As trillions of spiky time bombs float across our planet unseen and deadly, the economic damage of the virus containment strategy dubbed the Great Lockdown keeps piling up. Crude oil is gyrating wildly as I write this, with demand diving and stockpiles bursting.
At least 30 million Americans have lost their jobs, and millions more are out of work elsewhere. Airlines are flying empty or not at all. Factories are disrupted and cash-poor small businesses are sinking. The Olympics and sporting seasons are sidelined. From New York to Johannesburg to Tokyo the future is on hold.
If the world’s biggest economies are taking such body blows, Africa must be gasping, right? After all, economies this fragile simply can’t fend off a crisis this big.
“There isn’t much in Africa standing in the way of Covid-19,” a blogger for the World Economic Forum declared last month, referring to coronavirus disease. Health systems can barely cope with existing threats – HIV, tuberculosis, malaria and lesser known ills. According to this analysis, Africa has little hope of outside support when America and Europe are scrambling to find protective gear for front-line health workers.
That picture is way too dark, suggests the International Monetary Fund. While the IMF predicted in April that the U.S. economy will shrink 5.9 percent this year and European countries using the euro would take a 7.5 percent hit, Sub-Saharan Africa will crumble – wait, what’s this? The IMF says countries south of the Big Sandy will shrink by just 1.6 percent before bouncing back to 4 percent growth in 2021.
Along with government-ordered curbs on public movements, viral messages may be beating back the virus in Sub-Saharan Africa. The percentage of Africans with mobile phones has reached 80 percent, and one-third of Africans have mobile broadband Internet, making this the first pandemic to go up against mega-scale Sub-Saharan social networking.
Young Africans are promoting handwashing, face masks, social distancing and stay-at-home solidarity, while trading memes and stories on Facebook, Twitter and WhatsApp that poke fun at our shared predicament.
As of May 1, Africa had recorded 26,663 confirmed Covid cases, less than 1 percent of the 3.14 million cases worldwide, according to the World Health Organization. Egypt, Nigeria and South Africa combined account for half of Africa’s total.
If the IMF brain trust is correct, at least seven high-growth African countries will avoid slipping into recession. Ethiopia, Africa’s second most populous nation, will hit the brakes on economic growth that reached 9 percent in 2019, yet still will expand 3.2 percent during a pandemic. Kenya will slow to 1 percent growth, while Rwanda (which raced to 10 percent growth last year) and Uganda will each slow to 3.5 percent growth during a pandemic.
Over in West Africa, Ghana will decelerate to 1.5 percent from 6.1 percent in 2019, and Senegal to 3 percent from 5.3. Cote d’Ivoire is forecast to reach 2.7 percent growth, though that appears to be wildly optimistic given the country’s urgent balance of payments crisis.
These forecasts and the trend lines emerging from the Great Lockdown point to some positives, especially for economies not tied to oil revenue or consumer-linked minerals such as copper.
Ethiopia’s push into manufacturing could benefit from the post-Covid re-design of global supply chains to reduce dependence on China and consolidate production closer to growth markets. And if the cleaner air (see New Delhi) of the Great Lockdown boosts demand for electric vehicles, then Ethiopia’s green economy strategy might benefit. (Lower oil prices will favor fossil fuel vehicles in the short run.) Hyundai plans to make electrics in Ethiopia at its new factory.
As epicenter of Africa’s digital apps and Internet-based services, Kenya should see sustained cross-border demand as payments and services migrate online and teleworking persists. Prior to the crisis, World Bank research suggested that 4.5 million jobs could be created by the Kenya-powered digital economy across East Africa. The virus crisis may accelerate that journey.
Mobile-phone payments should be used to reduce the unsafe handling of cash and help speed short-term grants and loans to the most vulnerable in Kenya, the World Bank has recommended. Kenya’s economy is feeling the pressure from the freeze on global tourism, tumbling retail sales, and interrupted income for the urban and rural poor.
Coronavirus arrived in Africa about the same time as the world had figured out the right menu of prevention tactics, which enabled good practices to possibly get ahead of the virus surge. Practices, ironically, touted by the first African to run the World Health Organization, Doctor Tedros Adhanom Ghebreyesus, former health minister and foreign minister of Ethiopia.
Kenya moved aggressively in March to close its international airspace and imposed a 7 p.m. to 5 a.m. curfew to keep people in their residences. Workers in Nairobi adjust their face masks and scramble to get on the road home by late afternoon. South Africa enforced a similar lockdown, which began easing on May 1 with some factories allowed to reopen and limited outdoor activities to resume.
|NIGERIA||$3.4 Billion||April 28|
|GHANA||$1.0 Billion||April 13|
|COTE D’IVOIRE||$886 Million||April 13|
|SENEGAL||$442 Million||April 17|
|ETHIOPIA||$411 Million||April 30|
And the idea that the world would ignore Africa’s most Covid-vulnerable economies has proven to be flat wrong.
The IMF has rushed $8 billion to Sub-Saharan Africa so far. The IMF Executive Board approved a $3.4 billion emergency loan to oil giant Nigeria on April 28, neatly working out to a billion dollars for every percentage point of projected GDP shrinkage this year. “The Covid-19 outbreak—magnified by the sharp fall in international oil prices and reduced global demand for oil products—is severely impacting economic activity in Nigeria,” IMF Deputy Managing Director Mitsuhiro Furusawa said as the loan was announced.
Ghana received $1 billion in mid-April, and Ethiopia got $411 million at month’s end.
The IMF also approved an $886 million loan to Cote d’Ivoire – on a per-person basis, about twice what Nigeria is getting. (Nigeria’s population is eight times bigger.) IMF funds also have flowed to the Democratic Republic of the Congo ($363 million), Mozambique ($309 million) and several smaller countries.
A major concern: 2020 is shaping up as a year of setbacks for the global poor after two decades of progress. Sub-Saharan Africa will be the region hardest hit, contributing almost half of the projected rise in people living in extreme poverty (49 million) worldwide due to Covid-19, according to calculations by a World Bank team. Nigeria and Congo will bear the brunt.
Yet the biggest threat to Africa right now isn’t necessarily locus – as in proximity to coronavirus – but locusts – those flying menaces that descend on fields by the billions. Locusts can consume crops in one day that could feed about 35,000 people, according to the African Development Bank.
The locust invasion now in full swing could push as many as 5 million East Africans into hunger by June unless countered by a stepped-up supply of pesticides for aerial spraying and the release of grain reserves to cushion against food price surges.
“The last thing Africa needs now, as we are battling with the Covid-19 pandemic, is a hunger pandemic,” says Akinwumi Adesina, president of the development bank.
Locusts add one more rather scary variable to a formula that may yet pounce on the resilience of high-growth African economies.
“The economic fallout depends on factors that interact in ways that are hard to predict,” the IMF cautioned in its World Economic Outlook released in April, “including the pathway of the pandemic, the intensity and efficacy of containment efforts, the extent of supply disruptions, the repercussions of the dramatic tightening in global financial market conditions, shifts in spending patterns, behavioral changes (such as people avoiding shopping malls and public transportation), confidence effects, and volatile commodity prices.”
Other than that, we’re good.