Fighting Back

African countries rally with a raft of measures to combat the economic impact of COVID-19

- Benard Ayieko

The COVID-19 pandemic has left many individuals and businesses count-ing their losses in all sectors of the economy. Notably, there has been a big shift in stock markets, increase in the number of unemployed people, plummeting oil prices and reduced travel. Worse still, experts are warning that COVID-19 will be with us for some time, unless an effective vaccine is found. While the pandemic continues to cause havoc in the global economy, it is important to consistently evaluate the socio-economic impact it has on the African economy.

Impact on economy

The World Bank, in its Africa’s Pulse report released in April, estimated that the pandemic could cost sub-Saharan Africa (SSA) between $37 billion and $79 billion in output losses this year. It also portended that the impact on household welfare is expected to drop drastically, with welfare losses in the best-case scenario projected to reach 7 percent in 2020, relative to a non-pandemic scenario. On food security, the report indicates that COVID-19 will potentially create a severe food security crisis in SSA, with agricultural production contracting between 2.6 percent and 7 percent. Food imports are also expected to decline substantially to a high of 25 percent and low of 13 percent, due to high transaction costs and reduced domestic demand. The aggregate effect, the World Bank predicted, is that the pandemic will set off the first recession in the region in 25 years, with growth forecast at negative 5.1 percent in 2020 from a modest 2.4 percent in 2019.