CAPE TOWN - Approximately 20 million jobs will be lost in the informal as well as the formal sector across the African continent and it is clear Africa faces rough economic conditions for the foreseeable future, due to the impact of Covid-19, according to Absa Regional Operations (ARO).
In a statement on Wednesday, ARO said one of the critical learnings from the pandemic has been the need to forge partnerships to build resilience and sustainability of the small and medium enterprise (SMME) sector, that is so critical to Africa’s economic fortunes.
According to recent economic forecasts, gross domestic product (GDP) is expected to contract by 1.6% across sub-Saharan Africa in 2020.
SMMEs have historically played a pivotal role in shaping the economies of many African countries and this will only be amplified by the massive reduction in jobs available in the formal market due to the impact of Covid-19.
“In various markets in which Absa operates, we have seen a drive towards localisation to the benefit of citizen empowerment as well as the local economy,” ARO said.
It said that the necessary tightening of borders and the long-term disruption to trade activity meant that many goods and products that had always been available in stores suddenly disappeared at some point.
This has forced a change in thinking including on the part of large corporates, to see if they can source or secure local production of the same or similar item.
The continued uncertainty posed by secondary infection waves means that many supply chains are looking inwards in a bid to source products. There are already several countries, including Botswana, whose governments are actively encouraging localisation programmes.
The institutions said government support has come in the form of funding and critically, policy amendments, to drive greater localisation of sourcing in a bid to build resilience and networks and ensure much more economic value and job creation is retained in-country.
“Even though the pandemic has been devastating, one of the benefits has been the drive for the need to localise, which ultimately will help build and strengthen local economies in the interim until such time as the environment again allows for meaningful cross border trade and economic growth.”
The African Development Bank (AfDB) has spoken of the need to build linkages and of using supply chains to grow industries, to grow SMEs, to create jobs and opportunities throughout Africa.
“The goal is that, as we develop SMMEs through enterprise supply chains, we upskill and upscale small businesses by moving them higher up the value chain of services,” ARO said.
“If they can execute well on the procurement opportunities that come their way, they can potentially grow their businesses from small to medium-sized businesses, and hopefully, one day, be the new future of corporates across Africa.”
– African News Agency (ANA); Editing by Devereaux Morkel