The COVID-19 (coronavirus) outbreak has set the first recession in the sub-Saharan African region in 25 years, with growth forecast between -2.1 and -5.1 in 2020, from a modest 2.4% in 2019, the World Bank has said.
According to the Bank, Volatility in the global environment due to COVID-19 pandemic, which is taking a heavy toll on human life and placing excessive pressure on health systems, continues to negatively impact Sub-Saharan Africa.
“Economic and social impacts are immense, costing the region between $37 and $79 billion in estimated output losses in 2020, reducing agricultural productivity, weakening supply chains, increasing trade tensions, limiting job prospects, and exacerbating political and regulatory uncertainty.
With such formidable challenges, economic growth is expected to contract from 2.4% in 2019 to between -2.1 and -5.1% in 2020, sparking the region’s first recession in 25 years”.
A collapse in economic activity that results from the COVID-19 containment measures and macroeconomic instability will increase poverty and endanger lives and livelihoods.
Household welfare is expected to be equally dramatic with welfare losses in the optimistic scenario projected to reach 7% in 2020, compared to a non-pandemic scenario.
Growth will weaken substantially in the two fastest growing areas—the West African Economic and Monetary Union and the East African Community—due to weak external demand, disruptions to supply chains and domestic production.
The tourism sector is expected to contract sharply due to severe disruption to travel and tourism activities. Countries that rely on exporting extractives are also likely to be hardest-hit by COVID-19, with growth falling by up to seven percentage points in oil-exporting countries and by more than eight percentage points in metal exporters.
The bank highlighted several long standing challenges that makes it impossible for the sub-region to progress and most importantly to minimise the impact of the pandemic.
“Around 640 million people currently live without electricity in Africa – 210 million of which are in fragile and conflict-affected countries. Public debt levels and debt risk are rising, which might jeopardize debt sustainability in some countries; the availability of good jobs has not kept pace with the number of entrants in the labour force; fragility is costing the subcontinent a half of a percentage point of growth per year; and gender gaps persist and are keeping the continent from reaching its full growth and innovation potential”
