Matthew Campbell, Chris Kay and Pauline Bax London and Accra
EBOLA’S ECONOMIC effects in Africa are proving hard to quarantine even in the 49 of 54 countries that are untouched by the virus.
Corporate events are being cancelled, international investors are declining to visit and multinationals are on high alert. The International Monetary Fund on Monday cut its forecast for economic growth in sub-Saharan Africa this year to 5 percent from 5.5 percent, due in part to “economic spillovers starting to materialise” from the outbreak.
The ripple effects present a fresh challenge to Africa’s economic progress, which is heavily dependent on foreign investment and vulnerable to slight shocks. Business and political leaders say the virus is making overseas partners nervous and in cases hurting bottom lines.
No country has felt the psychological impact of the disease more than Nigeria, Africa’s most populous nation. With a gross domestic product (GDP) of more than $500 billion (R5.5 trillion), it registered 20 cases and eight deaths. Although Nigeria was on Monday declared Ebola-free by the World Health Organisation (WHO), with no new cases since September 8, the stigma lingers.
Communications firm, The Bobby Taylor Company in Lagos, had to cancel an event for about 150 music aficionados from the US, Nigeria and South Africa last month over fears.
“Lagos being Ebola-free is definitely something we can boast about but there’s still that twang of concern for people, the stigma that comes with us getting it in the first place,” said chief executive Bukky Karibi-Whyte. “How do you really convince someone that the disease won’t touch them?”
Ebola’s effects have reached the pinnacle of Nigeria’s corporate world, which is seeking international investment to refurbish ports, build power plants and erect waterfront skyscrapers for Lagos’s burgeoning upper classes.
Dangote Group, the Lagos-based business empire of billionaire Aliko Dangote, last month scrapped a planned visit by international investors to cement and sugar factories in and around the city. Some said they were worried about Ebola. The trip has not been rescheduled.
Many overseas organisations “fail to distinguish between high and low risk areas and the whole of West Africa has suffered as a result”, said Charles Laurie, the head of Africa at UK-based risk consulting firm Maplecroft. “Economic recovery for the region will be a lengthy process.”
The three countries still battling the virus – Guinea, Sierra Leone and Liberia – together have a GDP smaller than Afghanistan’s and are crowded together in the far western edge of the 7 242km-wide continent.
“Psychology plays a huge role and this has taken on a life of its own,” said Michael Marshall, whose Atago Pacific Partners advises on investments in sub-Saharan Africa. “Our long-term investment is not interrupted. The numbers, demographics and all the things that have made Africa compelling are still the case.”
Senegal, which the WHO last week said was Ebola-free, and Ivory Coast, which has had no cases, are losing trade by closing their borders with affected countries.
In Gambia, a tourist-dependent nation of picturesque beaches and palm trees, hotel bookings are down by 65 percent due to fear of the virus, the report said.
In Lagos, the World Bank estimates a worst-case scenario could knock about $33bn off of the region’s GDP, an estimated $750bn for 2014, by the end of next year. – Bloomberg