East African regional business to rise by 11% in 2023

Kenya map. Source: "World reference atlas"

A new index capturing how business stakeholders perceive the business environment in the East African Community points to an 11 percent upswing in business during 2022 and 2023.

The Business Barometer launched Friday, July 29, was commissioned by East African Business Council (EABC). It shows that the rate of investments, operation and performance of businesses in the bloc is recovering with a value of 11 per cent indicating slight optimism in the coming year.

“This slight optimism corroborates the survey findings in the report regarding the impact of the pandemic on business and the perception of the business community on the effectiveness of the measures introduced by governments in response to the pandemic,” reads a section of the 82-page report on the barometer on the state of business and investment in EAC amid the Covid-19 pandemic.

The pandemic had profound effect on businesses in the region that led to, among others, closure of borders, airspaces and ports thereby restricting movement of goods and persons. Containment measures employed by states to curb the pandemic such as curfews and closure of certain businesses negatively affected businesses in various ways.

Businesses in Burundi, Kenya, Rwanda and Uganda reported reduced cost of doing business while those in South Sudan and Tanzania felt that the costs increased during the pandemic and recovery relative to a year before the pandemic.

On Business outlook during 2022 into 2023, most businesses in Rwanda, South Sudan and Tanzania are optimistic about: improvements in the business climate, businesses performance, government interventions for business recovery, recovery from losses suffered during the pandemic and expansion of businesses to other markets within the EAC after the pandemic.

It is notable that businesses in Tanzania stood out with an optimistic view of the outlook across all dimensions.

The EABC barometer on business and investment revealed that curfews had the most negative effect, followed by border closures, banning of in-person meetings, inter-country movement restrictions, and banning of public gatherings, respectively.

The Barometer seeks to highlight the relevant policy issues, regulatory gaps, and recommendations. It also laid the foundation for the regional advocacy and the much needed reforms in the East Africa Community region by the EABC.

Among the study’s immediate recommendations is: the quick resolution of non-tariff barriers; improved investment climate and favorable government policies; provision of corporate tax cuts and tax breaks; provision of low interest business loans and restructuring of current business loans; and ensuring rapid delivery of SME and entrepreneurship policy support by simplifying access to support and ensuring effective digital delivery systems, while safeguarding accountability and effectiveness.

Strategic recommendations

The possible strategic measures that EAC partner states should adopt to recover from the pandemic are also highlighted. These include harmonization of tax regimes across borders. This, as noted, would mean that most basic laws affecting business would be the same across the countries, something that will improve compliance and doing business.

Resolution of political differences is also key. It was pointed out that EAC countries had some .political differences in trade in some goods like maize, sugar and others, and countries need to resolve these if business stability in those goods is guaranteed.

Harmonization of policies, especially trade regimes is also underscored: Each country operates a different tax regime and this adds discomfort to the already struggling business people.

lso recommended is the effective implementation of the free movement of person’s protocol within EAC partner states so as to foster business.

Countries in the region are also urged to “work on trade credits” so as to boost international trade and offer support to traders to do business with limited constraints.

Other recommendations include: a call for EAC partner states to, in future, engage the private sector before instituting measures that affect their businesses.

“Such interventions should be done in a timely manner to save life. Recovery strategies put in place by the governments should prioritize supporting the most affected by disasters including those who lost their jobs or small businesses that closed as a result of the unforeseen circumstances.”

Read the original article on New Times.