An African Perspective On The Impact Of COVID-19 And The Response To It

This week, we are going to share some of the observations made on a webinar organized by the Royal African Society on ‘African Economies after COVID-19’. The external panelists were: Donald Kaberuka, an envoy for the African Union (AU) and the previous president of the African Development Bank; Nanjana Nyabola, a political analyst and author; Arkebe Oqubay, a minister in the Ethiopian prime minister’s office; and Stephen Karingi, a specialist on regional integration and trade in the UN Economic Commission for Africa (UNECA). We leave it to readers to place Nigeria in the context of the many comments from panelists.

Kaberuka’s starting point was that Africa is less prepared and more vulnerable in this pandemic than it was in the global financial crisis of 2007-08. While Africa faces its first recession for 25 years, certain governments had shown resilience through their smart use of social capital. Kaberuka highlighted Côte d’Ivoire, Ethiopia, Kenya, Rwanda and Senegal in this group.

Africa has very limited fiscal space to counter the pandemic, which is a far cry from Japan’s package of measures that together make up about 20 per cent of its GDP. The AU has therefore identified a financing gap of US$150bn, of which US$57bn has been already disbursed or committed. Its preference would be the creation of new SDRs by the IMF on a selective basis.  (The US Treasury secretary has indicated his administration’s opposition to the idea.)

Nyabola noted the very modest public health systems. Kenya is best equipped in East Africa but has just 518 beds in intensive care units (ICU) for a population of 49 million so no government could handle an outbreak of the intensity of, say, Italy’s. She argued that the use of force in implementing lockdowns was counter-productive because it alienated people, citing the use of the military in enforcing quarantines and curfews in Kenya and South Africa. She concluded that Africa has demonstrated a high degree of solidarity and cooperation in the crisis, which she contrasted with the export bans and gazumping on orders of essential equipment seen elsewhere.

Oqubay outlined the Ethiopian government’s approach to the virus, which has attracted much favourable international commentary. It started work in January because it sensed that its many borders and its role as the Chinese gateway to Africa made Ethiopia vulnerable. To date, it has reported just 300 cases. He attributed the relative success to a rapid building of the public health capacity at a local, community level, and to a comprehensive programme of ‘track and trace’.

Additionally, the authorities have made extensive use of simple text messages to educate the public. In as much as there was any fiscal space, the government concentrated its backing on dynamic exporting and manufacturing businesses. (We would add that Ethiopia has many supporters for the delivery of its developmental policy, which we should see in the strong centralization of power that some have characterized as a command economy.)

Finally, Karingi made the point that African farmers must not miss this planting season because of the pandemic if they wanted to avoid critical shortages next season. Food price inflation has already been fuelled by the higher cost of imported rice and wheat. He highlighted the opportunity to fast-track the African Continental Free Trade Area. Under the sequencing of the existing protocols, e-commerce is at the back of the queue but its positive contribution to the response to the virus internationally suggested that it should come nearer the top of the list.

Gregory Kronsten

Head, Macroeconomics & Fixed Income Research

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