COVID-19 and Africa

The challenge ahead

Africa is poised to be the next epicentre of the COVID-19 pandemic, according a report by the United Nations Economic Commission for Africa (UNECA). 

It suggests that in the best-case scenario, the virus would result in 300,000 deaths. At this stage, the mortality rate associated with the virus in the most affected regions is higher amongst the elderly population, whereas 60% of Africa’s population is below the age of 25.

Despite that, COVID-19 poses a serious challenge to African healthcare systems, which are currently dealing with regional endemics such as Ebola, Malaria and Tuberculosis (TB). As with the other life-threatening diseases, the survival rates are dependent on the availability of equipment such as ventilators, hospital beds, the availability and skills of healthcare professionals. The World Health Organization’s (WHO) statistics depict a grim picture - 1.2 hospital beds per 1000 people, and currently 10 countries which do not possess any ventilators.

At the same time as African countries are heavily dependent on the support provided by international non-government organisations (NGOs) and the benevolence of the major personal protection equipment (PPE) producers, they have imposed the most stringent export restrictive measures. The spread of the virus is accentuated because large parts of the population do not have access to basic hygiene products such as soap and clean water. 

Costs of social distancing

Since the WHO declared COVID-19 a pandemic, many African countries have introduced social distancing measures. These measures have hurt the poorest, particularly those who live on a subsistence income derived from casual and informal revenue streams. Governments simply do not possess the fiscal space to support their people and businesses, nor do they have the system to administer such an endeavour.

Based on a McKinsey report, the economic growth of Nigeria – the largest economy in Africa - is expected to fall from 2.5% this year to -3.4%  – a decline of nearly six per cent. The same report also suggests that South Africa’s economic growth is expected to decline from 0.8% to -2.1% - representing a Gross Domestic Product (GDP) loss of US$ 10 billion.

African tourism and aviation sectors are expected to bear the brunt of the COVID-19 pandemic. In some countries, the tourism sector directly contributes up to 20%of their GDP and provides extensive indirect contributions to other economic sectors such as banking and transportation. At the same time, the receding global demand for oil is expected to hit oil-dependent economies such as Algeria, Angola, Cameroon, Gabon, Ghana, Nigeria, and the Republic of the Congo, and cost the continent up to US$ 500 billion, according to an African Union (AU) report.

Zambia’s economy is beginning to feel the impact of the pandemic since 75% of its export receipts are derived from copper, global demand for which has declined sharply because of lower industrial output. It is unlikely that intra-Africa trade will be affected greatly given that it is already low – 15% of Africa’s aggregate total trade in 2018.

If COVID-19 were to spread beyond urban areas to the rural areas, it could severely damage the food supply chain. Small scale farmers account for 80% of the food produced.  During the recent Ebola crisis in West Africa, up to 40% of agricultural land was left uncultivated.  This resulted in soaring food prices.  Managing both a pandemic and a food crisis would provide a colossal challenge for the poorest countries.

Debt difficulties

In recent weeks, many African countries have approached the International Monetary Fund (IMF) and the World Bank for financial assistance. To date they have both disbursed US$ 18 billion each and US$ 55 billion has been allocated to supporting economic recovery for the next 15 months. Recently, the G-20 announced a moratorium on bilateral debt repayments for low income countries commencing 1 May 2020 and lasting until the end of this year - it is expected to free up US$ 20 billion immediately.  Debt repayments for 30 African countries exceed their annual investments in public health.

This is temporary relief for many African economies which are saddled with debt. However, the moratorium would unlikely be long enough to facilitate their economic recovery nor does it include private sector debt repayments. There have been increasing calls by international aid agencies and charities to provide a more comprehensive debt relief package for the poorest countries, which should (in their view) include debt forgiveness.

However, it is a thorny issue among G-20 members. Many of them express their disappointment at the level of debt accumulation and lack of economic transformation in African countries since 2005, when the G-7 countries agreed to write-off a substantial part of African debt during the Gleneagles Conference.

Strategies for virus suppression and economic recovery

African countries have experience in dealing with endemics, such as Ebola, Malaria and Tuberculosis (TB). History has shown that they have recovered, but, they were endemics, whereas COVID-19 is a global pandemic, causing both a substantial reduction in global demand and a global supply shock. This has exposed the extreme vulnerability of African economies.

In the immediate and short-term, African countries will have to develop strategies that would have to reduce both transmission risks and hunger deprivation resulting from prolonged economic disruption.  The containment strategy should be focused on limiting the spread of the virus to rural areas to prevent food supply shortages and price hikes. It is important that each strategy that is implemented is based on the situation in the locality. 

Given the prevailing global export restrictions, private sector assistance will be required from governments and international development agencies to overcome the supply bottlenecks. Local production lines will have to be re-engineered to produce the basic PPEs and more complex equipment such as ventilators. Initial estimates suggest that 884 million pieces of PPEs, 74 million testing kits and between 30 to 40 thousand ventilators will be required. However, absorptive capacity relating to the number of medical professionals, is a challenge that will linger.  

That said, African countries are in a more advantageous position than many other countries. Infection rates, so far, have been lower than other regions. This is an opportunity for governments to assess the effectiveness of the measures implemented by countries, which are ahead in their infection trajectories. It also provides them some time to devise and implement an exit strategy from the lockdowns and enter into this “new normal” reality.

By Ziyaad Ebrahim, IIT PhD Candidate and Independent Trade and Development Consultant.