COVID-19 has brought the world to a screeching halt. With people infected reaching more than a million in 200 countries and more than 120,000 people have died. It is evident that the entire world is waging a battle against COVID-19, and it is the fight of our lives.
We are merely into the first quarter of the year but the whole world has been using words such as “quarantine” and “lockdown” and “mass testing” like they have never done before. Since we are still right smack in the middle of the pandemic, it is still quite difficult to grasp the scale and scope of its impact.
COVID-19’s Impact on the Economy
The impact of the coronavirus pandemic is already being felt in the global economic market. It is causing a major disruption in the global economy. As new cases and deaths are being reported each day, a second crisis is on the verge of forming – and that is economic recession. The impact of the virus is now being keenly felt in the Global North or the developed world. However, much of its socio-economic impacts will be felt by low and middle-income countries.
African Economies and COVID-19
In Africa, there are fewer COVID-19 cases compared to Europe, North America, and Asia. However, the numbers are rising as countries in the continent are doing their best to contain the virus. The slow arrival of the virus to the continent has bought precious time for countries to prepare, mobilizing precautionary measures and training health personnel.
On the economic front, demand for Africa’s raw materials and commodities from its biggest buyer – China – has slowed down considerably. China has shut down its ports and many of its manufacturing centres, resulting in a decrease in demand for African commodities. On the other hand, Africa’s access to manufactured goods and industrial components from China and other Asian countries has also been hampered. Industrial commodities such as copper, oil, and iron ore, major exports of Ghana, Zambia, Nigeria, and the Democratic Republic of Congo to China are significantly at risk.
For Central and West Africa, 80% of their rural population rely on subsistence farming. The ideal scenario is the 2020 off-season harvests should be reaching markets and providing a substantial income for agriculture workers and farmers. However, since there are a lot of restrictions such as market closures and border controls, it limits market access for farmers to buy quality seeds and fertilizers.
Africa has been gaining a lot of ground at the start of the year. From a period of political and economic uncertainty, it has been showing signs of considerable improvement. COVID-19 will hamper this predicted upturn and will result in uncertainty.
According to economic estimates, Africa will need billions of dollars to cushion the impact of the disease in their economies. Many countries in the continent are now scrambling together contingency measures.
How Can Economic Collapse Be Prevented?
To prevent economic collapse, governments will have to take on roles in securing jobs and business continuity. Governments and the business sector must collaborate and it is the best chance at preventing a recession. This means that businesses must be willing to leave their competitive interests behind and work together. Swiss NGO World Economic Forum has created the COVID Action Platform. This global platform is meant to gather the business community and mobilize support to protect the livelihood of people and facilitate the continuity of business.
Mitigating COVID-19 Impact in Africa
In Africa, governments and agencies are bracing for impact. In fact, Africa dominates the International Monetary Fund’s (IMF) debt relief list which they announced on April 13. The IMF will provide grants to 19 African countries to help address the impact of the COVID-19 pandemic. Some of these countries are Malawi, Benin, Liberia, Rwanda, Burkina Faso, Mozambique, Mali, Guinea-Bissau, Niger, Togo, and Sierra Leone.
The African Development Bank (AfDB) has raised $3 billion through a social bond, the largest ever issued, that will be deployed to its member nations. There are also reports from Ghana that the IMF has approved a $1 billion facility to help the country combat the pandemic. The Ghanaian government is also absorbing three months of water bills and electricity bills of the poorest of the poor in the West African nation.
On March 30th, the government of Zimbabwe announced that it set aside a $600 million budget to cover vulnerable households in the next three months, an effort to mitigate the impact of COVID-19. In addition, half a billion dollars has already been budgeted to fight the virus as the country entered into a lockdown. This is important as the country’s health system is one of the continent’s most fragile.
Africa’s most populous nation Nigeria has rolled out financial intervention schemes to the poorest household to cushion the effect of the pandemic. Nigeria’s finance minister will request $6.9 billion from the IMF, World Bank, and the AfDB.
If African economies want to come out of this crisis relatively unscathed, they must plan for unprecedented impact and collaboration; they must work together and dig in to overcome the crisis.
Aristides Mandinga, IR and Peace Studies