By Peter Uzoho
The Economic Commission for Africa (ECA) has predicted that the COVID-19 employment effects will likely be severe in urban areas in the continent.
Therefore, the Commission is calling for adequate consideration of the vulnerability of city economies as African governments consolidate efforts and define stimulus measures to mitigate national and regional economic impacts.
“As engines and drivers of economic growth, cities face considerable risks in light of COVID-19 with implications for the continent’s resilience to the pandemic,” the Director of the Gender, Poverty and Social Policy Division of the ECA, Thokozile Ruzvidzo said in a statement.
Africa’s cities are home to 600 million people and account for more than 50 per cent of the region’s Gross Domestic Product. This is even higher at more than 70 per cent for countries such as Botswana, Uganda, Tunisia and Kenya.
In the region, a third of national GDP (31%) comes on average from the largest city in African countries. As such, the economic contribution of cities in the region is far higher than their share of population.
“COVID-19 employment effects in are likely to be severe in urban areas. With urban-based sectors of the economy (manufacturing and services) which currently account for 64 per cent of GDP in Africa are expected to be hit hard by COVID-19 related effects, leading to substantial losses in productive jobs. In particular, the approximately 250 million Africans in informal urban employment (excluding North Africa) will be at risk.
“Firms and businesses in African cities are highly vulnerable to COVID-19 related effects, especially SMEs which account for 80 per cent of employment in Africa.
These risks are compounded by a likely hike in the cost of living is expected as shown for example by some initial reports of up to 100 per cent increase in the price of some food items in some African cities,” it stated.
Additionally, the report noted that urban consumption and expenditure (of food, manufactured goods, utilities, transport, energy and services) was likely to experience a sharp fall in light of COVID-related lockdowns and reduced restrictions.
“Africa’s cities drive consumption with their growing middle class with per capita consumption spending in large cities being on average 80 per cent higher at the city level than at the national level. COVID-19 related decline in urban consumption will thus impact domestic value chains, including rural areas,” Ruzvidzo noted.
Further, she pointed out that with per capita expenditure of African local authorities being the lowest in the world at $26, many local authorities are poorly resourced and less able to contend with the onslaught of COVID-19.
“Alarming also the likely fall in revenue streams for local authorities due to COVID-19 curtailing their already limited ability to respond to this crisis.
Intergovernmental/national transfers which account for 70 to 80 per cent of local authorities’ finance are likely to be reduced due to immediate national response and recovery requirements. Own source revenues which are already low at only 10 per cent of local authorities’ finances with city level lockdowns and restrictions leading to reduced economic activity,” she added.