Efem Nkam Ubi, Acting Director General, Nigerian Institute of International Affairs
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Covid-19 further exposes the fragility of African economies 10 Apr 2020
The Covid-19 coronavirus pandemic is a global health crisis of considerable magnitude. It has left in its wake economic, political and social challenges for policymakers to contend with. On March 27, Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, said the global economy had entered a recession that could be as bad or worse than the Great Recession of 2007-2009. The IMF forecasted a recovery in 2021.
To help alleviate the crisis, the IMF chief said the institution was planning to double its emergency financing programme as 81 lower income countries had already sought its support. Despite the funding that these countries would receive from international organisations in the fight against Covid-19, there is still the question of how countries in Africa – where many of the economies historically depend on external support – can weather the storm of the pandemic.
As at the time of writing this article towards the end of last month, Africa had 4,861 confirmed cases of Covid-19, with South Africa accounting for the largest share (1,280), followed by Egypt (609) and Morocco (516). Nigeria had recorded 111 cases, and one fatality. While the incidence of the disease on the continent and fatalities remained low compared to the more developed world regions, the World Health Organisation (WHO) advised Africa to take emergency steps and prepare for the worst.
Truth be told, virtually all African countries are not prepared to handle Covid-19. While calling on wealthy countries to help the developing world, United Nations Secretary General, Antonio Guterres, in an interview with Radio France Internationale, said Africa should be the priority of the international community as the continent doesn’t have the resources to fight the pandemic. Guterres said the continent is in urgent need of test kits, masks, ventilators, protective suits for health workers and massive financial assistance.
Covid-19 has shown the true state of leadership and governance in many countries both in and outside the continent of Africa. The responses from most G20 countries, which are the most hit thus far by the virus, have left much to be desired. Daryl G. Kimball, Executive Director of the Washington DC-based Arms Control Association, observed that the initially weak response by the United States "laid bare the terrible human cost of misplaced policy choices.”
He said although the American government spends tens of billions of dollars to maintain a massive nuclear arsenal capable of destroying the planet many times over, it doesn’t have a stockpile of face masks large enough to protect front-line healthcare workers during the current pandemic. Although it failed to invest in stockpile of medical supplies needed to deal with a disease pandemic, the administration of President Donald Trump has invoked a legislation, which gives the government the powers to enlist private companies to help in a national crisis. By using the Defense Production Act, American manufactures will help expand the development of medical masks, ventilators and other medical supplies.
Apart from lacking the medical supplies that the UN Secretary General said Africa needs, countries on the continent, unfortunately, don't have the manufacturing and technological capacity to develop the materials and equipment that it would need in the worst case scenario of widespread infections à la US, China and Spain, for instance. The continent depends substantially on importation of finished products from developed and other emerging economies in Asia and South America.
Africa is also vulnerable to volatilities in the international commodity markets. Thus, external shocks affecting commodity prices affect the domestic economies. Amid Covid-19 and price war between Saudi Arabia and Russia, oil prices have fallen below $30 per barrel, reaching a 17-year lows on March 30. The 2020 fiscal plans of oil exporting countries like Nigeria are already in jeopardy. With reduced revenue, many national governments on the continent who previously lacked the fiscal capacity for social provisioning would even find it more difficult during the pandemic and the economic recession caused by Covid-19 to support their people.
As businesses shut down and people are sequestered to reduce the spread of infections, the outlook of the global labour market also looks grim. Also on March 27, the International Labour Organisation (ILO) said its earlier estimate of about 25 million job losses and approximately $3.4 trillion losses in workers’ income might have underestimated the magnitude of the pandemic's impact.
For a continent with a huge number of dependants and the highest number of poor people, the economic ramifications of the disease will take a much bigger social toll. African governments have been rolling out some palliatives to reduce the economic impact of the disease on vulnerable people. However, the measures amount to a drop in the ocean.
The big question is whether at the end of it all, African leaders will strengthen their governance systems to not only be better prepared for the next crisis but also prioritise human development of their citizens and accelerate economic development.