- Projects $79bn loss by regional economy to pandemic
Ndubuisi Francis in Abuja
The World Bank has predicted recession for Sub-Saharan Africa in 2020 as the COVID-19 pandemic ravages the continent.
The bank said in a new forecast yesterday, which is contained in the latest edition of the bank’s economic update, ‘Africa’s Pulse’, that this would be the first regional recession in 25 years.
In 2019, the region was projected to grow at 2.4 per cent this year, but the current forecast by the World Bank put growth at between -2.1 per cent and -5.1 per cent.
The report quoted the World Bank Vice President for Africa, Hafez Ghanem, as saying that “the COVID-19 pandemic is testing the limits of societies and economies across the world, and African countries are likely to be hit particularly hard.
“We are rallying all possible resources to help countries meet people’s immediate health and survival needs while also safeguarding livelihoods and jobs in the longer term – including calling for a standstill on official bilateral debt service payments, which would free up funds for strengthening health systems to deal with COVID 19 and save lives, social safety nets to save livelihoods and help workers who lose jobs, support to small and medium enterprises and food security.”
The bank recommended some measures, including asking African policymakers to focus on saving lives and protecting livelihoods by focusing on strengthening health systems and taking quick actions to minimise disruptions in food supply chains.
Others are the implementation of social protection programmes, such as cash transfers, food distribution and fee waivers, to support citizens, especially those working in the informal sector.
The report said the region’s economy would contract 2.1 per cent to 5.1 per cent from growth of 2.4 per cent last year and that the virus would cost sub-Saharan Africa $37 billion to $79 billion in output losses this year due to trade and value chain disruption, among other factors.
Africa has at least 10,956 confirmed cases of the novel coronavirus, 562 deaths and 1,149 recoveries, according to a Reuters tally based on government statements and WHO data.
The World Bank and International Monetary Fund (IMF) are racing to provide emergency funds to African countries and others to combat the virus and mitigate the impact of sweeping shutdowns aiming at curbing its spread.
The virus has led to suspension of international passenger travel in many countries on the continent and hit sectors such as tourism.
Various African governments have announced lockdowns or curfews in response to the virus, which was slow to reach many African countries but is now growing exponentially, according to the World Health Organisation.
Real gross domestic product growth was projected to fall sharply particularly in the region’s three largest economies – Nigeria, Angola and South Africa, the World Bank said.
Oil exporting-countries would also be hard-hit; while growth would likely weaken substantially in the West African Economic and Monetary Union, and the East African Community due to weak external demands, disruptions to supply chains and domestic production.
The bank said the spread of the flu-like respiratory disease also had potential to lead to a food security crisis on the continent, with agricultural production forecast to contract between 2.6 per cent and seven per cent in the event of trade blockages.
“Food imports would decline substantially (as much as 25 per cent or as little as 13 per cent) due to a combination of higher transaction costs and reduced domestic demand,” the bank said in a statement accompanying the report.
It called on China, the United States and other bilateral creditors to temporarily suspend debt payments by the poorest countries so they can use the money to halt the spread of the disease and mitigate its financial impact.
“There will be need for some sort of debt relief from bilateral creditors to secure the resources urgently needed to fight COVID-19 and to help manage or maintain macroeconomic stability in the region,” Cesar Calderon, the bank’s lead economist and lead author of the report, said.
The global pandemic is causing an economic crisis unlike any in the past century and will require a massive response to help in the recovery, IMF Chief, Ms. Kristalina Georgieva said yesterday.