Impact Assessment of Covid-19 Case of Eastern

UNECA Sub-Regional Office for Eastern Africa Eastern Africa one of the fastest growing in the

Average Growth Rates (%), 2014 - 2020 8% In 2019, the fastest Eastern Africa-12 7.0 7.0 growing economies were: 7% 6.6 6.6 6.4 6.1 6% 5.7

5% 3.8 Africa 4% 3.2 3.1 3.2 3.0 3% 2.5 2.9 2.9 2.8 2.7 2.7 2% 2.3 2.5 1.6 World 1%

0% 2014 2015 2016 2017 2018 2019* 2020* Source: National sources, UNDESA, ECA calculations Note: Eastern Africa average excludes and South ; *Estimate/forecast Despite high levels of growth, Severe economic vulnerabilities still remain in Eastern Africa as a whole…

Slow paced structural change

Demographic pressures Lack of job opportunities Reduced performance in recent years Demographic pressures are real… Working Age Population (millions) Annual Increase between 2015 and 2030 2.5

2.1 2 Each year, these economies 1.5 need to create an aggregate 1.2 of new jobs 1 1 million 1 7 0.5 0.5 0.3 0.2 0.1 0 0 0 0

Eritrea Somalia Source: UNdata & ILO Yet job creation has not kept pace with economic expansion GDP vs. Employment Growth Rates Average between 2006 and 2016 8%

6% 6% growth required simply to absorb new entrants to job market 4% Madagascar D.R. Congo Kenya Ethiopia Africa Uganda Rwanda Tanzania 2% Djibouti Employment Growth Rate Seychelles XX Somalia Job creation rate well below rate of economic expansion 0% 0% 2% 4% 6% 8% 10% 12% GDP Growth Rate Source: UNdata & ILO Intra-regional trade has stopped growing and stagnated over the past decade in Eastern Africa Intra-Regional Trade (USD m)

EAC IGAD 3500 3500

3000 3000

2500 2500

2000 2000

1500 1500

1000 1000

500 500

0 0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Source: ECA; UNCTADstat Covid-19 brings a whole new level of vulnerabilities…

In Africa as a whole and Eastern africa in particular, some economic effects are expected in the Service sector:

• Slow-down in economic activity due to preventive and restrictive measures • Will result in

• Losses to regional Airlines • Loss of public revenues and houselholds income through -related activities; Regional exports heavily dependent on services, so if economic activity slows down and services are hit, effects could be substantial

Transport Services 14%

Travel Services 5%

Other Services Merchandise Trade 20% 61%

Source: UNCTADStat African services trade generate more than 150 Bn USD per year

African Services Exports, USD Billions

200

150

100

50

0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

-50

-100

imports exports Tr ade balance Trade deficits are less present in services than in Merchandises

Ethiopia

Kenya

Tanzania

Uganda

Madagascar Merchandise trade balance Seychelles Service trade balance Rwanda

Somalia

Djibouti

Burundi

D.R. Congo

-15,000 -12,000 -9,000 -6,000 -3,000 0 3,000 USD million

Source: UNCTADStat The Contribution of Tourism sector in some Top Tourism destinations in Africa amount to 140 bn USD in 2019. In a scenario where the sector looses 20% of revenues, that will correspond to a 28 bn USD loss from COVID.

GDP (USD bn) % share of Visitor % share of International GDP exports exports arrivals (mn) 32.1 9 9.7 9 10.5 29.6 12 12.2 27 11.3 22.7 19 9.6 20 12.3 18.6 5 1.6 3 - Kenya 8 9 1.7 15 1.5 Ethiopia 7.4 9 2.5 38 0.9 Tanzania 6.7 12 2.5 28 - 6.5 16 2.2 11 8.3 Cote d’Ivoire 4.6 10 0.5 4 1.8 3.5 24 2.2 37 1.4 Air transports provide substantial revenues to several economies (about 9 bn USD in total for listed below). With flights suspended because of COVID 19, important losses ahead. Top African Air transport exports, USD Millions, 2017

Ethiopia 2,576

Morocco 1,598

Egypt 1,439

Kenya 828

Tunisia 580

Madagascar 337

Mauritius 274

Algeria 256

Rwanda 183

Seychelles 156

United of Tanzania 155

Togo 139

Côte d'Ivoire 125

Ghana 122

Namibia 114

Cabo Verde 86

0 500 1000 1500 2000 2500 3000 Some African economies dependent heavily on tourism: Among the top 10 in this category, 3 are from Eastern Africa (Toursim share of GDP, %)

Botswana 13

Rwanda 14

Madagascar 16

Tunisia 16

Morocco 19

Gambia 20

Mauritius 24

Sao Tome and Principe 28

Cape Verde 46

Seychelles 67

0 5 10 15 20 25 30 In Eastern Africa the contribution of tourism to the economies varies across countries, and so COVID 19 will have different effects via this sector

EA Tourism Percentage Share of GDP

Democratic Republic of Congo

Uganda

Tanzania

Seychelles

Rwanda

Madagascar

Kenya

Ethiopia

Comoros

Burundi

0 10 20 30 40 50 60 70 For the , the number of tourists coming from African countries is growing, but that might not be enough to protect the sector from experiencing important losses as travel bans are in the rise

70,000,000

60,000,000

50,000,000

40,000,000

30,000,000

20,000,000

10,000,000

0 2013 2014 2015 2016

Africa Arrivals Total arival s Indeed, the origin of Toursists is well diversified for several countries, but still COVID is likely to affect substantially the revenues Distribution of Tourists by of origin (in %)

Kenya, 2019

Tanzania

Cote d'Ivoire

South Africa

Morocco

Seychelles

Egypt

0 10 20 30 40 50 60 70 80 90 100

Tourists from Africa Tourists from -Pacifc Tourists from Tourists from Not specified the region is a net commodity importer…

Ethiopia South Sudan

Somalia

Uganda Kenya

Net Exporter Congo (DRC) Net Importer Tanzania

...and so the overall impact of CODIV is likely to be more ambiguous as Madagascar prices of oil and other commodities

Powered by Bing are goind down © GeoNames, HERE, Microsoft Conclusions

1. Regional growth likely to be very negatively impacted by Coronavirus

2. Measures to prevent spread of disease will slow down economic activity and hit severely the Service sector, across the board.

3. Commodity Price shock will hit hard the net commodity exporters in the region – but will be more ambiguous on other countries.

4. Disruption to trade likely to be severe – but will require creative responses by regional governments to scarcities in some sectors.

5. Over the mid-to long-term, disruption in supply chains (particularly with China) could lead to filling the gap by regional producers – need to implement the AfCFTA! Andrew Mold Chief, Regional Integration and AfCFTA Cluster UNECA Sub-Regional Office for Eastern Africa , Rwanda www.uneca.org