Scoping the Impact of COVID-19 on Africa

The Coronavirus (COVID-19) pandemic has called nations across the world into action to secure the health of their people. Real-time COVID-19 trackers detail a frightful picture of exponential growth in the number of cases. Global figures more than doubled from 500,000 to over 1,000,000 in one week between 26 March and 2 April. Despite the 80% recovery rate, the highly communicable nature of COVID-19 is such that coupled recovered patients may yet be infected again by community spread.

Similar to previous pandemics, COVID-19 grabbed the world’s attention because of its contagiousness and high mortality rate (the number of deaths as a percentage of the total number of reported cases). The World Health Organization (WHO) estimates that the crude mortality ratio(the number of reported deaths divided by the reported cases) falls between 3-4%. The WHO report does concede, however, that the true mortality rate will take some time to fully understand, but the infection mortality rate (the number of reported deaths divided by the number of infections) is expected to be lower than this.

Africa’s Vulnerable Population

At the time of writing, 7,028 cases, 284 deaths, and 561 recoveries have been reported in across 50 African states. Despite the relatively late appearance of the pandemic in Africa, concern in the region is rising rapidly as vulnerabilities begin to show. A majority of African states are inadequately prepared due to weaknesses in their economic, social and political structure as well as healthcare systems.   

Source: The Africa Report – Coronavirus Africa Map: Which Countries are Most at Risk?

As terrifying as these vulnerabilities are, we have good reason to be optimistic about managing the crisis. World Health Organization Director-General Tedros Adhanom Ghebreyesus lamented that our initial inattentiveness to the seriousness of the situation contributed to the exponential spread of COVID-19. In the same address, Ghebreyesus noted that the pandemic is uniquely controllable. A lack of coordination at the onset saw carriers who managed to leave high-alert areas spread COVID-19 to unsuspecting and unprepared areas. With global efforts to arrive at a cure and vaccine in full-flight, it is expected that COVID-19 can be brought under control soon if the world’s nations successfully implement appropriate responses.

It is possible to reign in the spread through proactive approaches to containment.  China, the initial centre of the outbreak, has shown the world that it is possible to bring the infection under control. Speedy action is at the top of this agenda. So too is the utilisation of data and ICT tools to inform actions that balance curbing the spread with allowing people to resume some semblance of normality.

In Africa, however, states have responded with differing levels of urgency, making it difficult to discern a clear prognosis for future infection and recovery trends. Given that COVID-19 transmits mainly from person-to-person, controlling community spread has always been the best way to end the pandemic early. Schools and public institutions across Africa have been closed and governments have taken to discouraging unnecessary travel and social gatherings. Africans have generally followed WHO recommendations by raising personal hygiene awareness, exercising social distancing through self-isolation and quarantine, avoiding mass gatherings implementing work-from-home arrangements for non-essential sectors, and enforcing lockdowns where necessary. Furthermore, port entries from heavily hit countries have been suspended in most African countries, with the mandatory quarantine of passengers from affected regions being enforced through various means.

Questions remain, however, about the feasibility of such measures particularly among the considerable proportion of Africans that reside in informal settlements. Effective quarantines in these spaces are impaired by large numbers of people sharing limited space.

As a result of the later appearance of the disease on the African continent, it is assumed that the economic consequences of the pandemic will last for a longer period than is anticipated for those countries where the disease was discovered earlier. This is compounded by the relatively high vulnerability of African states to infectious diseases, inadequate emergency resources, and improper approaches to containment.

Knock-on Effects of the Health Crisis on Africa’s Economy

As we are all feeling, COVID-19 is not just a health crisis. Border closures, travel bans, internal movement restrictions, social isolation policies and lockdowns have led to a dramatic impairment of local, regional and international economic activity.

Production shutdowns and supply chain disruptions in China—Africa’s largest trading partner—have caused a drop in demand for Africa’s raw materials and commodities. Africa’s trade statistics indicate significant dependence on China as a trade partner. China is both Africa’s largest exporter and market with over two-thirds of African exports being raw and intermediate goods. Countries dependent on industrial commodities exports such as the Congo DR, Ghana, Zambia, and Nigeria are significantly exposed to decreased demand for products such as oil, iron ore and copper from China.

It is widely expected, though, that the situation in China will soon improve and help stabilise some of Africa’s most important value chains. Africa’s access to industrial components and manufactured goods from the region has however been hampered. This has set a damper on local industries and retail. Travel restrictions have been equally crippling to the movement of labour and leisure-seekers that drive the
tourism sector. Agriculture, which accounts for 60% of African employment, has seen the largest farms specialising in commercial agriculture drops send home staff in the tens of thousands due to drops in export demand and prices.

Earlier in the year, and following a 20% drop in petroleum prices caused by the outbreak, the Organization of Petroleum Exporting Countries’ (OPEC) outlook projects a significant drop in oil demand this year as a result of the virus. Other major markets for African imports and exports such as Europe and the US are also reeling from the impact of COVID-19. An Organisation for Economic Co-operation and Development (OECD) assessment forecasted a drop in annual global GDP growth “to 2.4% in 2020 as a whole, from an already weak 2.9% in 2019, with growth possibly even being negative in the first quarter of 2020.” The OECD projected an adverse impact on GDP growth in 2020 by half a 0.5% in the best-case scenario that the virus remained centred in China and over 1.5% in the broader contagion scenario—which is currently the case—where the outbreak spreads significantly through Asia, Europe, and America.

Source: OECD – Coronavirus: The World Economy at Risk

More recent revisions paint a picture of increasingly negative economic prospects for Africa. The United Nations Economic Commission for Africa (ECA) forecast on the macroeconomic effects of COVID-19 quantifies the expected downturn in the regional economy. Africa’s expected economic growth for 2020 is expected to drop by at least 1.4 percentage points from 3.2 to 1.8%. The causal factors are complexly intertwined but generally stem from:

  • Demand and supply disruptions due to productivity disruptions caused by restricted movement and fewer working hours, reduced household spending, scarcity especially of food and pharmaceuticals, slowdowns in manufacturing, and frustrated private investments;
  • Inflationary pressures concerning essential commodities as stock shortages due to slowed resupplying are compounded by bulk panic buys, opportunistic price hikes and cost-push to consumers as the increased cost of stock plus lower consumer spending lead to profit shortfalls;
  • Employment insecurity due to redundancy amidst non-essential occupations unsuitable for remote working, declining alternative income prospects, and the avoidance of markets and shopping centres that support millions of self-employed persons.
Source: UNECA – Presentation on the Economic Impact of the COVID-19 on Africa

Social Cushioning Impaired by Weak Welfare States

Given the as yet unsatisfactory response by African governments to the health crisis and the escalating knock-on effects on their economies, African societies face an imminent threat to their stability. The downswing in economic performance could trigger cascades across multiple sectors that will have pronounced effects on the ability of Africans to meet their needs well after the elimination of COVID-19.

Given the as yet unsatisfactory response by African governments to the health crisis and the escalating knock-on effects on their economies, African societies face an imminent threat to their stability. The downswing in economic performance could trigger cascades across multiple sectors that will have pronounced effects on the ability of Africans to meet their needs well after the elimination of COVID-19.

The pandemic’s expected effect on the global economy is currently comparable to previous global shocks such as the dot-com crash and less adverse than the 2009 global financial crisis. The COVID-19 pandemic could, however, drag on considerably longer and prove to be a global economic crisis as yet unprecedented in recent history.

In recognition of this risk, wealthy states have implemented radical economic policies in an attempt to cushion their societies and prepare them to bounce back as quickly as possible. Unfortunately for African states, the same weak social, political and economic structures that make them vulnerable to infectious diseases are symptomatic of very weak state welfare capabilities.

Stopping the spread of COVID-19 is a top priority at the moment. Wealthy states are able to offer monetary incentives to push for self-isolation, support their companies from going under, and deliver food and essential supplies to their people. In Africa, meanwhile, governmental interventions to stop the spread of COVID-19 have, in the absence of adequate welfare arrangements, made starvation and poverty a much more terrifying prospect than infection.

The lack of such welfare capacities in some African countries has led them to resort to lending institutions such as the World Bank and International Monetary Fund for financial help. Kenya’s Central Bank Governor, for example, revealed that the country was in need of budgetary support as the country had been operating with a cash shortfall of about $1 trillion since February 2020, suggesting that the country does not have the economic muscle to handle the pandemic within the country. Without external aid, already thin government budgets will not be able to spread to cover the massive healthcare costs or the pending economic crisis; and certainly not both at the same time.

Policy Recommendations

1.Sate Response to the Pandemic

The reduced household and corporate spending create a great need for government spending to keep value circulating in the economy. To avoid huge slumps or recessions, governments are being urged
to increase their own demand, particularly for goods and services that are not in short supply, e.g. construction and social services. These sentiments were summarised by UNCTAD in their recommendations to policymakers, advising: “Governments who are willing to do ‘whatever it takes’ to stabilise the economy have to increase their spending until private-sector demand and employment return to healthy growth rates.

One of the most important economic considerations at this time would be fiscal measures. For example, reducing value-added taxes on goods and income taxes could increase private spending.
This sort of policy move is considered viable financially; economically desirable and socially fair particularly when spending is affected by unexpected events. Similarly, investment in the targeted welfare support for adversely affected workers, businesses and communities are suggested. It is a delicate balancing act, however, as incentivising spending amidst commodities shortages will quickly devalue the funds that have been released in the economy.

Furthermore, requesting moratoriums is merited for governments that have public debts to service and may struggle to sustain efforts to recover their economies as well as make loan payments plus interest, – especially now when a health emergency of this scale is declared.

2.      Reserves and Welfare Considerations

The most pressing recommendation at this time is to ensure that the capacity and quality of health care systems are improved. As African countries edge closer towards to the commencement of trading under the African Continental Free Trade Agreement (AfCFTA), it will be essential to guarantee that as labour movements grow, there are adequate safeguards to prevent cross-infection.

Similarly, building up emergency reserves of essential products and tools necessary to help countries get though national emergencies such as pandemics are highly recommended. Policies surrounding the food and pharmaceutical industries should incentivise structures that promote the maintenance of adequate reserves that can be quickly mobilised in emergencies.

The African Union and Africa CDC produced the Africa Joint Continental Strategy for COVID-19
outbreak. Constituent trading blocs are following this lead such as the East African Community’s disaster risk reduction and management strategy. This community-mindedness in terms of dealing with pandemics and other emergencies is what needs to be carried forward to leverage the AfCFTA in the common fight for positive health, economic, and social outcomes.

3. Inclusiveness in the Mitigation of COVID-19’s Impact

Socio-economic inequalities must feature in policy responses and take into consideration both the short and long-term solutions. Measures taken by health authorities taken, such as social distancing, hand washing or self-isolation are impractical for those living in densely populated informal settlements. This is particularly true of informal sector workers who make their living on a day-to-day basis and cannot afford lockdowns and quarantines.

Furthermore, informal workers come into contact with large numbers of people and may not have access to protective gear to guard them against contracting a disease like COVID-19.  Health and safety provisions for those in the informal sector need to be prioritised. For example, setting up water points at markets and other informal sector clusters would be a step in the right direction. Similarly, the distribution of masks and gloves to prevent the spread of communicable diseases is also effective prophylaxis to community spread.

In terms of long term solutions, some have suggested the need for better urban planning by governments. Building designs that cater to micro-entrepreneurs should include adequate room size for work, storage and display and should also have a good supply of clean water.

Lastly, with little to no savings, it is highly likely that informal labourers will carry on working during this period. However, without formal health services in most informal settlements, this puts them in a precarious situation. In such situations, the least that could be done for is to provide them with access to emergency health services if required.