Sub-Saharan Africa’s economies could lose as much as $79bn (about R1.4-trillion) in output in 2020 due to the coronavirus epidemic, a World Bank report said. This could lead to a severe food security crisis, with agricultural production expected to contract between 2.6% and 7%.
The pandemic continues to wreak havoc across the globe, bringing most economies to a complete standstill as governments enact stringent measures to limit the movement of people to curb the spread of the highly contagious and potentially deadly disease. Economists predict the disease will cause a global recession worse than that of the global financial crisis of 2008/2009.
President Cyril Ramaphosa ordered the lockdown until April 16 as the country struggled to curb the spread of the virus, which has infected more than 1.8-million people and killed 114,900. In SA the virus has infected 2,173 and killed 25. Last week Ramaphosa announced the extension of the lockdown by another two weeks.
According to the World Bank’s report, titled “Africa’s Pulse”, while most countries in the region have been affected to different degrees by the pandemic, real GDP growth is projected to fall sharply, particularly in the region’s three largest economies — Nigeria, Angola, and SA — as a result of persistently weak growth and investment.
In general, oil exporting-countries will also be hard-hit. Growth is also expected to weaken substantially in the two fastest-growing areas — the Economic Community of West African States and the East African Community — due to weak external demand, disruptions to supply chains and domestic production. The region’s tourism sector is expected to contract sharply due to severe disruption to travel.
The World Bank says the coronavirus will cost the region between $37bn and $79bn in output losses for 2020 due to a combination of factors. These include trade and value chain disruption, which affects commodity exporters and countries with strong value chain participation; reduced foreign financial flows from remittances, tourism, foreign direct investment, foreign aid, combined with capital flight; and through direct effects on health systems, and disruptions caused by containment measures and the public response.
The pandemic also has the potential to spark a food security crisis in Africa, with agricultural production potentially contracting between 2.6% in an optimistic scenario and up to 7% if there are trade blockages, the authors write. Food imports will decline substantially (by as much as 25% or as little as 13%) due to a combination of higher transaction costs and reduced domestic demand.
The World Bank said it will be taking broad, fast action to help developing countries strengthen their response to the pandemic, increase disease surveillance, improve public health interventions, and help the private sector continue to operate and sustain jobs. It is deploying up to $160bn in financial support over the next 15 months to help countries protect the poor and vulnerable, support businesses, and bolster economic recovery.
“The Covid-19 pandemic is testing the limits of societies and economies across the world, and African countries are likely to be hit particularly hard,” Hafez Ghanem, World Bank vice-president for Africa said.
The global development lender, Ghanem said, is rallying all possible resources to help countries meet people’s immediate health and survival needs while also safeguarding livelihoods and jobs in the longer term — and is also calling for a standstill on official bilateral debt service payments. This would free up funds for strengthening health systems to deal with the pandemic and save lives; social safety nets to save livelihoods and help workers who lose jobs; support to small and medium enterprises; and food security.
The World Bank recommends that African policymakers focus on saving lives and protecting livelihoods by strengthening health systems and taking quick action to minimise disruptions in food supply chains. It is also suggested that leaders implement social protection programmes — including cash transfers, food distribution and fee waivers — to support citizens, especially those working in the informal sector.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.