African countries have so far lost an estimated $29 billion to the coronavirus economic disruption, an amount equal to Uganda’s gross domestic product (GDP), according to UN estimates.
“Africa may lose half of its gross domestic product with growth falling due to a number of reasons which include the disruption of global supply chains,” said United Nations Economic Commission for Africa (ECA) Executive Secretary, Vera Songwe, in a statement.
Here Is All You Need To Know
- According to the United Nations Economic Commission for Africa (ECA)’s latest report, coronavirus will shred 1.4 per cent off Africa’s $2.1 trillion GDP, as a result of the widespread disruption of business on the continent and across the world by the coronavirus pandemic.
- The report however forecasts that the continent’s annual economic growth is likely to drop from 3.2 per cent in February to 1.8 per cent in March, warning that it could worsen in the coming months as more countries report coronavirus infections within their borders.
- Uganda’s GDP was estimated at about $28.5 billion as at the end of last year, indicating that the estimated losses so far are equivalent to the country’s annual production.
- The UN agency has warned that the unfolding coronavirus crisis could seriously dent Africa’s already stagnant growth, with the continent expected to spend more $10.6 billion in unanticipated increases in their health budgets to curtail spread of the virus.
- Dr Songwe in the statement observes that China, Africa’s major trading partner which is strongly hit by Covid-19, was already inevitably impacting negatively on Africa’s trade by directly affecting global supply chains.
- According to the UN document, Africa’s increased interconnectedness with the rest of the world has exposed the continent to the disease, which was first reported in Wuhan, China, in December.
- The continent has also seen a sharp decline in Foreign Direct Investment inflows, capital flights and financial markets instability.
- Dr Songwe estimates that Covid-19 could reduce Nigeria’s total exports of crude oil in 2020 by between $14 billion and $19 billion.
Policy Alternatives
- The document recommends a number of policy options to the African governments to reduce more revenue losses that could lead to unsustainable debt.
- Some of the suggestions to governments include the need to review and revise their budgets to reprioritise spending towards mitigating expected negative impacts from Covid-19 on their economies, such as providing safety nets and incentives to food importers to quickly forward-purchase to ensure sufficient reserves of basic supplies.
- The UN agency also calls for a need to set aside a special fund for the virus preparedness, prevention and curative facilities including logistics and to improve their health systems.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer.
He could be contacted at udohrapulu@gmail.com