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Coronavirus: Africa Faces “Complete Collapse of Economies”

The global economic crisis linked to the coronavirus has wiped out jobs for millions across the African continent, many of whom live hand-to-mouth in slums and without clean water. 

The International Monetary Fund on March 25 reported it had received requests for emergency financing from close to 20 African countries. It expected requests from another 10 or more. The IMF has since approved credit facilities for Guinea and Senegal.

Fears have mounted over whether measures to control the spread of COVID-19 could lead people trapped at home who risk going hungry. UNECA has said that the continent will be hit harder than others with an economic toll that will exacerbate “current fragilities.”

Heavily indebted countries in sub-Saharan Africa are particularly vulnerable. The continent as a whole may need $10.6 billion in unanticipated increases in health spending to fight the pandemic. Debt could become unsustainable, according to UNECA chief Vera Songwe. 

“We’ve been through a lot on the continent. Ebola, yes, African governments took a hit, but we have not seen anything like this before,” Ahunna Eziakonwa, the United Nations Development Program regional director for Africa, told The Associated Press. “The African labor market is driven by imports and exports and with the lockdown everywhere in the world, it means basically that the economy is frozen in place. And with that, of course, all the jobs are gone.”

Half of Africa’s 54 countries have imposed lockdowns, curfews, travel bans or other measures in a bid to prevent local transmission of the virus. In countries like Uganda, the informal sector accounts for more than 50% of the country’s gross domestic product. 

Africa, home to 1.3 billion people, could keep people home for months. Some governments are saying they’re unable to offer direct financial support to its citizens, portending unprecedented damage to economies in the developing world. Casual laborers, petty traders, street vendors, mechanics, taxi operators, and conductors, housekeepers, waitresses, and sellers of all things, are now jobless.

Eziakonwa says, unless coronavirus can be curbed, 50% of all projected job growth in Africa will disappear as aviation, services, exports, mining, agriculture, and the informal sector cease altogether. 

“We will see a complete collapse of economies and livelihoods,” she cautioned. “Livelihoods will be wiped out in a way we have never seen before.” 

The U.N. Economic Commission for Africa reported the virus will hit Africa in a big way. Oil-exporting nations like Nigeria and Angola may lose as much as $65 billion in revenue as prices fall. 

Calls for economic stimulus packages abound. Ethiopian Prime Minister Abiy Ahmed spoke of an “existential threat” to Africa’s economies, requesting $150 billion from G20 nations. African finance ministers agreed the continent needs a stimulus package upwards of $100 billion, including a waiver of as much as $44 billion in interest payments. 

South African President Cyril Ramaphosa said in a speech that the pandemic “will reverse the gains that many countries have made in recent years.” 

Ugandan President Yoweri Museveni announced a lockdown. Public transport has been closed and all but essential businesses.

“What am I going to eat if he stops us from working? Museveni cannot do that,” said Marius Kamusiime, who operates a passenger motorcycle. “We may have to go back to the village if this corona becomes serious.” In the multi-generational homes of Africa, one job loss can affect up to a dozen people. 

“Sitting down is not an option because they don’t have money locked away,” said Eziakonwa, the UNDP official in charge of Africa.

Rwanda’s government and others distribute food to those who need it.“We do know what to do to bring the economy back to life. What we don’t know is how to bring back people to life,” said Ghanaian President Nana Akufo-Addo. 

In Kenya, President Uhuru Kenyatta announced temporary tax relief to those earning up to $240 in monthly wages, including a reduction in the maximum income tax rate from 30% to 25%. He also gave $94 million to “vulnerable members of our society” to protect them from economic damage.

Some leaders say they cannot afford such benefits. While “the rich countries are unlocking staggering sums” to stimulate their economies, Benin’s President Patrice Talon said that his West African country, “like most African countries, does not have these means.”

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