The Economic Commission for Africa (ECA) has warned the unfolding coronavirus crisis could seriously dent Africa’s already stagnant growth with oil exporting nations losing up to $65 billion in revenues as crude oil prices continue to tumble.
In the country, already importers and entrepreneurs are feeling the impact of the pandemic as borders in Europe and China have been closed.
ECA executive secretary, Vera Songwe has told the media having already been strongly hit Africa’s major trading partner, China, coronavirus was inevitably impacting Africa’s trade.
“Africa may lose half of its GDP with growth falling from 3.2 percent to about 2 percent due to a number of reasons which include the disruption of global supply chains,” said Songwe, adding the continent’s interconnectedness to affected economies of the European Union, China and the United States was causing ripple effects.
She said although a few cases have been reported in some 15 countries so far, the crisis was set to deal African economies a severe blow.
Songwe said the continent would need up to $10.6 billion in unanticipated increases in health spending to curtail the virus from spreading, while on the other hand revenue losses could lead to unsustainable debt.
Coronavirus outbreak, Songwe said, could reduce Nigeria’s total exports of crude oil in 2020 by between $ 14 billion and $ 19 billion.
The ECA estimates coronavirus could lead to Africa’s export revenues from fuels falling at around $101 billion in 2020. While remittances and tourism could also be affected as the virus continues to spread worldwide, resulting in a decline in FDI flows; capital flight; domestic financial market tightening; and a slow-down in investments; hence, job losses.
Pharmaceuticals, imported largely from Europe and other coronavirus affected partners from outside the continent, could see their prices increasing and availability reduced for Africans.
With nearly two-thirds of African countries being net importers of basic food, shortages are feared to severely impact food availability and food security.
Furthermore, negative consequences are expected to worsen, if coronavirus develops into an outbreak in Africa.
In addition, a decline in commodity prices could lead to fiscal pressures for Africa’s economic power houses such as South Africa, Nigeria, Algeria, Egypt and Angola.
Stephen Karingi, director of the ECA’s Regional Integration and Trade Division, said there, however, is an opportunity the continent could take advantage of as trading within the African Continental Free Trade Area (AfCFTA) is set to commence this July.
Said Karingi: “The intra-African market could help mitigate some of the negative effects of coronavirus through limiting dependence on external partners, especially in pharmaceuticals and basic food.”
He believes diversifying economies away from fuel-driven was vital beyond coronavirus, emphasising the need for the continent to urgently implement the AfCFTA as he urged African countries who export drugs to prioritise selling on the African market.
The ECA, in a presentation on the economic effects of the coronavirus on Africa, suggests African governments could review and revise their budgets to reprioritize spending towards mitigating expected negative impacts from coronavirus on their economies.
As a safety net, the think tank is urging governments to provide incentives for food importers to quickly forward purchases to ensure sufficient food reserves in key basic foods items.
Karingi said fiscal stimulus packages are also crucial if the continent is to weather the coronavirus storm which has now claimed over 5 000 lives globally and infected over 139 637 people.