of facilitation of Business to Business linkages to for exporters to interact with buyers in global markets improving chances of further cooperation and opening new markets.
Source: allafrica.com

World trade fell sharply in the first half of the year, as the COVID-19 pandemic upended the global economy. However, rapid government responses helped temper the contraction, and WTO economists now believe that while trade volumes will register a steep decline in 2020, they are unlikely to reach the worst-case scenario projected in April.
The volume of merchandise trade shrank by 3% year on year in the first quarter according to WTO statistics. Initial estimates for the second quarter, when the virus and associated lockdown measures affected a large share of the global population, indicate a year on year drop of around 18.5%. These declines are historically large, but could have been much worse.
The WTO's 20 April annual trade forecast, in light of the large degree of uncertainty around the pandemic’s severity and economic impact, set out two plausible paths: a relatively optimistic scenario in which the volume of world merchandise trade in 2020 would contract by 13%, and a pessimistic scenario in which trade would fall by 32%. As things currently stand, trade would only need to grow by 2.5% per quarter for the remainder of the year to meet the optimistic projection.
However, looking ahead to 2021, adverse developments, including a second wave of COVID 19 outbreaks, weaker than expected economic growth, or widespread recourse to trade restrictions, could see trade expansion fall short of earlier projections.
"The fall in trade we are now seeing is historically large – in fact, it would be the steepest on record. But there is an important silver lining here: it could have been much worse,” said Director General Roberto Azevêdo. "This is genuinely positive news but we cannot afford to be complacent. Policy decisions have been critical in softening the ongoing blow to output and trade, and they will continue to play an important role in determining the pace of economic recovery. For output and trade to rebound strongly in 2021, fiscal, monetary, and trade policies will all need to keep pulling in the same direction."
In light of available trade data for the second quarter, the April forecast’s pessimistic scenario, which assumed even greater health and economic costs than what had transpired, appears less likely, since it implied sharper declines in the first and second quarters.
The COVID 19 pandemic and associated containment efforts intensified in the second half of March. Strict social distancing measures and restrictions on travel and transport were fully in effect in most countries throughout April and May, and are now increasingly being relaxed. These developments are reflected in a variety of economic indicators which, taken together, suggest trade may have possibly bottomed out in the second quarter of 2020. Global commercial flights, which carry a substantial amount of international air cargo, were down nearly three quarters ( 74%) between 5 January and 18 April, and have since risen 58% through mid-June. Container port also appears to have staged a partial recovery in June compared to May.
Meanwhile, Indices of new export orders from purchasing managers' indices also started to recover in May after record drops in April. It is useful to keep in mind that these rebounds follow historic or near-historic declines, and will need to be monitored carefully before drawing any definitive conclusions about the recovery.
Looking ahead to next year, a slower-than-expected pace of economic recovery would weigh on trade growth. On the other hand, a quick return to its pre-pandemic trajectory would imply trade growth in 2021 of around 20%, in line with the April forecast’s optimistic scenario. Monetary, fiscal and trade policy choices will play a significant role in determining the pace of recovery.
The outlook for the global economy over the next two years remains highly uncertain. This is reflected in the range of GDP estimates from other international organizations, in some cases relying on multiple scenarios. The World Bank, OECD and IMF have all released forecasts showing significant slowdowns in global trade and GDP; all are broadly consistent with the WTO's forecast for the current year. The World Bank's recent forecast would see global output decline by 5.2% in 2020, falling between the WTO's optimistic and pessimistic range. Other international organizations' GDP forecasts for 2020 are also increasingly negative, even as their trade projections stay roughly in line with the WTO's optimistic scenario. These estimates imply a less negative trade response to declining GDP growth than was observed during the global financial crisis of 2008 09.
The responsiveness of trade to changes in income can be measured by the ratio of the growth of merchandise trade volumes to real GDP growth at market exchange rates, also referred to as the income elasticity of trade. The implied elasticity under the WTO's optimistic forecast for 2020 was 5.3 – in line with that seen during the financial crisis. However, if world GDP instead contracts by the World Bank's estimated 5.2% with a trade decline of 13.4%, the elasticity would only be 2.6. Lower elasticity implies trade holds up better for a given fall in income.
There are several reasons why trade might respond less to changes in GDP than it did during the financial crisis. First, fiscal and monetary policies have arguably been rolled out more quickly and on a larger scale in the current crisis than they were in 2008 09. The WTO forecast scenarios did not include an attempt to model either set of policy responses, since, at the time, these policies were just being introduced. Second, income support to households and expectations that the pandemic would eventually ease may have encouraged consumers to maintain consumption levels at a higher level than expected. Finally, much of the decline in output has been concentrated in non tradeable services such as hospitality, personal services and entertainment, which tend to be less import intensive than manufacturing.
Although purchases of consumer durables such as automobiles fell sharply earlier in the crisis other economic sectors have shown signs of resilience in recent weeks. Sales of consumer electronics have thus far held up better than might have been expected, supporting international trade in these products. For example, according to China's customs statistics, the country's exports of automatic data processing machines, including computers, were up 30% year-on-year in US dollar terms in April. Anecdotal evidence similarly points to strong demand for computer and information technology services, which have facilitated working from home during the crisis.
Automobile sales have also rebounded from recent, though admittedly extreme, lows. For example, sales of cars in China were up 5% year on year in May after falling 79% in February. Car sales in Western Europe and the United States were still down sharply in May compared to last year, but declines were smaller than in the previous month. Increased purchases of consumer durables could be seen as a bellwether signaling renewed consumer confidence as lockdowns are lifted and economies start to revive. They will thus be closely monitored in the coming months.
Source: WTO