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Coronavirus: Disrupted supply of goods from China hurt eastern Africa

Saturday February 29 2020
cargo

Four big cargo ships that supply goods from China have failed to dock at Mombasa port for the second month in a row. PHOTO | FILE | NMG

By JAMES ANYANZWA
By ALLAN OLINGO

Four big cargo ships that supply goods from China have failed to dock at Mombasa port for the second month in a row following the coronavirus outbreak, pointing to a possible surge in prices of consumer goods in the region.

Mombasa is the gateway through which Kenya, Uganda, South Sudan, Rwanda and parts of Tanzania, Ethiopia and the Democratic Republic of Congo import their goods.

East African Countries import a wide range of goods from China including consumables, electronics, construction materials, vehicle spare parts, clothing, furniture, kitchenware, raw materials and machinery.

The Kenya Ports Authority (KPA), in a response to The EastAfrican queries, said the four Chinese ships have not docked at the Mombasa Port in January and February, implying eight shipments have failed to arrive during the two months.

Most Chinese factories are on lockdown as Beijing scrambles to contain the outbreak, disrupting supply chains across the world.

“The port of Mombasa receives three big dischargers (imports) from China under Evergreen Line and one COSCO ship on a monthly basis. These four ships have not called since the coronavirus effect in China,” said the KPA managing director Daniel Manduku.

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China Ocean Shipping Company (COSCO) is a Chinese State-owned shipping line.

Coronavirus has infected more than 81,000 people globally in about 44 countries, killing more than 2,800.

KPA predicts that the downturn in imports from China will become clearer in March.

“There is an anticipated effect on the throughput in the following months from February given the reduced trading volumes with China as a major trading partner,” said Mr Manduku.

A study by the UK-based independent think tank, Overseas Development Institute (ODI), shows that Kenya, Tanzania, Rwanda, Burundi and Uganda are among the world’s 97 economies that are most exposed to a Chinese slowdown either directly or indirectly.

In 2019, China’s trade with Africa stood at $208 billion, while exports were estimated at $113.2 billion.

The report, which was released this February, shows that sub-Saharan Africa faces losses in exports of goods worth $4 billion and $600 million in tourism exports due to the coronavirus.

Other African countries most exposed to the coronavirus disruption include Angola, Congo, Sierra Leone, Lesotho and Zambia.

For instance, 60 per cent of Angola’s total exports are to China and 10 per cent of tourists are from China.

According to the report, Kenya’s foreign direct investments (FDI) inflows from China is estimated at 1.85 per cent of the gross domestic Product (GDP) while its exports stand at 13.18 per cent of GDP.

Personal remittances from China are estimated at 3.09 per cent of GDP, while migrants as a percentage of the population stands at 2.35 per cent.

Kenya’s international tourism receipts from China as a percentage of total exports stands at 14.98 per cent.

Nairobi’s exports to the Asian nation in January declined by 44,000 tonnes (11.3 per cent) compared with the same period last year, largely due to decreased sales of Titanium by 53,000 tonnes (80 per cent) and Soda ash by 25,701 tonnes (98 per cent).

“We have also lost an average two ships call for loading at Base Titanium. We have not quantified the business loss yet, however, if the virus threat is not contained soon, we expect reduced number of vessels calling especially from China, hence a volume reduction which will also affect revenue collected,” said KPA.

EMPTY SKIES

The ODI report shows that there is a large amount of travel between China and Africa, with hubs such as Addis Ababa, Cairo and Nairobi being particularly at risk owing to the large number of Chinese travellers that pass through these airports.  African carriers that have cancelled flights to China include RwandAir, Kenya Airways, Royal Air Maroc, EgyptAir, Air Madagascar and Air Mauritius.

Air Tanzania has postponed its maiden flight to China.

Globally, Virgin Atlantic, Germany’s Lufthansa, Air France and KLM SA, have also stopped flying to China.

Kenya Airways has already lost more than $8 million in revenues after the loss-making national carrier suspended all flights to and from Guangzhou, China, with effect from January 31, as a precaution against the deadly Coronavirus 2019 outbreak. The China Southern Airlines resumed flights from Guangzhou to Nairobi on February 26 but a court order issued on Friday again suspended the flights. Globally, the International Air Transport Association (IATA) forecast the industry is set to lose $29 billion worth of passenger revenues this year, of which $40 million will be linked to African airlines.

According to IATA, carriers outside the Asia-Pacific are forecast to bear a revenue loss of $1.5 billion, assuming the loss of demand is limited to markets linked to China.

Global traffic is forecast to decline by 4.7 per cent, causing the first overall decline in demand since the Global Financial crisis of 2008-2009.

Kenya’s Ministry of Health has so far investigated 17 alerts and all have tested negative for COVID-19.

The viral outbreak has hit Kenyan traders hard.

“Business is not good. There are no imports coming in from China. Normally we import a lot of electronics, spare parts, computers, cartridges and cosmetics from China but we don’t have goods coming in now. No goods at all,” said the chief executive of Importers and Small Traders Association of Kenya, Sammy Karanja, said.

He added that the small traders have lost Ksh30 billion ($300 million) worth of imports, which have declined by as much as 80 per cent in the past two months.

“We are looking for new markets to remain in business. Right now we can’t travel to China because of the travel advisories. We have to diversify our markets because that is the only way to survive,” said Mr Karanja.

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