EABC WEBINAR ON REGIONAL PERSPECTIVE ON PRE-BUDGET AND FINANCIAL SECTOR RESPONSE TO COVID-19 HELD ON 10TH JUNE 2020 14.00HRS-16.00HRS EAT VIA MICROSOFT TEAMS

EAST AFRICAN BUSINESS COUNCIL

EABC WEBINAR ON REGIONAL PERSPECTIVE ON PRE-BUDGET AND FINANCIAL SECTOR RESPONSE TO COVID-19 HELD ON 10TH JUNE 2020

14.00HRS-16.00HRS EAT VIA MICROSOFT TEAMS

 

REPORT

  • INTRODUCTION:

 

The EAC region has been negatively impacted by the COVID-19 pandemic, both socially and economically. The impact of the COVID-19 pandemic on the financial sector has been attributed to the disruption of economic activities across the world and in the EAC region.

 

On 11th June 2020, three EAC Partner States i.e. Kenya, Uganda and Tanzania will unveil their Budgets for the Fiscal Year 2020/2021 after holding Pre-budget Consultations of EAC Ministers of Finance and Economic Planning During the Pre-budget meeting Ministers of Finance and Economic Planning agreed on various tax measures for the financial year. This financial year, EAC Partner States are uniquely challenged with COVID-19 pandemic and some have reviewed their targeted economic growth downward by nearly 50 percent. In the region, the impact of the pandemic has been felt differently across sectors and countries depending on the national measures instituted to contain the spread of the pandemic as well as the linkage of the particular sector to the global economy. EAC Private Sector expects the 2020/21 Budgets for EAC Partner States will have the economic stimulus packages that will mitigate the impact of the COVID-19 pandemic on businesses and East Africans, stimulate economic growth and recovery.

 

Like many other sectors, the financial sector in the EAC region is reeling from the impact of COVID-19 pandemic. All sub-sectors of financial sectors including deposit-taking & non-deposit taking institutions and financial markets infrastructure providers have been negatively impacted by the pandemic. Banks, stock markets, and pension funds in the EAC region have been negatively affected.  The impact of the COVID-19 pandemic to the financial sector has been attributed to the disruption of economic activities across the world and in the region as nations institute various measures to fight the pandemic.

 

Given the importance of budgets in addressing impacts of COVID-19 pandemic on EAC economies, the East African Business Council (EABC) engaged with stakeholders in the financial sector and Tax Experts in the region via an online webcast on the Regional Perspectives on Pre-Budget and Financial Sector Response to Covid-19 in the EAC Partner States on 10th June 2020 at 14:00hrs -16:00hrs. Senior Government Officials, Business Leaders, Sector Stakeholders and Development Partners across EAC region were invited to participate and jointly chart out recommendations and proposals on the economic stimulus packages for the growth and recovery of the EAC region.

 

2.0 OBJECTIVES OF THE WEBINAR

 

The objectives of the Webinar were to assess pre-budget proposals in light of COVID-19 and the impact of COVID 19 on EAC economies & the financial sector as well as to come up with regional stimulus package for economic recovery.

  • PANELISTS/PARTICIPANTS

The Webinar attracted participants from the business community across EAC, EAC Secretariat, EAC Public sector and Development Partners in the EAC region. The high-level panelists for the webinar included: Mr. Joseph Sheffu, Country Managing Partner, Ernst & Young, Tanzania; Dr. Habil Olaka, Chief Executive Officer, Kenya Banker Association, Eng. Jenifer Gache, Industrial Development Advisor EAC Secretariat and … Director of Policy Insurance Regulatory Authority of Uganda.

 

4.0 OPENING OF THE MEETING:

In his remarks, Dr. Peter Mathuki, the EABC Executive Director thanked the panelists for finding time to take part in the webinar and share their expert views on pre-budget and the impact of covid19 on the EAC Financial sector. In the same vein, he thanked all participants for their attendance. He requested all participants to observe a minute of silence following the death of HE Pierre Nkurunziza President of Republic of Burundi and Member of EAC Heads of State Summit.

5.0 KEY HIGHLIGHTS/OBSERVATIONS FROM THE DISCUSSIONS:

  • It was observed that due to the impacts of COVID-19 pandemic in the EAC economies all three EAC Partner States are expected to projected lower economic growth in 2020 than 2010 as follow Kenya in 2020 against 2019, Tanzania in 2020 and Uganda in 2020 against in 2019.
  • Noted that the International Monetary Fund (IMF) is projecting that economic growth of sub-Sharan African will decline to negative 5%
  • It was observed that generally all sectors of economies across countries have been affected - tourism, manufacturing, transport & logistics and agriculture being adversely affected.
  • It was noted that in combating the pandemic, the three countries have been implementing variegated measures ranging from partial to total lockdown
  • Observed that in mitigating the impact of the pandemic the countries have applied different fiscal and monetary measures aiming at cushion citizens and economy
  • Noted that the disruption on tourism and agricultural exports which are larger contributors to foreign exchange earnings in the region is likely to worsen countries’ balance of payments
  • It was observed that banking and insurance sub-sector being highly regulated sectors were the best place to manage the shock

6.0 KEY RECOMMENDATIONS FROM WEBINAR:

  • To stimulate economic growth EAC Partner States should continue investing on infrastructure, inject more liquidity in the economy and Government hasten payment of pending bills to the private sector and VAT refund,
  • COVID-19-pandemic should catalyze further EAC integration, digitalize economies, diversify manufacturing and foreign exchange earnings;
  • To mitigate the impact of COVID-19 to businesses EAC Partner States handle global trade and supply chain as a bloc;
  • EAC Partner States should give tax relief to the digital platform as it's at nascent stages
  • EAC Partner States should create a conducive environment for the private sector to invest in agriculture;
  • There is a need to enhance Public-Private Dialogue in order to come up with better policy for the agriculture sector;
  • Partner States need to finalise the review of EAC Common External Tariff (CET) in order to do away with Stay of Application and Country’s Specific Duty Remission
  • Private sector in the region to enhance involvement in the harmonization domestic taxes;
  • Partner States should promote value chain at regional level in order to link producers across the region and enhance their interlinking
  • Public and Private Sector should work together to map out and identify critical sectors for regional value chain promotion;
  • EAC Partner States should establish a regional Relief Fund to cater for SMEs dealing with Exports and Cross border trade & investment; as well as National Relief Fund to cater National SMEs;
  • SMEs should embrace ICT as one way of mitigating the impacts of COVID-19 pandemic
  • Partner States to enhance training of the workforce to enable SMEs to embark on diversifications;
  • Partner States should make tax regime simple, transparent and predictable to SMEs;
  • For the private sector to focus on value addition and industrialized the region Partner States should provide industrial park services;
  • Partner States should create long-term better policy to attract more investment;
  • To promote local content EAC Partner States should complement each other based on their competitive advantages and take advantage of the larger market created by EAC;
  • EAC Partner States should approach the AfCFTA as a regional bloc;
  • There is need to create strong relationships among the social sector, productive sector and trade in order to minimize disruption during the crisis in the region;
  • Private sector should be involved in the development of the East African Regional Recovery Strategy.

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