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COVID-19 Sinks 40m Sub-Saharan Africans into Abject Poverty - Word Bank

“The road to recovery may be long, and it may be steep, but prioritizing policy actions and investments that address the challenge of creating more, better and inclusive jobs will pave the way for a faster, stronger and inclusive recovery for African countries,” said Albert Zeufack, World Bank Chief Economist for the Africa regions.
09 Oct 2020 15:39

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More than 90 per cent of the world economies are expected to go into a recess this year due to the effects of the COVID-19 pandemic, according to a new World Bank report on Sub-Saharan African economies.

The report, a regional economic analysis dubbed Africa’s Pulse: Charting the Road to Recovery, notes that while countries in the region did well to limit the spread of the virus in its initial stages, the measures used have had far-reaching effects on the economies.

Most African countries instituted lockdowns and curfews and closed borders in March, as part of the strict control measures.  But these led to a halt in tourism; one of the major sources of foreign earnings for countries in Sub Saharan Africa. The other affected sectors include education, hospitality, logistics and entertainment, which could no longer operate.

Africa has so far registered just over 1.5 million confirmed cases of COVID-19, with South Africa accounting for almost half of them, while the continent has recorded 37,000 deaths. Globally, 36 million people have contracted the virus, while just more than a million have died.

The World Bank now says that more than 40 million people in Sub-Saharan Africa will slide into abject poverty as the economies contract by 3.3 per cent in 2020, compared to a growth of about 4 per cent that had been projected before the outbreak. This will see the region into its first recession in 25 years, according to the latest World Bank report.

While the the region is expected to start recovering next year, it could take several years to get to the levels it was at before the pandemic broke out.

“The road to recovery may be long, and it may be steep, but prioritizing policy actions and investments that address the challenge of creating more, better and inclusive jobs will pave the way for a faster, stronger and inclusive recovery for African countries,” said Albert Zeufack, World Bank Chief Economist for the Africa regions.

The long walk to recovery is because Africa will have to wait for the recovery of her markets in Europe, America and Asia, so that the prices of especially the commodities that Africa exports, start rising.

Before that, there will be no real growth, according to Zeufack.  

//Cue in; More than 90…

Cue out… economies can recover.”//    

Uganda is expected to be among the fastest-growing economies at 1.9, more or less the same as Rwanda and Tanzania, while Kenya will grow at less than 1 per cent, just as many other non-resource intensive countries. The decline in growth has been stronger among metals exporters where real GDP is expected to contract by six per cent, partly reflecting the large drop in output in South Africa.   

Among oil exporters, after expanding by 1.5 per cent in 2019, real GDP is projected to fall by more than four per cent in 2020, with the main contractions in Angola and Nigeria. Economies that heavily rely on tourism will also be hit longer because even as borders open, travel for leisure will pick up at a slow rate.

The substantial downturn in economic activity will cost the region at least USD 115 millionin output losses this year, but the annual average income per person will also fall to the levels of 2007. This is a loss of wealth of 13 years. There is worry that African countries are borrowing too much and that by the time the crisis ends, many of them could be closer to the debt crisis level of 70 per cent of GDP, according to Zeufack:  

//Cue in; entering the crisis…

Cue out…extremely dangerous.”//   

The slowdown will also be abetted by lower domestic consumption and investment brought on by containment measures to slow the spread of the coronavirus.

“Although the pandemic is not over and the persistence and spread of the virus is uncertain, African governments have started putting in place policies and programs to support an inclusive and sustainable post-pandemic recovery” said Hafez Ghanem, World Bank Vice President for Eastern and Southern Africa.

Africa’s Pulse notes that the road to recovery will also require massive investments across countries, as well as financial support from the international community. It recommends a bold reform agenda that includes policies that create fiscal space, along with policies to speed up job creation.

Zeufack says Policies that are needed in place for sustainable recovery must focus on creation of meaningful jobs:    

//Cue in; And these policies include…

   Cue out…. That lead to job creation.”//  

By mid-September, 46 countries in Sub-Saharan Africa had put in place 166 social protection measures —with social assistance representing 84 per cent of these measures. Social protection programs have proven to be a critical tool to mitigate the social impact of the pandemic.

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