In 2019, the world recorded an economic growth rate of 4%. All these gains were lost in 2020. Indeed, because of the Covid-19 pandemic, the contraction amounted to no less than 4.3%, a completely new economic situation in peacetime. However, notwithstanding all these, 22 countries have succeeded in creating wealth, 12 of them from Africa.
Recession
Accordingly, the following countries saw their economies grow by varying percentages: Guinea (5.2%), Côte d’Ivoire (1.8%), Ghana (1.1%), Benin (2%), Niger (1%), Egypt (3.6%), South Sudan (8.3%), Ethiopia, Uganda (2.9%), Burundi, Tanzania (2.5%) and Malawi (1 , 3%). The countries exist side-by-side other countries such as China, Vietnam, Guyana, Turkey, among others.
In West Africa, while Guinea has the best performance, all eyes were on Ivory Coast. The real economic heart of French-speaking sub-Saharan Africa, the country has retained the confidence of international investors. Its economy remains as attractive as ever and its management of the crisis has been praised.
Charles Rapulu Udoh
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The Nigerian economy has slipped into another recession. This is the second recession in four years since the 2016 recession. Africa’s biggest economy recorded a gross domestic product (GDP) growth rate of –3.62% (year-on-year) in real terms in the third quarter of 2020. This means that the national economy has contracted cumulatively at –2.48%. According to the National Bureau of Statistics (NBS) in an update on the economy released today, 21st November, 2020, the economy has contracted over two consecutive quarters.
National Bureau of Statistics
The Bureau noted that while this represents an improvement of 2.48% points over the –6.10% growth rate recorded in the preceding quarter (Q2 2020), it also indicates that two consecutive quarters of negative growth have been recorded in 2020. The Bureau added that growth in Q3 2020 was slower by 5.90% points when compared to the third quarter of 2019 which recorded a real growth rate of 2.28% year on year. The NBS noted that the performance of the economy in Q3 2020 reflected residual effects of the restrictions to movement and economic activity implemented across the country in early Q2 in response to the COVID-19 pandemic.
“As these restrictions were lifted, businesses re-opened and international travel and trading activities resumed, some economic activities have returned to positive growth,” it said.
“A total of 18 economic activities recorded positive growth in Q3 2020, compared to 13 activities in Q2 2020.
“During the quarter under review, aggregate GDP stood at N39, 089,460.61 million in nominal terms. This performance was 3.39% higher when compared to the third quarter of 2019 which recorded an aggregate of N37, 806,924.41 million.
“This rate was, however, lower relative to growth recorded in the third quarter of 2019 by –9.91% points but higher than the preceding quarter by 6.19% points.”
For clarity, the Nigerian economy was broadly classified into the oil and non-oil sectors. Real growth for the oil sector was –13.89% (year-on-year) in Q3 2020, indicating a sharp contraction of –20.38% points relative to the rate recorded in the corresponding quarter of 2019.
“Furthermore, real oil growth decreased by –7.26% points when compared with oil sector growth recorded in Q2 2020 (6.63%),” the bureau disclosed.
“Quarter on quarter however, the oil sector recorded a growth rate of 9.64% in Q3 2020”.
“The sector contributed 8.73% to total real GDP in Q3 2020, down from 9.77% and 8.93% respectively recorded in the corresponding period of 2019 and the preceding quarter, Q2 2020.”
The NBS said the non-oil sector grew by –2.51% in real terms during the reference quarter, which is –4.36% points lower than the rate recorded in Q3 2019 but 3.54% points higher than in the second quarter of 2020.
It further stated that the non-sector was driven mainly by Information and Communication (Telecommunications), with other drivers being Agriculture (Crop Production), Construction, Financial and Insurance (Financial Institutions), and Public Administration.
“In real terms, the non-oil sector contributed 91.27% to the nation’s GDP in the third quarter of 2020, higher than its share in the third quarter of 2019 (90.23%) and the second quarter of 2020 (91.07%),” the NBS added. The contraction means Nigeria’s economy has slipped into recession for the first time since 2016 following a negative economic growth for the second consecutive quarter. Economists consider two consecutive quarters of contracting GDP as the technical definition of a recession.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
Many African countries are reopening their airspaces inspite of the rising cases of COVID-19 cases across the continent. This according to observers is part of efforts to save their economies from total collapse with the regional recession starring them on the face. Of all the countries in Africa, the island nation of Seychelles seems to be making headway in tackling the pandemic. As at this week, the country has gone 70-plus straight days without a single infection. Yet it is delaying reopening its airspace, waiting till August 1, because that was how the virus made a landfall in the country.
Countries across the continent are facing very difficult choices with rising infection rate. They are in a dilemma to either welcome the international flights that originally brought COVID-19 to the continent, or further hurt their economies and restrict a lifeline for badly needed humanitarian aid. “This is a very important moment,” the World Health Organization’s Africa chief, Matshidiso Moeti, told reporters on Thursday, a day after Egypt reopened its airports for the first time in more than three months.
Africa had more than 463,000 confirmed virus cases as of Sunday (July 5) and South Africa, its most developed economy, already struggles to care for COVID-19 patients. But Africa’s economies are sick, too, its officials say. The continent faces its first recession in a quarter-century and has lost nearly $55 billion in the travel and tourism sectors in the past three months, the African Union says. Airlines alone have lost about $8 billion and some might not survive.
Most of Africa’s 54 countries closed their airspace to ward off the pandemic. That bought time to prepare, but it also hurt efforts to deliver life-saving medical supplies such as vaccines against other diseases. Shipments of personal protective gear and coronavirus testing materials, both in short supply, have been delayed. “Many governments have decided travel needs to resume,” the WHO’s Africa chief said.
Africa has seen far fewer flights than other regions during the pandemic. Sometimes the entire West and Central African region saw just a single daily departure, according to International Civil Aviation Organization data.
While Asia, Europe and North America averaged several hundred departures a day from international airports, the African continent averaged a couple or few score daily. Last week, the number of global flights jumped significantly. In the three-day period between June 30 and July 2, the daily number of departures increased from 3,960 to 6,508 as countries loosened restrictions, the data show.
African nations want to join the crowd. Senegal’s president has said international flights will begin on July 15. The 15-member Economic Community of West African States is expected to reopen its airspace on July 21. Nigeria has said domestic flights resume on July 8 and Rwanda on Aug. 1.
Kenya Airways wants to resume international flights. South Africa and Somalia are open for domestic ones, and Cameroon, Equatorial Guinea, Tanzania and Zambia now have commercial flights. Tanzania opened its skies weeks ago, hoping for a tourism boost despite widespread concern it’s hiding the extent of infections. It hasn’t updated case numbers since April.
“It’s good to be back!” Africa’s largest carrier, Ethiopian Airlines, declared late last month. After scrambling to revamp its services for cargo and repatriation flights in the past few months, it now wants to play a leading role in “the new normal.”
That means face masks are mandatory on board. But the WHO’s Africa chief hopes to see all airlines do more. “Physical distancing should be encouraged by leaving seats vacant,” Moeti said. And she suggested that “when we see a flare-up that is unacceptable” in virus cases, the loosening of travel restrictions could be reversed.
The WHO recommends that countries look at whether the need to fight widespread virus transmission outweighs the economic benefits of opening borders. “It is also crucial to determine whether the health system can cope with a spike in imported cases,” it says.
Regional leaders of the International Air Transport Association and Airports Council International are ready to go. In an open letter to African ministers last month, they welcomed global guidelines developed by the ICAO for the return to travel after the aviation industry’s “biggest challenge of its history.”
They also urged African countries to “identify every opportunity where travel restrictions could be lifted … as soon as the epidemiological situation allows for it.”
As the continent slowly takes flight, some European nations and others are limiting entry to people from countries they feel are doing a good job of containing the virus. African nations can seize the moment and do more tourism at home, Amani Abou-Zeid, AU commissioner for infrastructure and energy, told reporters last week.
“This is an opportunity to encourage Africans to see Africa,” she said. Not always. The 70 recently infected people in the Seychelles, all crew members from West African countries meant to work on tuna fishing vessels, were isolated on boats in a special quarantine zone in the harbor in the capital.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
As a region, Sub Saharan Africa has eluded economic recession on regional basis in a quarter of a century, but that is likely to change with the negative impacts of the Covid-19 across the continent. This is because the World Bank in its recent economic projections predicts that the region’s economy will contract between 2.1% and 5.1% in 2020 from 2.4% growth last year. The rapidly spreading coronavirus outbreak is expected to push Sub-Saharan Africa into recession in 2020 for the first time in 25 years, the World Bank said in a new forecast on Thursday.
World Bank vice-president for Africa Hafez Ghanem
The global lender in its special report titled “Africa’s Pulse” said the region’s economy will contract between 2.1% and 5.1% from growth of 2.4% last year, and that the coronavirus will cost Sub-Saharan Africa between $37bn and $79bn in output losses this year due to trade and value chain disruption, among other factors.Africa has at least 10,956 confirmed cases of the novel coronavirus, 562 deaths and 1,149 recoveries, according to a Reuters tally based on government statements and World Health Organisation (WHO) data.
“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,” World Bank vice-president for Africa Hafez Ghanem said. The World Bank and International Monetary Fund (IMF) are racing to provide emergency funds to African countries and others to combat the virus and mitigate the impact of sweeping shutdowns aiming at curbing its spread.
The coronavirus has led to suspension of international passenger travel in many countries on the continent, and hit sectors such as tourism.Various African governments have announced lockdowns or curfews in response to the virus, which was slow to reach many African countries but is now growing exponentially, according to the WHO. Real gross GDP was projected to fall sharply, particularly in the region’s three largest economies — Nigeria, Angola and SA, the World Bank said.
Oil exporting countries would also be hard-hit; while growth would likely weaken substantially in the West African Economic and Monetary Union, and the East African Community due to weak external demand, disruptions to supply chains and domestic production.
The bank said the spread of the flu-like respiratory disease also had potential to lead to a food security crisis on the continent, with agricultural production forecast to contract 2.6% and up to 7% in the event of trade blockages. “Food imports would decline substantially (as much as 25% or as little as 13%) due to a combination of higher transaction costs and reduced domestic demand,” the bank said in a statement accompanying the report.
The institutions have also called on China, the US and other bilateral creditors to temporarily suspend debt payments by the poorest countries so they can use the money to halt the spread of the disease and mitigate its financial impact.
“There will be need for some sort of debt relief from bilateral creditors to secure the resources urgently needed to fight Covid-19 and to help manage or maintain macroeconomic stability in the region,” Cesar Calderon, the bank’s lead economist and lead author of the report, said.
The World Bank said African policymakers should focus on saving lives and protecting livelihoods by spending money to strengthen health systems and taking quick actions to minimise disruptions in food supply chains.It also recommended social protection programmes, including cash transfers, food distribution and fee waivers, to support citizens, especially those working in the informal sector.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
Many African countries are being shielded from the gathering recession that will most likely hit the global economy in the nearest future because of the level of diversity. This strength derived from the economic diversity in some regions of the continent will make them relatively unaffected by the global recession this is contained in a recent report from the Institute of Chartered Accountants in England and Wales (ICAEW) in its Economic Update on Africa’s fourth quarter of 2019.
ICAEW Regional Director for Middle East, Asia and Africa Michael Armstrong
The professional accountancy body provides GDP growth forecasts for various regions including East Africa, which is the region in Africa that was estimated to have experienced the most rapid real GDP growth of 6.3% in 2019 and is forecast to continue doing so over the next two years. Behind East Africa is the franc zone, the second-fastest growing region in Africa: there, GDP growth is forecast at 4.9% for 2020.
The ICAEW report, produced in partnership with forecaster Oxford Economics, also indicates that Africa will become home to half of the 10 fastest-growing economies on the planet over the next five years.
The report finds that, despite there being a gloomy backdrop created by slow growth in the United States, China and Europe, Africa remains a relative bright spot with many positive economic stories. Although the continent’s two largest economies, Nigeria and South Africa, continue to struggle, the report finds that Africa will become home to half of the 10 fastest-growing economies on the planet over the next five years.
Speaking during the launch of the latest report, ICAEW Regional Director for Middle East, Asia and Africa Michael Armstrong, noted that the strength of the diversified economies in the east of the continent plays a major role in cushioning them from the shocks a global slowdown in economic growth.
“Africa’s commendable growth performance in the context of dismal returns in the developed world continues to attract investor interest. This interest keeps the African economies on a growth trajectory with new money entering the respective economies which can only be a good thing when looked at in comparison to the global outlook which shows a weakening of global GDP growth.” said Mr. Armstrong.
“As has been the case for a while now, East Africa’s economic growth is expected to remain robust, easing slightly from 6.3% this year to 6.1% in 2020. Most of the region’s economies continue to benefit from lower international commodity prices while the consumption-driven growth structure prevalent in the region insulates these economies from the global trade slowdown,” he added.
Economic growth in the franc zone is also expected to remain strong, increasing from 4.7% in 2019 to 4.9% next year. “Côte d’Ivoire’s effective exploitation of its mineral and agricultural resources has been accompanied by an ambitious government development plan, while Senegal’s relatively diversified economy has been supported by the Plan Senegal Emergent development strategy,” said Mr. Armstrong.
Meanwhile, North Africa’s economic performance remains volatile due to instability in Libya, with regional growth picking up from 2.8% this year to 4.5% in 2020. In Egypt, the region’s economic anchor and favourable policy adjustments are translating into improved macroeconomic fundamentals and a positive growth outlook.
Although it will pick up next year, GDP in the continent’s other regions will remain relatively subdued, largely due to lacklustre performances in Nigeria, Angola and South Africa. Growth in West & Central Africa is expected to increase from 3.4% in 2019 to 3.7% next year, largely held back by a subdued economic performance by Nigeria due to some erratic and ineffective policy decisions. In Southern Africa growth is expected to come in at 2.2% in 2020 compared with a 1.3% expansion in 2019. The South African economy will keep stagnating this year, also due to policy uncertainty, while electricity constraints have had a negative impact on industry and have deterred investment in general.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
