‘Complete collapse of economies’ ahead as Africa battles virus

By Rodney Muhumuza, AP
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‘Complete collapse of economies’ ahead as Africa battles virus

Countries across Africa face a “complete collapse of economies and livelihoods” unless the spread of coronavirus can be controlled, a UN official has warned.

More than half of Africa’s 54 countries have imposed lockdowns, curfews, travel bans or other measures in a bid to prevent local transmission of the virus.

They range from South Africa, where inequality and crime plague Africa’s most developed country, to places like Uganda, where the informal sector accounts for more than 50% of the country’s gross domestic product.

The UN’s development programme regional director for Africa, Ahunna Eziakonwa, said: “We’ve been through a lot on the continent.

“Ebola, yes, African governments took a hit, but we have not seen anything like this before.

“The African labour market is driven by imports and exports and with the lockdown everywhere in the world, it means basically that the economy is frozen in place.

“And with that, of course, all the jobs are gone.”

Unless the virus’ spread can be controlled, up to 50% of all projected job growth in Africa will be lost as aviation, services, exports, mining, agriculture and the informal sector all take a hit, Ms Eziakonwa said.

“We will see a complete collapse of economies and livelihoods. Livelihoods will be wiped out in a way we have never seen before,” she warned.

The UN Economic Commission (UNECA) for Africa has said the pandemic could seriously dent already stagnant growth in many countries, with oil-exporting nations like Nigeria and Angola losing up to 65 billion US dollars (£52 billion) in revenue as prices fall.

Economies in sub-Saharan Africa are seen as especially vulnerable because many are heavily indebted and some struggle just to implement their budgets under less stressful circumstances.

Now the continent might need up to 10.6 billion dollars (£8.5 billion) in unanticipated increases in health spending, and revenue losses could lead to debt becoming unsustainable, UNECA chief Vera Songwe said in March.

Urgent calls for an economic stimulus package have followed.

A man wearing a face mask to protect against coronavirus cycles in Thokoza, east of Johannesburg (Themba Hadebe/AP)

Ethiopian prime minister Abiy Ahmed has spoken of an “existential threat” to Africa’s economies while seeking up to 150 billion dollars (£120 billion) from G20 nations. A meeting of African finance ministers agreed that the continent needs a stimulus package of up to 100 billion dollars (£80 billion), including a waiver of up to 44 billion dollars (£35.4 billion) in interest payments.

South African president Cyril Ramaphosa backed the calls for a stimulus package, saying in a recent speech that the pandemic “will reverse the gains that many countries have made in recent years”. Several African nations have been among the fastest-growing in the world.

The International Monetary Fund on March 25 said it had received requests for emergency financing from close to 20 African countries, with requests from another 10 or more likely to follow.

The IMF has since approved credit facilities for at least two West African nations – Guinea and Senegal – facing virus-related economic disruption.

But further challenges remain. Rampant corruption in many African countries feeds inequality, and poor or non-existent public services stoke public anger that sometimes escalates into street protests and deadly violence.