The World Bank sees economic growth in Sub-Saharan Africa falling sharply from 2.4 per cent in 2019 to -2.1 to -5.1 per cent in 2020, the first recession in the continent over the past 25 years.
A recent report by the bank’s Africa’s Pulse assessing the economic impact of COVID-19 and influx of policy responses noted that growth in Sub-Saharan Africa had been greatly felt by the ongoing coronavirus disease outbreak.
The continent is expected to suffer a COVID-19 impact cost in the region of $37bn and $79bn in output losses for 2020 due to combined effects, which include trade and value chain disruption, impacting commodity exporters and countries with strong value chain participation. Others are reduced foreign financing flows from remittances, tourism, foreign direct investment, foreign aid, combined with capital flight; and through direct impact on health systems caused by containment measures and public response.
Read Also:
The impact on household welfare is expected to be equally dramatic with welfare losses in the optimistic scenario, which has been projected to reach seven per cent in 2020 compared to a non-pandemic scenario.
Already, majority of countries in SSA have suffered varying degrees of impact by the pandemic, but three of the region’s largest economies including Nigeria, Angola and South Africa are predicted to see a sharp drop in real Gross Domestic Product growth owing to persistently weak growth and investment.
Apparently, oil exporting countries like Nigeria and Angola will be hard-hit, while growth is also projected to weaken largely in the two fastest growing areas – the West African Economic and Monetary Union and the East African Community – owing to weak external demand, disruptions to supply chains and domestic productions.
More so, the COVID-19 pandemic is also credited with the potential to spark a food security crisis on the continent, with agricultural production potentially contracting between 2.6 per cent in an optimistic scenario and up to seven per cent should there be trade hindrances.
According to World Bank Vice President for Africa, Hafez Ghanem, African countries would be hard-hit, restating the body’s support in rallying resources that can help countries on the continent to mop up funds to address more pressing needs including calling for a standstill on official bilateral debt service payments.
He said, “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.
“We are rallying all possible resources to help countries meet people’s immediate health and survival needs while safe-guarding livelihoods and jobs in the longer term – including calling for a standstill on official bilateral debt service payments which would free up funds for strengthening health systems to deal with COVID-19 and save lives, social safety nets to save livelihoods and help workers who lose jobs, support small and medium enterprises and food security.”
With several African countries reacting quickly and decisively with regards to policy measures to arrest the spread of the virus, the report considered reactions on a country-to-country basis.
It stated, “Ultimately, the magnitude of the impact will depend on the public’s reaction within respective countries, the spread of the disease, and policy response. And these factors could lead to reduced labour market participation, capital under-utilisation, lower human capital accumulation, and long-term productivity effects.”
Get real time update about this post categories directly on your device, subscribe now.
