A number of African economies are among the world’s fastest growing in recent years. However, analysts fear COVID-19, which was slow to arrive on the continent, will end that.
The U.N. Economic Commission for Africa (ECA) estimates the coronavirus has already cost the region $29 billion and could more than halve its GDP, for reasons including supply chain disruptions.
“You have several other losses that are linked to that,” Mama Keita, ECA director for Eastern Africa, told CNBC Africa. “The slowing down of activities comes with reduced public revenue for the government, reduced profitability for businesses, lower investment.”
The pandemic is also causing unemployment and other lost revenues on a continent where many live on the edge.
Ethiopian Prime Minister Abiy Ahmed is asking G-20 leaders for $150 billion in emergency funding for Africa, describing the virus as an “existential threat” to its economies.
U.N. Secretary-General Antonio Guterres appealed for an initial $2 billion in international aid for the immediate health needs of the world’s most vulnerable countries. Many are African. He noted the sum is a small fraction of the massive coronavirus rescue packages richer nations are putting together for themselves.
“No African government has the financial means to engage in such programs to protect their economies,” said Laurent Bossard, who heads the Sahel and West Africa Club of the Paris-based Organization for Economic Cooperation and Development. “Moreover, there is a concern that developed countries — the richest countries — have less and less financial means to help Africa.
“Because the African economy relies too much, too heavily on the exports of raw material, the impact of the global disaster will be a disaster, I think, for the continent.”
Africa’s tourism sector will likely be hard hit by the crisis, as will foreign investment and trade. Oil exporting countries such as Nigeria, Algeria and Angola are already reeling from plummeting crude prices.
Experts say other key African exports, such as cocoa, rubber and timber, will also be affected.
“This crisis should be for the African countries, governments, an occasion to engage in proactive policies of economic diversification,” Bossard said. “They cannot afford to keep so dependent on raw material exports.”
However, Bossard and others say the outside world must step up — not just with humanitarian aid but with broader support for African economies. How the continent deals with pandemic is not just an African problem, they say, but will also affect how the world recovers from the health and economic consequences of COVID-19.