The World Bank, on Thursday, projected a very bleak outlook for African economies in the face of the increasingly devastating impact of the Coronavirus pandemic.
It said Sub-Saharan Africa’s (SSA’s) growth will slump to all time low of -5.1% this year, thereby pushing the region into its first recession in 25 years.
According to the latest Africa’s Pulse, the World Bank’s twice-yearly economic update for the region, released today, this sluggish growth trend is expected to cost the region between $37 billion and $79 billion in output losses in 2020.
It noted that growth in Sub-Saharan Africa had been significantly impacted by the ongoing coronavirus which will see the growth reversed significantly from 2.4% in 2019 to -2.1 to -5.1% in 2020.
Commenting on the report findings, World Bank Vice President for Africa, Hafez Ghanem, noted that, while the pandemic had become a huge test for societies and economies globally, African countries would be particularly hit hard by the increasingly socioeconomically devastating pandemic.
He said: “The COVID-19 pandemic is testing the limits of societies and economies across the world, and African countries are likely to be hit particularly hard.
“We are rallying all possible resources to help countries meet people’s immediate health and survival needs while also safeguarding livelihoods and jobs in the longer term including calling for a standstill on official bilateral debt service payments which would free up funds for strengthening health systems to deal with COVID 19 and save lives, social safety nets to save livelihoods and help workers who lose jobs, support to small and medium enterprises, and food security”, Ghanem assured.
To mitigate the impact of the COVID-19 pandemic, The Pulse authors recommended that African policymakers should focus on saving lives and protecting livelihoods by focusing on strengthening health systems and taking quick actions to minimize disruptions in food supply chains.
In addition, they also canvassed implementation by governments in the SSA social protection programmes, including cash transfers, food distribution and fee waivers, to support citizens, especially those working in the informal sector.
A further analysis of the report showed that COVID-19 will also trigger trade and value chain disruption, which impacts commodity exporters and countries with strong value chain participation; reduced foreign financing flows from remittances, tourism, foreign direct investment, foreign aid, combined with capital flight; and through direct impacts on health systems, and disruptions caused by containment measures and the public response.
The authors noted that though most countries in the region have been affected to different degrees by the pandemic, real gross domestic product growth is projected to fall sharply, particularly in the region’s three largest economies Nigeria, Angola, and South Africa as a result of persistently weak growth and investment.
In general, they projected that oil exporting-countries will also be hard-hit; while growth is also expected to weaken substantially in the two fastest growing areas the West African Economic and Monetary Union and the East African Community due to weak external demand, disruptions to supply chains and domestic production.
In addition, the Africa’s Pulse report authors further indicated that the region’s tourism sector would contract sharply due to severe disruption to travel.