Africa could lose 20 million jobs due to coronavirus pandemic - AU study

A man wearing a mask walks alone on Helen Joseph Street in Joburg. Picture: Karen Sandison/African News Agency(ANA)

A man wearing a mask walks alone on Helen Joseph Street in Joburg. Picture: Karen Sandison/African News Agency(ANA)

Published Apr 5, 2020

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Johannesburg - About 20

million jobs are at risk in Africa as the continent's economies

are projected to shrink this year due to the impact of the

coronavirus pandemic, according an African Union (AU) study.

So far, Africa accounts for just a fraction of total cases

of the disease which has infected more than one million people

worldwide, according to a Reuters tally.

But African economies are already facing an impending global

economic downturn, plummeting oil and commodity prices and an

imploding tourism sector.

Before the onset of the pandemic, continent-wide gross

domestic product (GDP) growth had been projected by the African

Development Bank to reach 3.4% this year.

However, in both scenarios modelled by the AU study - seen

by Reuters and entitled "Impact of the coronavirus on the Africa

economy" - GDP will now shrink.

Under what the AU researchers deemed their realistic

scenario, Africa's economy will shrink 0.8%, while the

pessimistic scenario said there would be a 1.1% dip.

Up to 15% for foreign direct investment could disappear.

The impact on employment will be dramatic.

"Nearly 20 million jobs, both in the formal and informal

sectors, are threatened with destruction on the continent if the

situation continues," the analysis said.

African governments could lose up to 20 to 30% of their

fiscal revenue, estimated at 500 billion in 2019, it found.

Exports and imports are meanwhile projected to drop at least

35% from 2019 levels, incurring a loss in the value of trade of

around $270 billion. This at a time when the fight against the

virus' spread will lead to an increase in public spending of at

least $130 billion.

Africa's oil producers, which have seen the value of their

crude exports plunge in past weeks, will be among the worst hit.

Sub-Saharan Africa's biggest oil producers Nigeria and

Angola alone could lose $65 billion in income. African oil

exporters are expected to see their budget deficits double this

year while their economies shrink 3% on average.

African tourist destinations will also suffer.

Africa has in recent years been among the fastest growing

regions in the world for tourism. But with borders now closed to

prevent the disease's spread and entire airlines grounded, the

sector has been almost entirely shut down.

Countries where tourism constitutes a large part of GDP will

see their economies contract by an average of 3.3% this year.

However, Africa's major tourism spots Seychelles, Cape Verde,

Mauritius and Gambia will shrink at least 7%.

"Under the average scenario, the tourism and travel sector

in Africa could lose at least $50 billion due to the Covid-19

pandemic and at least 2 million direct and indirect jobs," the

AU study said.

Remittances from Africans living abroad - the continent's

largest financial inflow over the past decade - are unlikely to

cushion the blow.

"With economic activity in the doldrums in many advanced and

emerging market countries, remittances to Africa could

experience significant declines," the analysis found.

Reuters

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