Keywords: sub-Saharan Africa, Covid-19, sub-Saharan economy
As the world was preparing to end 2019 and usher in the new year, information started trickling in about a new virus, subsequently named Covid-19, ravaging China. Shortly into the new year of 2020, the new virus had spread to different countries and the worldwide response was a lockdown – some total, some partial. The pandemic penetrated every country and different sectors had to give way, for it to lead to diverse social and economic outcomes. For Africa, particularly sub-Saharan Africa, the economy suffered a brutal blow. The first recorded case of Covid-19 in Africa occurred on 14 February 2020 in Egypt. Sub-Saharan African countries were not proactive about the situation and suffered corresponding economic implications.
By February 2021, the number of Covid-19 infections in Africa was about 2.5 million and less than 60,000 deaths.
The low caseloads recorded were seen as a testament to some right decisions made by the African governments in the early stages of the spread.
When the pandemic started fully in sub-Saharan Africa, the governments were plagued with the ineffectiveness of their inadequate health care system. The poor medical system was unable to handle Covid-19 emergencies and curtail the spread of infection.
However, based on experience with a similarly deadly viral outbreak in West Africa – the 2014 Ebola virus, African leaders understood that if they failed to contain the Covid-19, it would result in threats to security, health, and prosperity. Many African countries realized that their best shot would be at preventing the importation of the Covid-19 and managing the transmissions in their country.
Ivory Coast set an example. By 2nd January 2020, there was an improvement in airport surveillance and passengers and passengers who had China in their recent travel history were screened. Other African countries followed suit and even went a step further by putting a suspension on direct flights, to and from China.
This was a good initiative, as it helped to slow down the spread of the virus. The countries also instituted public health measures just like other parts of the world. Citizens were advised to wash their hands often, reduce interpersonal contact, and mandated to wear face masks.
In South Africa, the entire country was placed on a total lockdown for 21 days. The lockdown in other countries like Cote d’Ivoire, Senegal, and Nigeria varied. Some ordered total lockdown, others partial, and some included curfews to their measures. All of these were to prevent the spread after reporting their first few cases. Lesotho however entered full lockdown mode before reporting its first case.
These lockdown measures, although necessary for containment of the Covid-19 virus, caused several issues for them.
It affected the growth of Africa on both external and domestic levels which also affected quite significantly the state of citizens living in poverty.
Most economic forecasts were projecting a reduction in the GDP of most countries beginning from 2020. According to the UN, more than 30 million people would plunge into poverty and food insecurity would increase.
Many agencies made different projections regarding the effect of Covid-19 on the sub-Saharan economy.
Before mirroring into the economic aftermath of Covid-19 in sub-Sahara, it is important to highlight a major challenge. The economy of the region was already in shambles. The countries in the region had accumulated lots of debt from 2013 to 2017 with over 10 countries having high chances of debt distress.
These countries also had to deal with public health issues, wrecking more havoc on their already unstable health system.
The push on the region’s economy was felt mostly in these areas.
- Disruption in global supply chains.
This led to reduced demand for African exports in the global market. Also, Africa began to see delays/reductions in foreign direct investment (FDI) as foreign business partners pulled their capital into local investments. The lockdown measures and travel bans were a hindrance to the movement of people both within their countries and internationally causing a disturbance in the operational pattern of different persons, businesses, parastatals, and government bureau.
- Oil price collapse
The pandemic caused a reduction in the oil demand, driving the price to the abyss. Oil exporters languished while oil importers smiled. By March 2020 the oil market witnessed around 50% slash in the price of oil. Most of the oil-exporting countries in the region, especially Equatorial Guinea, Nigeria suffered losses in tax revenue, high liquidity problems, and strain on their currency.
The available statistics and situation analysis formed the basis for several expert opinions. Many experts projected the fate of several countries in the region to be bleak especially in a worst-case scenario.
Some projections placed Nigerian GDP growth on a fall from 2.5% to -3.4% if they could at least contain the outbreak. This means the GDP would reduce by around $20 billion. The majority of this harsh impact came from the oil price collapse as Nigeria is a chief oil exporter.
Things were projected to be even bleaker if they failed to contain the outbreak. Their GDP was expected to drop to -8.8%, a reduction by about $40 billion. Besides external influence, the drop was to be fueled by reduced spending of consumers in food, logistics, and utilities.
For South Africa, it was projected that the GDP growth would decrease from 0.8% to -2.1%. This meant possible losses of about $10 billion if they contained the outbreak. The losses were intended to come from disruption of the supply chain, tourism, and consumption. The oil price collapse was expected to favor them and provide some form of support for their economy since they were oil importers. If they failed to curtail the spread then their GDP would sink to -8.3% making them lose around $35 billion. The majority of this loss would come from the disturbance in citizen spending together with extended pressure on exports.
For Kenya, the projections pegged the GDP growth decline at 1.9% from the previous 5.2%, a reduction of about $3 billion if they succeed in containing the outbreak. The country would have to deal with disruption to the supply chain, citizen spending, and tourism. And if they don’t contain the outbreak, then the GDP would drop to -5% which equals a loss of $5 billion.
In reality, the effects of the pandemic were somewhat closer to projections by experts. By Q2 of 2020, Nigeria’s real GDP had fallen by 6.1%. The strict containment procedures in South Africa dragged their real GDP down by 17.1% and Angola had its GDP reduced by Q1 in 2020.
The GDP growth in Cote d’Ivoire, Kenya, and Ethiopia slowed down substantially. Some economies had it worse, especially those that depended largely on tourism like Cape Verde, Mauritius, and Seychelles. This was because the pandemic weakened international tourism.
More people were plunged into poverty due to lack or little savings combined with the non-existent credit system and formal welfare system leading to fewer finances for survival. Also, foreign remittances tanked deeply wrecking more havoc.
According to respondents of a GeoPoll study mirroring the effect of Covid-19 from November 2020, many individuals recorded reduced income in 2020 through to 2021.
Currently, sub-Sahara has contained the spread of Covid-19 at an enormous level. They are still at the heart of an economic crisis and embittered that the outside world is offering only little assistance.
Although African countries have dealt with their fair share of diseases and natural problems, in 30 years, the Covid-19 pandemic is the most severe blow they have experienced. The pandemic-driven collapse in the economy has scorched up revenues for public expenses although it is at this moment that the expenditure needs to be ramped up.
Besides, the debt level of the region increased and will probably in a short time plunge many of the countries into debt distress. The situation in sub-Sahara is so disheartening that the IMF (International Monetary Fund) suggests that an extra $345 billion will be needed to carry the region until 2023.
Around the time of the GeoPoll report, the respondents in Kenya reported reduced income. Things seemed even bleaker in Nigeria. By March 2021, the rate of inflation was hovering at 18.17% with food inflation particularly breaking the roof at 22.95%. This has increased the pressure on families who now have to spend more money for food and consequently increasing expenditure from scarce resources as income has also reduced.
This has led to even more worrying projections by the IMF that the rest of the world will have an astonishingly higher GDP per capita than sub-Saharan Africa in the near future.
The pandemic has not only destroyed sources of income but single-handedly increased the gap between the world’s wealthiest most developed country and sub-Saharan Africa. The GDP gap between sub-Saharan Africa and other developed regions is expanding rapidly and will continue into 2022.
Besides the monetary impact, the Covid-19 pandemic was instrumental in shattering the progress of countries in certain areas like education, investment, health, etc. This will lead to obvious scarring as the loss of income, human and physical capital becomes continuous.
Is there hope for the region to recover from the Covid-19 Effect?
The region is bouncing back health-wise courtesy of the vaccine successes but the economic future is undecided. While other countries are ramping up access to vaccines before 2023 to ease the full-scale return to pre-pandemic activities, the case is different for sub-Saharan Africa.
Many of the countries still struggle with vaccination of their front-line workers and this provides a little insight into the future of the region post-Covid-19.
The region’s output capacity may not return to pre-pandemic levels until 2022 and the per capita income might remain at pandemic levels until 2025.
However, there could be a ray of sunshine in the dim clouds. In its economic analysis for 2021, the World Bank’s economic analysis projected an improvement in the region’s economic growth. The moderate growth and rebound from Covid-19 setbacks may slightly dwindle if the region is harshly affected by a resurgence of the virus.
However, considering how well the region is faring with the pandemic, there may be hope after all and the sub-Saharan countries may bounce back sooner rather than later.
Author: Chisom Anyanwu