So far, Africa has suffered less coronavirus deaths and infections compared to other continents. However, the continent will not escape the looming economic slump as the pandemic continues to cripple economies around the world.
On March 13, the Economic Commission for Africa (ECA) warned that the unfolding coronavirus crisis could seriously dent Africa’s already stagnant growth.
“Africa may lose half of its GDP, with growth falling from 3.2% to about 2% due to a number of reasons which include the disruption of the global supply chain,” said the Commission’s Executive Secretary, Mrs Vera Songwe.
African Countries are Vulnerable to Global Disruptions
Experts are blaming this on Africa’s over dependence on imports from outside the continent. According to UNCTAD, intra-African trade, which is defined as the average of intra-African exports and imports, was around 2% compared with 68.1% in Europe, 59.4% in Asia and 55.5% in America. This means that African countries are vulnerable to global disruptions caused by activities such as pandemics and terrorism.
According to statistics from the General Administration of Customs of China, in the first half of 2019, China’s total import and export volume with Africa was $101.86 billion, up 2.9% year on year. China’s exports to Africa were $52.86 billion, up 5.2% year on year. With China’s economy devastated by the coronavirus, the volume of exports to Africa will go down, resulting in lower consumer spending.
This exposes Nigeria’s economy which relies heavily on Chinese commodities. China accounts for almost a quarter of Nigeria’s imports. As the virus continues to spread across the country, economic growth will slow down, and borrowing costs will increase because of reduced imports from China.
The Demand for African Goods is Set to Fall Considerably
On the other hand, the demand for African goods is set to fall considerably as major trading partners outside the continent implement lockdowns and restrict flights.
South Africa’s top export destinations are China ($17.1B), the US ($8.21B), India ($8B) and the UK ($7.97B). All these countries have been hit had by the coronavirus, forcing them to introduce measures to prevent its spread. This is a major disruption to the foreign export markets for South Africa whose economy is already in recession.
70% of Kenyan flowers are sold in Europe, mostly though an auction in the Netherlands. Now the coronavirus has grounded shipments and most European governments have banned public gatherings exceeding two people. Flowers are now cut and left to rot in farms.
“This being a living product, we cannot stop the entire operation,” Sachin Appachu, general manager of Bliss Flora Ltd, told France 24.
In an interview with the AFP, Clement Tulezi, the director of the Kenya Flower Council, said: “We are cash-strapped. We are losing over 250 million shillings ($2.3 m). People in Europe have two immediate needs: that is food and their own safety. The rest are luxuries. And so they are looking at flowers as a luxury.”
How Will Travel and Tourism Be Affected?
The impact of the coronavirus on the travel and tourism industry is also expected to leave a huge dent on Africa’s economy. African governments have imposed travel bans on countries such as China and Italy, thereby reducing the number of people visiting the country for business and tourism. Before the pandemic, tourism in Africa was growing at 5% per year.
In Egypt, the Minister for Tourism and Antiquities, Mr Khaled el-Anani, said that monthly tourism losses due to the lockdown would reach $1 billion. “We lost a lot of money, especially since the monthly tourism revenue is $1 billion, but the health of Egyptians is more important,” he told Al-Monitor.
In Luxor, a major Egyptian tourist hotspot and one of the cities that were greatly affected by the coronavirus, one tour guide called Mohamed Said complained: “The coronavirus has really affected tourism here. Many hotels reservations have been cancelled and tourists can barely be seen at tourist sites.”
Central banks of various African countries are taking measures to cushion the economy from the effects of the pandemic. The Central Bank of Kenya last week lowered its lending rates to 7.25 from 8.25% to shield borrowers. This will ensure money is easily available to citizens to encourage spending. To prop up the tourism sector, the Egyptian Central Bank yesterday provided loans to tourist companies with repayment terms of up to two years and a six month grace period. It also slashed its main interest rates by 300 basis points.