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Experts on the economic effects of COVID-19 on the African continent
A few days ago I received an email from Eyayaw, a boy with big dreams in the hotel business, whom we met three years ago in Ethiopia:

“As you know, people in Lalibela depend on tourism. Now there is not a single tourist in Lalibela. The economic crisis is unbelievable. Prices for basic supplies and food are rising and people who are better off, selfishly buy more than what they need. For most of us it is impossible to buy food and basic things as we simply have no money. This is going to be the most challenging time for me and my family. We are looking for a miracle.”

The COVID-19 pandemic has plunged Africa into a major economic crisis whose dimensions, driving factors and consequences we have discussed with two experts who live and work in Africa: one of Africa’s most influential economists, Prof. Carlos Lopes, and the Executive Director of the Mo Ibrahim Foundation, Nathalie Delapalme. Mo Ibrahim himself sends an appeal to Europe.

Tackling this virus requires a coordinated global effort and it is in the interest of us all to support African economies, too. 

Yours sincerely,
Dr Ingrid Hamm
Prof. Carlos Lopes: "The majority of African countries are in a situation of extreme vulnerability"
Prof. Carlos Lopes is currently High Representative of the Commission of the African Union for Partnerships with Europe. Previously, he also held the position of Executive Secretary of the United Nations Economic Commission for Africa (UNECA).

GPI has talked to him about the numerous challenges the African continent is facing that are exacerbated by the COVID-19 pandemic. Special regard is given to the fiscal and economic situation as well as how this crisis can also create opportunities for further development.
On the African continent the economic consequences of the COVID-19 crisis are especially severe due to a combination of factors that predate the virus. Among them, Prof. Lopes mentions climate related developments that pose additional threats to people’s livelihoods such as the "crickets’ invasion in the Horn of Africa” and “prevailing conflicts in the environmentally stressed area of the Sahel. But we also have droughts in Southern Africa and floods in Mozambique and parts of East Africa”. Furthermore, supply-chains are disrupted and extreme price declines for raw materials are recorded that contribute to more than half of Africa’s export rate. Due to the lockdown measures imposed across the continent, logistics have also become exceedingly expensive.

On top of social and economic contractions, African nations face huge challenges posed by externalities: “We have a flight of capital that is quite significant, close to 5 percent of our GDP, because of stimulus packages in richer countries attracting capital there. We also have a standstill on investment and debt problems resurfacing because the fiscal space in countries in Africa has diminished quite significantly“. Some of these problems had already been emerging before the pandemic first arrived on the continent and Prof. Lopes agrees that “COVID-19 has been exacerbating all the tendencies that we have been seeing”.

On a positive note, the current crisis also pushes innovation in different sectors and drives digital solutions, for instance in education and businesses. Prof. Lopes believes that "Governments in Africa are going to be judged for the next few years based on their capacity of response, but also innovation". What is missing according to him is “a bit of scale for these to be much more impactful in terms of making transformation“.

As the G20 have already agreed to suspend debt repayments for the 76 poorest countries for the rest of 2020, Prof. Lopes cautions that „When it comes to debt, you have to trade very carefully, because if we just go for debt forgiveness in all accounts, it can create problems in terms of trust in the economies of the continent for the future. So, it is really a right balance to be stricken“.

Middle-income countries in Africa often have a better debt-to-GDP ratio than the OECD average but due to low taxation and unattractive interest rates available to them, they have very little margin to cater for other obligations in health care or education. Therefore, he concludes that „The majority of African countries are in a situation of extreme vulnerability“.

Considering the road ahead, Prof. Lopes warns that the economic recovery of the continent after the pandemic is set to take considerably longer than elsewhere. Most of the progress and reforms of the last decade can be lost due to COVID-19. He believes that „it is in the interest of everybody to actually rescue African economies for their own interest. If not for selfish reasons, then because this is going to avoid conflicts around the world“.

You can find additional information and the full transcript of our GP Video Interview here.

Nathalie Delapalme: „If the pandemic’s impact is not tackled in Africa, no region will escape the backlash“

Nathalie Delapalme is Executive Director of the Mo Ibrahim Foundation (MIF). The Mo Ibrahim Foundation, founded in 2006 by Dr Mo Ibrahim, a Sudanese businessman and philanthropist, focuses on defining, assessing and enhancing governance and leadership in Africa through various initiatives - one of them being the annual Ibrahim Index of African Governance.

There is hardly any other organization that knows more about the social, economic and political developments on our neighboring continent than the MIF.

The MIF is one of GPI’s trusted partners and we are thankful for the opportunity to discuss the effects of the current COVID-19 crisis on the continent with Ms Nathalie Delapalme.
The COVID-19 virus is still continuing to spread across the world and threatens to hit the world’s poorest nations disproportionally hard. How do you assess the current situation and the effect of the pandemic on the African continent?
 
On 18th May, there were 84,932 recorded cases of COVID-19 and 2,767 recorded fatalities on the African continent, with only four countries – South Africa, Egypt, Morocco and Algeria – accounting for half of the total cases and two thirds of the total fatalities. Africa still represents only 1.6% of the world’s total recorded cases and less than 1% of recorded fatalities. Of course, we all hope that this means that Africa is somehow protected from this new virus. Indeed, the continent’s very young demography – the youngest continent in the world, with a median age of under 20 – appears to be a key factor. But this may well be wishful thinking. Above all, we most probably do not know the reality. In the majority of the continent, most people who cough do not go to see a doctor. Most people who suffocate do not go to hospitals. Most people who die do not die in hospitals. Only 3 African countries have a decent death registration system covering more than 90% of their population (one of them is Egypt, the second-most hit country currently).
 
So, Africa might be hit later, but it will most probably be hit harder. Why harder? Because, whatever lessons have been drawn from the Ebola crisis, and there are many, Africa is still struggling with a key deficit in health capacities. What we witness in more developed countries - lack of respirators, hospital beds, personal protection equipment, testing capacities - is unavoidably worse on the continent. On average, there are only 2.1 physicians for 10,000 people in Sub-Saharan Africa, as opposed to almost 25 for 10,000 in Europe, many of them by the way originally from Africa. Only 10 African countries out of 54 provide free and universal healthcare to their citizens. For the remaining, it is out-of-the-pocket expenditure or no healthcare.
 
Furthermore, even though the African demography is indeed young, diabetes, cardiovascular diseases, obesity - all probable aggravating factors for COVID-19 - are pathologies on the rise on the continent. Last, social distancing and basic hygiene measures are difficult to implement in crowded urban areas and in the multiple refugee and IDP’s camps present on the continent, while public information campaigns are hindered by average distrust in government, want of appropriate channels and lack of digital access for at least 60% of the population.   
 
We are facing a two-fold crisis: primarily, the COVID-19 pandemic is a health crisis, but it also has enormous economic consequences globally. Considering the road ahead, what are your thoughts on the economic impact of the crisis in Africa? 
 
Indeed, already there and massively so, the economic impact is a major concern. Both IMF and UNECA now assess that Africa’s economic growth will already contract by 1.5 percentage point in 2020, falling back to 1.8%. That means a loss of around $200 billion in income for the region, and of millions of jobs, where prospects are already so concerningly limited. The World Bank predicts that Africa will fall into recession for the first time in 25 years. And this is happening just when Africa is also hit by the worst desert locust plague of the last 25 years, potentially putting 20 million people in critical food insecurity, meaning many might die from hunger before even succumbing to the virus.
 
This threatens to reverse most progresses achieved in the recent years. Many will fall back into poverty. Education and health levels will revert into decline. It will also widen inequalities, both within and between countries, worsen already existing fragilities while triggering new ones, and bring additional fuel to social unrest and regional conflicts. The continent’s youth, more than ever devoid of economic and social prospects, might well become even more attracted to migration or enrolment in criminal and terrorist networks.
 
In your opinion, what are the most crucial efforts that African governments should undertake in order to mitigate the social and economic fallout of the crisis?
 
Africa is familiar with pandemics. Created in the wake of Ebola, Africa-CDC (Africa Centres for Disease Control and Prevention) is doing an impressive job under John Nkengasong’s leadership. Many countries have very early implemented measures, both at health and economic levels: Senegal, Rwanda, Kenya, Morocco, South Africa. In Nigeria, the private sector Coalition Against COVID-19 (CACOVID) led by the Aliko Dangote Foundation has been deploying massive efforts since 26th March to strengthen health structures, testing capacities and isolation center availabilities, as well as to provide food relief packages.
 
The political will is also there and indeed the African Union has risen to the challenge and taken ownership. This deserves to be pointed out.  President Ramaphosa is holding regular meetings at the highest political level and has very early included key African stakeholders in the ongoing conversation, be it from the private sector or civil society. Five Special Envoys of the highest caliber and with a key international network – Dr. Ngozi Okonjo-Iweala, Donald Kaberuka, Tidjane Thiam and Trevor Manuel and Benkhalfa Abderrahmane - have been appointed by the African Union to mobilize support to address the economic challenges African countries will face.
 
Sadly, international support and solidarity seems to be lacking exactly when it is so urgently needed. Can the international community allow itself such a course of action?
 
At various levels, the international community has also risen to the challenge. The recent Call for Action - issued collectively by 18 African and European leaders – set out four key priorities: strengthening Africa’s emergency health response capacity, sharing scientific knowledge and expertise, providing humanitarian supplies for the most affected communities, deploying a very large economic stimulus package. All are crucial and all need to be implemented. Of course, these measures must go along with strengthened governance and accountability from beneficiaries, and this is a crucial challenge for African leaders and institutions.
 
One of the key characteristics of this unprecedented global crisis is its domino effect, both in space and in time. It can only be tackled with a global, collective, coordinated effort. This is not about charity and aid to Africa. If the pandemic’s impact is not tackled in Africa, no region will escape the backlash. You cannot confine Africa. And if its effects on African economy are not mitigated, the political and social cost will be devastating, including in terms of global stability and security. 
We stand poised at a tipping point. This is obviously a major challenge for Africa – for its governments, leaders, institutions and especially its people. But a crisis is often the only path to change. And African resilience and innovation capacities are greater than anywhere else.
"During this crisis countries are very much preoccupied by dealing with the crisis themselves, so everyone is looking internally, and we are not really looking outside our borders, maybe only to stop people coming in. Moving forward, I think we’ll have to appreciate that this is a global pandemic and it needs a global response to it."

- Dr Mo Ibrahim
Is Africa ready to deal with the COVID-19 pandemic? Are Africa’s international partners helping at the right and relevant level? Dr Mo Ibrahim himself has recently discussed the impact of COVID-19 in a short video produced by the foundation that you can watch here:

GP Conference "Jobs or Migration? An African Perspective"
November 2019

Prof. Carlos LopesNathalie Delapalme and Dr Mo Ibrahim also joined our GP Conference "Jobs or Migration? An African Perspective" as speakers last year and with their valuable insights and expertise greatly contributed to a successful event.

In an intercontinental discourse between African and European experts we talked facts on migration and discussed the discrepancy between them and public misperceptions in Europe. Furthermore, we shed light on the driving factors of African migration, debated how to generate a robust employment market trend and how to manage the population growth.

Find more information here.

We hope you have enjoyed this edition of our newsletter. Comments and criticism are welcome. Please feel free to write to the team at office@globalperspectives.org or reply directly to this e-mail. Many thanks!

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