A study (Impact of the coronavirus on the Africa economy) done by the African Union (AU) shows that over 20 million jobs in Africa are at risk, as the continent’s economies are projected to shrink this year due to the impact of the coronavirus (COVID-19)
Global statistics show that Africa accounts for a Fraction of total cases globally. However, Africa’s economies are already faced with an impending global economic downturn, plummeting oil and commodity prices as well as a declining tourism sector.
Before the global pandemic began, African Development Bank (AfDB) projected a wide Gross Domestic Product (GDP) growth to reach 3.4 percent in Africa this year. But with the ongoing global COVID-19 war, the GDP is expected to shrink drastically
According to AU’s research, in a realistic scenario, Africa’s economy will shrink 0.8 percent, while the pessimistic scenario shows a 1.1 percent dip. Also, up to 15 percent of foreign direct investment could disappear, and the impact on employment will be great.
African governments could lose up to 20 to 30 percent of their fiscal revenue, estimated at 500 billion in 2019, while exports and imports are expected to drop at least 35 percent from 2019 levels, incurring a loss in the value of trade of around $270 billion which 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, as Africa’s biggest oil producers Nigeria and Angola alone could lose $65 billion in income. Also, African oil exporters are expected to see their budget deficits double this year while their economies shrink 3 percent on average
More so, nearly 20 million jobs, both in the formal and informal sectors are at risk as well as a shutdown in Africa’s tourism sector due to the closure of borders and cancellation of flights to prevent the spread of the virus.
Countries, where tourism constitutes a large part of GDP, will see their economies contract by an average of 3.3 percent this year. However, Africa’s major tourism spots Seychelles, Cape Verde, Mauritius, and the Gambia will shrink at least 7 percent.
“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 shows.
Remittances from Africans living abroad – the continent’s largest financial inflow over the past decade are unlikely to cushion the effect. “With economic activity in the doldrums in many advanced and emerging market countries, remittances to Africa could experience significant declines,” the analysis found.
Therefore, African governments need to be prepared for the worst possible outcome of the pandemic, they need to come together and strategize ways to set policies in place that will help reduce the impact of COVID-19 on the continent.
