Sub-Saharan Africa could lose up to $79bn in output due to Covid-19
JOHANNESBURG - Sub-Saharan African economies could lose between $37 billion and $79 billion in output in 2020 due to Covid-19 and the region faces a severe food security crisis, with agricultural production expected to contract between 2.6 percent and seven percent, the World Bank said on Thursday.
In a report, the bank said growth in the region had been significantly impacted by the ongoing coronavirus outbreak and was forecast to contrast by 2.1 to 5.1 percent in 2020 after expanding by 2.4 percent last year, which would be sub-Saharan Africa's first recession in 25 years.
"The World Bank Group and the International Monetary Fund have called for a “bilateral debt standstill,” which ... should be an important part of the global response to soften the impact of Covid-19 on Africa’s poor," a press statement accompanying the report said.
World Bank vice president for Africa Hafez Ghanem said the coronavirus pandemic was testing the limits of societies and economies across the world and African countries were likely to be hit particularly hard.
"We are rallying all possible resources to help countries meet people’s immediate health and survival needs while also safeguarding livelihoods and jobs in the longer term," Ghanem said, adding that this included calling for a halt on official bilateral debt service payments which would free up funds for strengthening health systems to deal with Covid-19.
The bank said the losses in sub-Saharan Africa's output would largely be due to disruptions in the trade and value chain which would impact commodity exporters and countries with strong value chain participation, as well as reduced foreign financing flows from remittances, tourism, foreign direct investment and foreign aid, combined with capital flight.
They would also come through direct impacts on health systems and disruptions caused by containment measures.
Real gross domestic product growth was projected to fall sharply particularly in the region’s three largest economies – Nigeria, Angola, and South Africa— as a result of persistently weak growth and investment.
"In general, oil exporting-countries will also be hard-hit; while growth is also expected to weaken substantially in the two fastest growing areas—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 World Bank said.
It said the Covid-19 crisis also had the potential to spark a food security crisis in Africa, with agricultural production potentially contracting 2.6 percent in an optimistic scenario and up to seven percent if there were trade blockages.
The bank noted that in addition to containment measures in response to the coronavirus, countries were also opting for a combination of emergency fiscal and monetary policy actions with many central banks in the region cutting interest rates and providing extraordinary liquidity assistance.
"However, it is important to ensure that fiscal policy builds in space for social protection interventions, especially targeting workers in the informal sector, and sows the seed for future resilience of our economies," said Albert Zeufack, chief economist for Africa at the World Bank.
The World Bank is deploying up to $160 billion in financial support over the next 15 months to help countries protect the poor and vulnerable, support businesses, and bolster economic recovery.
- African News Agency (ANA)