Thunderbird Expert on ForeignPolicy.com: Africa Is Bracing for a Head-On Collision With Coronavirus
Africa Is Bracing for a Head-On Collision With Coronavirus
As the pandemic reaches the continent, countries from Morocco to Malawi are facing a health crisis and an economic shock.BY LANDRY SIGNÉ, AMEENAH GURIB-FAKIM
Now that almost all of Africa’s 54 countries are reporting cases of the new coronavirus, one thing is certain: The pandemic will have drastic consequences in Africa, especially in the many countries that still have poor public health infrastructure and weak social welfare systems. For African economies, the shock will result in a drastic loss of revenues and slower economic growth. However, just as it survived Ebola, the continent will recover well from the coronavirus crisis—if its leaders act boldly now and the international community provides help where it is urgently needed.
Belatedly, some African countries have instituted measures to prevent the spread of the coronavirus within their borders. Countries such as South Africa, Kenya, Ghana, and Gabon have banned flights from affected countries, while Morocco has suspended all international travel. Rwanda, Mali, and the Democratic Republic of the Congo have added quarantine measures for travelers from countries affected by the outbreak. South Africa plans to erect a fence on its border with Zimbabwe to keep out potentially infected migrants.
As much as it is a crisis of public health, the pandemic threatens to batter Africa’s economies, especially the countries and sectors dependent on trade. A recent report from the United Nations Economic Commission for Africa estimated that the continent could lose up to 1.4 percentage points of GDP growth as a result of the pandemic—surely a much too conservative figure given the massive destruction of trade and economic activity around the world. Already hit by the crash in oil prices, African countries including Angola and Nigeria that export oil could together lose up to $65 billion in income. Additional health spending on the pandemic is expected to reach $10.6 billion across Africa. Brookings estimates to up to 2.1 percentage points in lost GDP growth for sub-Saharan Africa if the pandemic and global disruptions are severe and endure.
Even as Africa is still bracing for the full effect of the pandemic, it has already been hit by collapsing trade and broken supply chains. Many African countries are highly dependent on exports to China—in particular Angola, South Africa, and Congo, but also South Sudan, Namibia, Kenya, and Rwanda. The countries that will be hit the hardest are the resource-rich economies whose oil and other commodities are primarily sold to China. Chinese purchases account for 95 percent of all of South Sudan’s exports, for example, 61 percent of Angola’s, and 58 percent of Eritrea’s. These countries will be devastated by the collapse in Chinese trade.
A drop in China’s oil demand by at least 20 percent combined with the crash in oil prices has already affected exports. As of March 4, about 70 percent of the April-loading cargoes of crude oil from Angola and Nigeria were still unsold, and other African oil exporters such as Gabon and the Republic of Congo also have difficulty finding buyers. As a result, the International Monetary Fund has lowered projected GDP growth in Nigeria from 2.5 percent to 2 percent. South Sudan, which the IMF expected to be the fastest-growing country in the world—with 8.2 percent GDP growth in 2020—is unlikely to achieve this performance given its dependence on crude oil exports to China.
Imports no longer arriving in African ports are also causing pain and disruption. In South Africa, the drop in imports and resulting shortages have led to a spike in inflation, which recently reached a 17-month high. In Ghana, shortages of some basic consumer goods imported from China have led to price spikes exceeding 100 percent for some products, including food. To reverse the situation, some countries such as Rwanda are imposing fixed prices for basic food items such as rice and cooking oil. Small importers, traders, and consumers are also seriously affected in Nigeria, Uganda, Mozambique, and Niger, where a large number of poor people earn their livelihood trading Chinese products such as textiles, electronics, and household goods.
Crashing even worse is tourism, a major source of revenue for many African economies. Approximately 67 million tourists visited Africa in 2018, and the industry supports around 24.3 million jobs on the continent and earns about 8.5 percent of GDP. The worst-hit countries include tourist hotspots such as Seychelles, Cape Verde, Morocco, Mauritius, and many others. South Africa, another popular destination, has canceled 162 international and regional flights between March 18 and the end of the month due to plummeting demand and travel restrictions due to the coronavirus.
What makes the pandemic even more painful is that it aggravates previous economic strainsWhat makes the pandemic even more painful is that it aggravates previous economic strains.—including the disruption in global trade due to U.S.-China trade tensions, the effect of Brexit on supply chains and financial flows, the decline in the price of industrial commodities such as copper, and the oil price war between Russia and Saudi Arabia.
But it’s not just trade and travel restrictions that are hitting African economies. The coronavirus outbreak will strain already weak social security systems. Besides health, nutrition is also a critical area, especially in poorer countries. Depending on the contagion rate, many sectors of the economy could be paralyzed—not just external trade and tourism, but the domestic sectors of the economy as well.
Health care systems are incredibly weak in many nations, with little preparedness for epidemics—as illustrated by the fact that until recently, few countries were able to offer widespread testing for the new virus. Some countries have strengthened their emergency preparedness since the 2014-2016 Ebola outbreak and are now in a relatively better position to deal with the coronavirus. Yet most African countries have not learned enough from the Ebola crisis, which resulted in a GDP loss of 13.7 to 18.7 percent per year between 2014 and 2017 in Liberia alone.
Originally published at https://foreignpolicy.com/2020/03/26/africa-coronavirus-pandemic-economic-crisis/