Impact of Covid-19 in Africa: a scenario analysis to 2030

17 Nov, 2020 - 00:11 0 Views
Impact of Covid-19 in Africa: a scenario analysis to 2030 A masked seller and buyer by world bank/Sambrian Mbaabu via FLICKR (LICENSE: CC BY-NC-ND 2.0)

The Chronicle

Kelly Alexander

AFRICA is known to struggle under the weight of fragile institutions, poor leadership, conflict, corruption and myriad legacy challenges that perpetuate underdevelopment from colonial times.

The coronavirus has once again brought to the fore these challenges and exposed the frailty of many of the institutions across the continent.

Yet, as the virus was late in arriving to the continent, we saw governments across Africa taking decisive actions in an attempt to keep citizens safe, and implementing global best practices and policies. While there are obvious capacity and execution shortfalls, there were also a number of successful areas of practice. For example, the Africa CDC (Centre for Disease Control) developed a joint continental strategy on the coronavirus and launched a continental taskforce on Covid-19.

A bleak outlook
Our recent report on the Impact of Covid-19 in Africa examined the impact of the Covid-19 pandemic on the African continent. The focus of the report was 15 African countries considered to be broadly representative of Africa’s developmental and cultural diversity.

The countries were selected based on regional representation, the inclusion of regional ‘‘anchor economies’’, and variation in terms of income level and economic structure. Based on the research three scenarios regarding the future impacts of Covid-19 were formulated.

The scenarios indicate that Africa’s development trajectory has suffered a severe setback, and our report finds that Africa’s economy is expected to be between US$349 billion and US$643 billion smaller in 2030, than earlier pre-Covid-19 estimations. In the best-case scenario, GDP per capita will recover to 2019 levels in 2024, while the worst case scenario indicates that the restoration of GDP to 2019 levels may only be in 2030.

Covid-19 is set to further constrain Africa’s progress towards attaining the 2030 Sustainable Development Goals (SDGs). The pandemic is expected to significantly reduce government revenue, health expenditure, and undermine debt sustainability in a number of African countries. In the worst case, more people will have died from the impact of reduced health expenditure and hunger by 2030, than from Covid-19.

Opportunities
Despite this bleak outlook, Covid-19 also presents opportunities for the continent to bolster institutions, leverage regional and continent-wide capacity and support, and capitalise on the geo-political shifts to foster increased intra-African co-operation.

Examples of such intra-continental initiatives spurred by Covid-19 have already emerged. The African Union, for example, has established Africa Covid-19 Response Fund and the Africa Medical Supplies Platform, an online marketplace that enables the supply of Covid-19-related critical medical equipment in Africa.

Furthermore, there is an opportunity to redouble efforts to effectively implement the African Free Trade Continental Agreement (AfCFTA). Encouragingly, a number of partnerships have sprung up — between governments, business and civil society — to effectively deal with the Covid-19 pandemic. Moving forward, these partnerships could be repurposed for the sake of improved governance and co-operation in the post-corona era.

Another area where opportunities arise is business. Covid-19 represents a significant jolt to the way in which business is conducted and the reconfiguring of economies is forcing businesses and organisations to revisit their operational practices.

This provides an enormous opportunity as it creates momentum for a transition to new practices and models, including circular economy, shared value, inclusive business and stakeholder capitalism. During a recent summit of high-level African business leaders, it was noted that;

“Covid-19 has compelled business leaders to rethink their corporate purpose and strategy. (It has become) clear that purpose-led businesses were better able, not only to respond to society’s needs, but also to pivot as a business, further proving the importance of purpose-led organisations.”

In other words, the experience of businesses during Covid-19 seems to suggest that purpose-led business models — that is models that go beyond the pursuit of profit, and seek to make a contribution to society — are both important and more likely to be successful in surviving crises.

Policy recommendations
The report concludes with four main policy recommendations aimed at reducing vulnerability and strengthening Africa’s resilience. These recommendations aim to make a robust contribution to the debate facing the international community, African governments and in-country stakeholders, about policy options for Africa.

1. Respond to Africa’s emerging debt crisis by providing debt relief:
-The G20, with the support and inclusion of China, have announced a debt service moratorium package until the end of 2020 for which 40 African countries are eligible, and the IMF has announced a similar moratorium in effect until the end of October 2020 for 19 African countries. This is a step towards alleviating some of the financial challenges the countries face.

-Lockdowns across the continent have led to the inevitable economic slowdowns with implications for tax revenue collection, making additional and targeted debt relief initiatives even more necessary.

2. Increased and more effective health spending.
-Governments must ensure that their focus on Covid-19 does not result in an increase in co-morbidity, such as malaria, HIV/Aids and tuberculosis-related deaths.

-Despite a target of a minimum of 15 percent of public revenue spending to be allocated to healthcare, this target has not been reached by most African countries. Additionally, due to Covid-19, there is the potential for external healthcare funding levels to decline, which will exacerbate the strain on budgets and health spending.

-Beyond the obvious policy implication of increased and targeted healthcare spending, African countries and partners need to ensure the adoption of a comprehensive approach to healthcare. This means that issues like maternal health, HIV, TB and malaria, are not neglected even in this extraordinary time.
-Care should be taken that adequate budget is allocated to countries that continue to battle with the challenge of Ebola.

-Investments in the healthcare system should include the development of a vaccine and building the necessary capacity for local vaccine production.
-All of this should be seen as an investment in capacity and resilience for future pandemics and stronger, more responsive healthcare systems.

3. Provision of safe water, improved sanitation and hygiene (WASH), and other basic infrastructure.
Lack of safe drinking water and sanitation facilities form not only a significant barrier to the attainment of the SDGs, but also an obvious and significant barrier to the management of Covid-19. Tackling this challenge requires a large investment in urban planning and infrastructure.

– To mitigate these challenges the provision and delivery of clean water remains a short term priority to areas that are un/under-served. In addition, items such as hand-sanitiser should be made available to communities, in conjunction with clear communication regarding responsible health behaviour.

– In the long term, WASH represents a key opportunity for private sector investment — driving best practice, mutual learning, and innovation in sustainable water provision, use and treatment. Innovation and the adoption of circular models can also serve to lower the cost of service provision in this area.

4. Spurring Africa’s economic reform to boost much more rapid and inclusive economic growth.
-A focus on manufacturing development and beneficiation, in conjunction with the active and efficient implementation of AfCFTA and increased regional trade, represents one pathway to inclusive economic growth.

– There is an opportunity to exploit the changes in global value chains, leapfrog in the implementation of digital solutions and innovation, and aggressive investment in renewable energy technology.

-The facilitation of economic activity and support for small business, strengthening of institutions to facilitate transparency and good governance, and leveraging newly created cross-sectoral partnerships can serve to achieve the required structural transformation on the continent.

These policy recommendations are designed to aid policy makers and development practitioners to focus their efforts on areas in which they are likely to be able to have the greatest impact. This will help African countries in getting on track to meeting the SDGs, and mitigate some of the adverse impacts of the Covid-19 pandemic on the attainment of these goals.

-Kelly Alexander is a member of faculty and PHD candidate in the Department of Organisation Studies, Tilburg University.

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