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Prosper Ndlovu, Business Editor

AS the spread of the novel coronavirus (Covid-19) accelerates across the world, African economies are already staring at the imminent disruption of industrial processes and regional trade shocks emanating from a constrained global business network. 

While the level of infection on the African continent has been relatively low compared to other continents, partly attributed to the comparatively low integration of Africa with the rest of world, indications are that the spread of Covid-19 is on an upward trajectory on the continent.

Despite stringent restrictions ranging from flight bans, public event suspensions and school closures, countries in Sub-Saharan Africa have also started suffering deaths with the tally of positive cases growing fast. South Africa had passed the mark 400 of positive cases yesterday, while Zimbabwe has recorded its first death out of two cases. Botswana president, Dr Mokgweetsi Masisi, is on self-isolation for 14 days.

Commodity-dependent countries such as the Democratic Republic of Congo and Zambia are likely to suffer bitter effects of Covid-19 following China’s reduced demand for copper and cobalt. 

Services-oriented economies, such as Egypt, Ethiopia, Rwanda and Kenya where air transport services, financial services and tourism services are relatively strong are more vulnerable too, given the nature of the epidemic. 

The cancellation air flights, travel bans and restriction of movements of persons is set to slow down growth leading to job cuts.

Given this reality, Comesa secretary general, Chileshe Mpundu Kapwepwe, in a statement yesterday said the region must be prepared to grapple with the devastating secondary health, social and economic ramifications of the disease. She noted the most affected regions and countries were, incidentally, the major trading partners for Comesa, a regional economic community of 21 African member states including Zimbabwe. These include; Europe, China and the United States.

“Any economic slow-down in these countries has global repercussions given the inter-connectedness and fragmentations in production, trade and investments,” she said.

“Reduction of consumption demands in these markets coupled with low diversification implies cut down of export earnings from these markets in the short to medium term. 

“Manufacturing and industrial sectors in Comesa and Africa will be impacted by a decreased supply of key components from China, Europe and America. This is a result of likely delays in the global supply chain.”

The Comesa boss said the magnitude of the effects on trade and investments for African countries will depend on the sizes and economic structures as well as characteristics of the various economies. For the big economies, she said the effects would be much larger owing to their stronger inter-connectedness with the rest of the world compared to smaller economies. 

In addition, Kapwepwe said more diversified economies would most likely experience less severe effects compared to low diversified ones in the wake of reduced demand for exports and cut down in supply from import sources. 

Latest statistics indicate that the European Union, South Africa and China are the leading export destinations for Comesa exports and accounted for 32 percent (US$36.1 billion), 13 percent (US$14 billion) and six percent (US$ 7.3bn).

At the same time, the EU, China and US are the biggest sources of imports into Comesa countries accounting for 32 percent (US$48 billion), 20 percent (US$29.4 billion) and eight percent (US$12 billion) share of total imports respectively by 2018.

“It’s expected that there would be reductions in FDI (foreign direct investment) inflows to Africa in the immediate future as the most affected countries in Asia, Europe and the US shift focus to address the health and economic impacts caused by the Covid-19 crisis,” said Kapwepwe. She stated that in the                                      tourism sector, countries would likely suffer reduced incomes generated from meetings, incentive travel, conventions and exhibitions (MICE). 

“Reductions in investments in the tourism sector in several African countries is inevitable following massive restrictions on travel and social activities across the world. 

“The business health of major airlines has been put to test following travel cancellations and indeed some have already stopped flying in the region with countries like Mauritius, Seychelles, Rwanda and Kenya most affected,” said Kapwepwe.

The outlook is not entirely gloomy though as countries stand a chance to take advantage of the economic integration initiatives in Africa. For instance, Kapwepwe said the reduction of international crude oil prices provides an opportunity for improvement of the balance of payments position of non-oil producing countries and could drive down production costs and enhance competitiveness and general welfare. 

Secondly, reductions in input supplies are set to provide yet another opportunity for manufacturing companies in Africa to expand production and supply the continental market under the frameworks of existing regional economic communities (RECs) and the wider African Continental Free Trade Area. 

African countries can, thus, seize the opportunity and expand intra-African trade currently standing at barely 15 percent of their total trade. Established in 1994, Comesa brings together 560 million people into a cooperative framework for sustainable economic growth and prosperity through regional integration.