East African Community’s (EAC’s) tourism sector will face a 92 percent decline in cash flows due to the impact of the COVID-19 pandemic, says a report released on Thursday.
According to the report by East African Business Council (EABC), the logistics and retail sector will face a 75 percent and 63 percent reduction in cash flows due to measures to contain the spread of the virus.
“However, the pharmaceutical sector has recorded zero effect on cash flows. The COVID-19 pandemic has contributed to the increase of demand for pharmaceutical products as well as the decisions of EAC partner states to allow movement of essential goods,” says the report on the impact of COVID-19 on businesses and investment in the EAC region and recovery strategy that was launched virtually.
The survey sought to find out how COVID-19 has affected businesses in the region by looking into the impact on five critical areas: cash flow, supply chains, employees, projected period of business sustainability and areas companies are seeking support.
The study urges national governments to make additional funds available to assist the tourism and hospitality sector which is under particular stress due to new travel restrictions.
The findings show that the spread of COVID-19 has also generated substantial uncertainty for the regional businesses which may result in the closure of business and investments.
The analysis indicates that about 41 percent of businesses in the trading bloc will not be sustainable for more than six months while another 29 percent of firms may not survive in the next one year.
The review notes that the manufacturing sector has also been affected in terms of sourcing of raw materials, intermediate and capital goods from countries that have been heavily hit by the COVID-19 outbreak.
The report recommends partner states to provide support to key industries in order to expand their capacities to be competitive against imports.
The analysis calls on the economic bloc to emphasize regional value chain integration and development from raw materials to finished goods with a view of reducing industrial and trade risks arising out of external shocks.