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EAC businesses to grow 11% in 2022/23 - report

Businesses in Burundi, Kenya and Uganda reported reduced cost of doing business during the pandemic.

In Summary

•The EABC Business Barometer is an index that captures the sentiment of the business stakeholders about how they see the business environment within the EAC.

•Businesses in Burundi, Kenya and Uganda reported reduced cost of doing business during the pandemic.

East African Business Council (EABC) CEO John Bosco Kalisa
East African Business Council (EABC) CEO John Bosco Kalisa
Image: Handout

Business captains in the region are optimistic that business in the East African Community bloc will increase by 11 per cent in 2022 and 2023.

The East Africa Business Community Barometer on Business and Investment links the slight optimism to perception of business owners on the effectiveness of measures introduced by governments in response to the Covid-19 pandemic. 

Several states imposed key discretionary actions and policies in 2020 and 2021 to limit the human and economic impact of the pandemic.

In Kenya, for instance, a package of tax measures was adopted, including full income tax relief for persons earning below Sh24,000  per month and reduction of the top pay-as you earn rate from 30 to 25 per cent,

There was also a reduction of the base corporate income tax rate from 30 to 25 per cent, reduction of the turnover tax rate on small businesses from three to one per cent, and a reduction of the standard VAT rate from 16 to 14 per cent.

These conditions, according to business owners, plus other loan flexibility policies, contributed a large extent of the growth.

The EABC Business Barometer is an index that captures the sentiment of the business stakeholders about how they see the business environment within the EAC.

It shows the rate of investments,operation and performance of businesses in the EAC bloc is recovering.

From the report, businesses in Burundi, Kenya, Rwanda and Uganda reported reduced cost of doing business while those in South Sudan and Tanzania felt that the costs increased during the pandemic and recovery relative to a year  before the pandemic. 

On Business outlook during 2022 into 2023, most businesses in Rwanda, South Sudan and Tanzania are optimistic about improvements in the business climate and performance.

Most entities are also upbeat that governments will put in place interventions for business recovery from the losses suffered during the pandemic.

A number are looking forward to expanding their businesses to other markets within the EAC post the pandemic. 

From the report, businesses in Tanzania stood out with an optimistic view of the outlook across all dimensions.

The EABC barometer on business and investment revealed that curfews had the most negative effect by 58.2 per cent, followed by border closures 54.4 per cent.

Banning of in-person meetings came in third, causing 44.5 per cent of the business losses.

Business owners revealed major effects of the pandemic included lack of customers, lack of finances, reduced sales volume, and high financial losses.

Most of them noted they had to find new ways to connect to customers as their key survival measure. 

They turned to online or remote work and came up with new delivery ways of products and services an they changed operation schedules.

In order to help economies from Covid-19 pandemic effects, the business community recommended EAC partner states to harmonize tax regimes across borders and eliminate trade barriers such as tariffs and quotas on cross-border trade.

"...Effective implementation of free movement of persons as per EAC Common Market protocol and harmonization of policies especially trade regimes," EABC chief executive officer John Bosco Kalisa said as he highlighted effective measures governments can take to improve business environment in the region.

He added that authorities should review regulations or restrictions on the covid-19 pandemic policies in order to regulate, reinforce and promote investment in all sectors even for the post-pandemic recovery and resilience in the region.