COVID-19 and the consequences for Africa

AdobeStock 329115246resizedThe African continent has been hit later than other regions from the pandemic, but it’s becoming a major challenge 

According to the Africa Centre for Disease Control, 46 countries have confirmed cases of COVID-19, though infection rates are still low – (below 5,000 cases) reported by Coronavirus in Africa Tracker as of 30 March, 2020. 

Global slowdown, disruption in supply chains, reduction in export volumes to key trade partners (China and Europe), declining migrant remittances, plunging commodity prices, the contraction in tourism and increased borrowing costs will damper investment and economic activity in Africa region in the first-half of 2020. The lockdowns, closure of borders and businesses (including small-micro traders) and factories are affecting daily wages and informal workers, which constitute a large part of Africa’s workforce. Labour-intensive sectors: retail, hospitality, construction and transportation are hardest hit businesses.  

China is Africa's biggest trade partner – with around 10,000 Chinese firms currently operating across the continent. According to Chinese state media, one million-plus Chinese national live in African countries. It is estimated that African airlines have lost over US$400mn since the outbreak began with airlines like South African Airways, Royal Air Maroc, Air Tanzania, Air Mauritius, EgyptAir, RwandAir and Kenya Airways all suspending flights to and from China and worst affected European countries (Italy and Spain).

Richer, more developed nations possess financial capacity to mitigate the economic fallout of COVID-19, which is painfully lacking in Africa, thus the urgency for sizeable assistance from the international financial community. 

Africa's hospital infrastructure lacks the means to contain this deadly epidemic. National health system in every country needs basic supplies like gloves, surgical masks, test kits, protective suits and portable ventilators. "Our greatest concern is the potential for the virus to spread to countries with weaker health systems," said World Health Organisation (WHO) chief Tedros Adhanom Ghebreyesus, former Ethiopian Foreign Minister.

Ethiopia has proposed a US$150bn emergency health financing and budgetary support (including debt relief) from the World Bank for African countries to tackle the crisis more effectively. The cost of SSA’s debts exceeds annual health budgets of most countries. British charity Oxfam argued, “It makes no sense for African countries to transfer much-needed resources to foreign banks, developed nations with capacity to cope with the pandemic, or international institutions."

Several advanced countries have announced stimulus programmes, many have cut interest rates, and both the World Bank Group (WBG) and International Monetary Fund (IMF) have unveiled massive support packages to help developing and emerging economies overcome the health crisis and limit the economic damage. "These are testing times for policymakers: they must rise to the occasion by acting quickly, decisively, and in collaboration," said WBG.

Across the world, there is a strong correlation between age and severity of the COVID-19 infection. Older people with pre-existing conditions are more vulnerable. "It's possible that with a predominantly young population, Africa may be spared widespread severe cases," said Dr. John Nkengasong Africa Centres for Disease Prevention and Control director, as the continent has the world's youngest population. 

By Moin Siddiqi, economist

Full report will be published in May 2020 issue of African Review

 

 

 

 

 

 

 

 

 

 

 

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