Why Tanzania’s exports to EAC soared despite Covid

Dar es Salaam. Tanzania’s exports to other East African Community (EAC) countries increased by nearly 20 percent in 2020 - with economists associating the trend with a diversified economic structure during the Covid-19 pandemic.

The country’s exports to the region amounted to $811.2 million - up from $678.5 million in the previous year - while imports declined slightly, dropping to $326.7 million from $334.7 million. The trend resulted in a trade surplus of $484.5 million compared to a surplus of $343.8 million in 2019, according to the central Bank of Tanzania’s Annual Report for 2020/2021.

Kenya continued to be Tanzania’s biggest trading partner within the EAC, accounting for 28.4 percent of the intra-EAC exports in 2020, and 76.4 percent of imports. Economic experts associate the trend with the global lockdowns and other Covid-19 restrictions that made the EAC countries turn to each other in trading.

The director of the Centre for Chinese Studies at the University of Dar es Salaam, Prof Humphrey Moshi, said that, during the Covod-19 pandemic global trade was severely impacted by traveland transport restrictions, thus pushing countries to explore for opportunities in nearby markets.

He told The Citizen that this opened up regional integration and markets, as countries saw that there is a huge market potential for goods and services produced within the borders of neighbouring countries.

“There were a lot of discussions during the early outbreak of Covid-19, and countries started to explore potentials for open up regional markets, efforts which bore fruits,” said Prof Moshi.

He added that, for a country like Tanzania to enter into the global value chain, it must first capture the regional markets.

“Most importantly, we must change what we export and import, and also make sure we export processed goods that benefit domestic productions through our industrial policy. This brings about employment and technology transfers, while creating beneficial local value chains,” said Prof Moshi.

Another senior consultant and economist, Prof Samuel Wangwe, said increased exports for Tanzania in the interregional trade signifies a healthy balance of payments which boosts economic growth.

“This also shows that the Tanzanian shilling will be stronger and more stable. This is a good sign for a growing economy,” he said.

Prof Wangwe also said that the rise in exports in one way might also signify that domestic production and investments have improved, that local enterprises have enough to sell to neighbouring countries.

In the Southern African Development Community (Sadc), Tanzania also continued to record improvement, registering a trade surplus of $1.09 billion in 2020. According to the BoT, South Africa was Tanzania’s major trading partner accounting for 23.2 percent of the country’s total trade in 2020. Next was the Democratic Republic of Congo (DRC), with 2.41 percent. Tanzania’s major exports to Sadc were gold, cigarettes, wheat flour, and ceramic products, whereas major imports were motor vehicles, maize seeds, iron sheets, and lubricants, the Central Bank says.

Globally, according to BoT, while Tanzania’s terms of trade remained favourable during 2020, the country’s export trade remained concentrated in a few countries whereby South Africa, the United Arab Emirates, Switzerland and India were the main destinations, altogether accounting for about 55 percent.

On the other hand, China, India and the United Arab Emirates were the main sources of imports, accounting for 47.8 percent of total imports in 2020.

“The external sector continued to perform satisfactorily despite the challenges associated with the corona virus,” reads the Central Bank’s report in part.