[COVID-19\Africa Trade & Business]
Dorothy Tembo: “The COVID-19 pandemic has been both a health and an economic crisis and has presented a number of challenges for SMEs and global supply chains.”
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COVID-19 is having a damaging effect on African businesses and trade.
COVID-19 is having a profound impact on global trade and the businesses that drive it, says a new report by the International Trade Center (ITC). The report highlights the devastating effect the pandemic is having on the small and medium enterprises so important to Africa’s economies.
The SME (small and medium-sized enterprises) Competitiveness Outlook predicts that African exporters are set to lose more than $2.4 billion in global industrial supply-chain exports. The expected losses are a result of factory shutdowns in China, the European Union and the United States.
The 2020 edition of the ITC’s 2020 Outlook reveals just how profoundly SMEs and global supply chains have been tested by the COVID-19 pandemic, leaving international trade in turmoil.
The report also highlights the importance of the African Continental Free Trade Area (AfCFTA) in any recovery.
ITC acting Executive Director Dorothy Tembo of Zambia said: ‘The COVID-19 pandemic has been both a health and an economic crisis and has presented a number of challenges for SMEs and global supply chains.”
Supply chain linkages
The bulk of the African export losses – more than 70 percent – is caused by the temporary disruption of supply-chain linkages with the EU, the report released on June 22 showed.
While most countries experienced some form of shutdown, the findings in the SME Competitiveness Outlook highlight that it was lockdowns in China, the European Union and the United States that have had the most significant impact on trade.
Together these three economies account for 63 percent of world supply-chain imports and 64 percent of supply-chain exports. The report estimates that the global disruption of these manufacturing hubs will amount to $126 billion in 2020.
With countries in various stages of lockdown or loosening confinement periods, it is becoming clear that the virus has particularly impacted SMEs.
Although the pandemic has affected every corner of the world, the economic earthquake unleashed by COVID-19 does not affect everyone in the same way.
With fewer resources to ride out the storm, micro, small and medium enterprise (MSMEs) have been particularly vulnerable to the repercussions of the crisis.
These firms in developing countries will be disproportionately affected, especially in Africa, least developed countries and small island developing states.
Small businesses active in trade tend to be more competitive and resilient. Yet many of them have been shaken by severe disruptions in international supply chains.
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