By Francis H. Murray
The World Bank has warned that the outbreak of the COVID-19 pandemic will lead to the first economic and social recession in Sub-Saharan Africa in 25 years.
According to the latest Africa’s Pulse 2020 report, the World Bank’s bi-annual analysis of the state of the region’s economies, the outbreak will cost the region between $37billion and $79billion in output losses for 2020.
‘‘Growth in Sub-Saharan Africa has been significantly impacted by the ongoing coronavirus outbreak and is forecast to fall sharply from 2.4% in 2019 to 2.1 to 5.1% in 2020, the first recession in the region over the past 25 years,’’ the report states.
According to Cesar Calderon, lead economist and lead author of the report: “the immediate measures are important but there is no doubt there will be need for some sort of debt relief from bilateral creditors to secure the resources urgently needed to fight COVID-19 and to help manage or maintain macroeconomic stability in the region.”
Hafez Ghanem, World Bank Vice President for Africa, said the COVID-19 pandemic did not only pose a global threat to humanity but was also testing the limits of societies and economies alike across the world, adding that African countries were likely to be hit particularly hard.
“We are rallying all possible resources to help countries meet people’s immediate health and survival needs while also safeguarding livelihoods and jobs in the longer term – including calling for a standstill on official bilateral debt service payments which would free up funds for strengthening health systems to deal with COVID-19 and save lives, social safety nets to save livelihoods and help workers who lose jobs, support to small and medium enterprises, and food security,” he noted.
The analysis of the report shows that the pandemic’s effect on the continent ranged from trade and value chain disruption, which impacted commodity exporters and countries with strong value chain participation, reduced foreign financing flows from remittances, tourism, foreign direct investment, foreign aid, combined with capital flight; and through direct impacts on health systems, and disruptions caused by containment measures and the public response.
In Sierra Leone, the Ministry of Finance said the country’s 5.1% growth rate will now drop to 3.8% by the end of the year as a result of the pandemic.
The World Bank report further notes that ‘‘while most countries in the region have been affected to different degrees by the pandemic, real gross domestic product growth is projected to fall sharply particularly in the region’s three largest economies – Nigeria, Angola, and South Africa - as a result of persistently weak growth and investment.’’
The report also notes that agriculture and oil driven countries have also been hit hard with growth also expected to 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 authors of the report recommend that African policymakers should focus on saving lives and protecting livelihoods by prioritizing and strengthening the health systems and taking quick actions to minimize disruptions in food supply chains.
Last week the World Bank gave Sierra Leone US$ 7.5 million as contribution to the fight against the viral pandemic.
The Bank also recommend implementing social protection programs, including cash transfers, food distribution and fee waivers, to support citizens, especially those working in the informal sector.
Sierra Leone already had a US$30 million social safety net program for the current year, thanks to the Bank.
The Finance Ministry is also considering tax breaks and deferrals for the formal sector.
This is in addition to a Le 500billion stimulus package announced by the Bank of Sierra Leone for businesses.
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