Africa may lose half of GDP due to COVID-19 – ECA
The impact of the COVID-19 on Africa could cause the continent to lose half of it’s GDP, according to the Economic Commission for Africa (ECA).
The ECA in a press release copied to ghanabusinessnews.com March 13, 2020, warned that the COVID-19 pandemic could seriously dent Africa’s already stagnant growth, with oil exporting countries losing up to $65 billion in revenues as crude oil prices continue to drop.
“Africa may lose half of its GDP with growth falling from 3.2 per cent to about 2 per cent due to a number of reasons which include the disruption of global supply chains,” Ms. Vera Songwe, the Executive Secretary of the ECA was quoted as saying.
Ms. Songwe said having already strongly hit Africa’s major trading partner, China, COVID-19 was inevitably impacting Africa’s trade.
She noted that although a few COVID-19 cases have been reported in some 15 countries in Africa so far, the crisis was set to deal African economies a severe blow, adding that the continent’s interconnectedness to affected economies of the European Union, China and the United States was causing ripple effects.
According to Ms. Songwe, Africa would need up to $10.6 billion in unanticipated increases in health spending to curtail the virus from spreading, while on the other hand revenue losses could lead to unsustainable debt.
She also indicated that the pandemic could reduce Nigeria’s total exports of crude oil in 2020 by between $14 billion and $19 billion.
The ECA estimates COVID-19 could lead to Africa’s export revenues from fuels falling at around $101 billion in 2020, the release said.
The release pointed out that remittances and tourism are also being affected as the virus continues to spread worldwide, resulting in a decline in FDI flows; capital flight; domestic financial market tightening; and a slow-down in investments – hence job losses.
It said, pharmaceuticals, imported largely from Europe and other COVID-19 affected partners from outside the continent, could see their prices increasing and availability reduced for Africans.
With nearly two-thirds of African countries being net importers of basic food, shortages are feared to severely impact food availability and food security, and negative consequences are expected to worsen, if COVID-19 develops into an outbreak in Africa, it added.
The release further noted that, a decline in commodity prices could lead to fiscal pressures for Africa’s economic power houses such as South Africa, Nigeria, Algeria, Egypt and Angola.
Stephen Karingi, the Director of the ECA’s Regional Integration and Trade Division, was however, cited to have said that there, was an opportunity the continent could take advantage of as trading within the African Continental Free Trade Area (AfCFTA) is set to commence this July.
“The intra-African market could help mitigate some of the negative effects of COVID-19 through limiting dependence on external partners, especially in pharmaceuticals and basic food,” he said.
He also believes that diversifying economies away from fuel-driven was vital beyond COVID-19, emphasizing the need for the continent to urgently implement the AfCFTA and urging African countries who export drugs to prioritize selling on the African market.
The COVID-19 which started in China in December 2019, has killed some 5,000 people globally and infected some 139,637.
By Emmanuel K. Dogbevi