By Olakunle Agboola – With several African governments closing borders, cancelling flights and enforcing strict quarantine requirements to curb the spread of the virus, experts say there will be consequences for the continent’s economy.
As at mid-March, Africa seemed to have so far been spared the worst human impact of the coronavirus pandemic but was already beginning to suffer the destructive economic impact of a potential global slide to recession.
Medical experts, most especially the Westerners, are more concerned about the slow spread of the virus in Africa compared to Europe, Asia and America. Can Africans curtail the spread of the coronavirus if the pandemic begins to escalate exponentially across the continent? This was a major concern due to limited access to sanitation and the continent’s meagre public health services.
Given such fears for its vulnerable population, South Africa, which by mid-March had experienced several dozen cases, declared a national disaster on 15 March, banning all travels from major affected countries, including China, the UK, Italy and the US. Other African governments have joined South Africa in prioritizing the preservation of human life over the economic impact of such measures by introducing a range of restrictive and exclusionary policies.
Recently, Nigerian President through a national broadcast ordered a total lockdown of Lagos, Ogun and Abuja, the federal capital territory for two weeks to curtail the spread of coronavirus.
Such painful decision will compound the destructive impact of the pandemic, which has already upended Africa’s economic relationship with China by cutting the Asian country’s usually voracious demand for oil, mining products and other raw materials from the continent as Chinese factories react to slowly to global demand.
The United Nations Economic Commission for Africa (UNECA) has revised Africa’s growth downwards by more than a third, from 3.2% to 1.8%, and the Organization for Economic Co-operation and Development (OECD) has revised global growth figures down from 2.9% to 1.5%. Yet given increasing social isolation measures and enforced city and country lockdowns, many are now projecting a global recession. Mohamed El-Erian, chief economic advisor to Allianz, asserted in mid-March that the world is going into a “sudden and deep recession.”
Key sectors of the African economy sensitive to slowing global demand including tourism, agriculture, oil and mining. Disruption to supply chains, plummeting commodity prices and a shutdown of the aviation sector are assured. If countries are swiftly able to control the rate of infection, Africa may yet be spared the worst economic impacts. But if countries are not able to replicate the success of China and South Korea in reducing the rate of infection and fatalities, widespread social unrest has the potential to further destabilize the global economy.
According to ratings agency, Fitch, the Coronavirus outbreak will have a downside risk for short term growth for sub-Saharan African growth, particularly in Ghana, Angola, Congo, Equatorial Guinea, Zambia, South Africa, Gabon and Nigeria – all countries that export large amounts of commodities to China.
Professor of Economics, Bola Adeniyi said, ”COVID-19 is expected to impact China’s global trade for several months. As China is Africa’s biggest trading partner, the effects of COVID-19 are already being felt in Africa. With China having shut down its manufacturing centre and closed its ports, there has been a resultant decrease in demand for African commodities. Importers in China are cancelling orders due to port closures and as a result of reduction in consumption in China. Sellers of commodities in Africa are being forced to offload products elsewhere at a discounted rate”.
John Adeyeye, a TV producer in South Africa said, ”the global theatre industry might suffer if people stop going to cinemas for fear of picking up the virus, leaving the way open for traditional broadcasters and live streaming platforms to benefit from stay at home movie and tv watchers. It will be interesting to see what changes are implemented by film distributors to address this difficulty. One option could be to use transactional video on demand platforms for new releases. Whatever means are implemented, the impact is likely to disrupt the traditional reliance on theatres as the first release window and ultimately, the way of doing business in the film distribution industry could find itself forever changed as a result”.
Globally, travel related business such as hotels, airlines, luxury and consumer goods have already suffered due to the travel ban by African governments. Holidays and events gatherings have been cancelled and rescheduled in areas affected by the virus and people have stopped going out to entertainment venues and restaurants to avoid the risk of exposure. This has affected the entertainment sector in Africa having Nigeria, South-Africa, Kenya and Ghana as the front-liner of show business in Africa.
The total lock down of major cities in Africa is daily affecting the economy, which will take a fine-tuned energy to grow the economy when Covid-19 epidemic is over.
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