Tourism and logistics sectors have been hit the hardest by the Covid-19 pandemic in the region, a report by the East African Community Business Council (EABC) shows.
The report shows the two sectors, which are critical to the economy of the East African Community, recorded a decline in revenue by 92 percent for tourism with logistics taking a 75 percent hit.
“The survey finds that sectors such as tourism, logistics and retail have significantly experienced a higher percentage of cash flow reduction,” said EABC chief executive officer Peter Mathuki.
The business lobby has proposed that EAC governments allocate enough funds to cater for outstanding Value Added Tax (VAT) Refunds and domestic debt repayments, to give businesses the needed liquidity to boost their working capital during the Covid-19 period.
EABC also wants States to consider granting an extension to businesses in filing their tax returns (VAT, Pay as You Earn, Excise Duty and Withholding Tax.
“This will give relief to businesses which would not be able to meet their tax filing obligations as per the period specified in the law, as they struggle to mitigate the impact of Covid-19 pandemic,” EABC said in the report.
The state of unemployment in the region has also escalated with 36.4 percent of the businesses revealing that they have been forced to lay off their staff.
The World Bank predicts that the impact of the pandemic will lead to a decline of EAC economic growth from 2.4 percent in 2019 to between 2.1 percent and -5.1 percent in 2020. This will cost the EAC partner states between $37 billion and $79 billion in terms of output losses.
Other sectors affected by the pandemic include real estate, finance, construction, events management, ICT, manufacturing and consultancy. Based on the data analysis, COVID-19 has led to decline in sales, increased cross border restrictions and challenges related to sourcing raw materials.
The study was conducted by EABC in partnership with GIZ, to highlight the impact of Covid-19 to business and investment in the EAC, and further propose remedial measures.
Source: Business Daily Newspaper.
