18 March, 2020
Addis Ababa, Ethiopia Economic Commission for Africa
Economic Effects of the COVID-19 on Africa
Key messages
1) Africa needs a $USD100bn to respond effectively 2) Prioritize immediate health response through
procurement of surveillance and logistical supplies and involve all stakeholders;;
3) Mitigate socio-economic impacts through fiscal stimulus -
4) Manage liquidity in the financial sector;;
5) Protect/increase funding for social protection;;
6) Involve private sector in the response to the crisis 7) Maintain the momentum towards AfCFTA’s
implementation.
Outline
1. The Status in Africa
2. Channels of Impact in Africa
3. Focus on Growth and Employment 4. Focus on Trade in Goods
5. Focus on Trade in Services 6. Focus on Financial Sector
7. Poverty, Gender and Urbanization 8. The Fiscal Implications
9. Policy Options
10. The Role of AfCFTA
11. Regional Highlights
THE STATUS IN AFRICA
COVID-19
Exponential health impact 4 days apart 30 fold increase.
Number of cases increased from about 50 confirmed cases on 13 March to over 400 confirmed cases on 17 March, while number of countries increased from 12 to 28 respectively
13 March 2020 17 March 2020
COVID-19 a public good problem Reported cases in Africa
6
Region Confirmed Cases Deaths Recovered
Central Africa 8 -‐ -‐
East Africa 30 1 -‐
North Africa 265 9 27
West Africa 59 -‐ -‐
Southern Africa 67 -‐ -‐
Total 429 10 27
….the crisis may overwhelm weak health systems on the continent
China
Pop – 1.4 Bn
Africa
Pop – 1.3 Bn
• Africa’s population is 100m shy of China’s population
• Assuming the crisis hits Africa in same magnitude as China - we
can expect about 80K people affected by COVID-19 and about
3000 deaths at minimum (assuming similar responses)
0 10 20 30 40 50 60 70 80 90 100
Benin Burkina Faso Cameroon Congo Democratic Republic of the Congo Egypt Equatorial Guinea Ethiopia Gabon Ghana Guinea Kenya Liberia Namibia Nigeria Rwanda Senegal Somalia South Africa Sudan Togo Tunisia
Proportion of urban population living in slums
UN-‐Habitat (2016) World Cities Report
In half of the affected countries more than 50% live in slums (2014)
In some affected African countries less than 50% of the population have access to safely managed drinking water services (2017)
0 10 20 30 40 50 60 70 80 90 100
DRC Ethiopia Ghana Kenya Morocco Nigeria Rwanda South Africa
In %
World Development Indicators
Achieving the SDGs severely compromised
• Crisis will severely undermine progress on SDGs and Agenda 2063
• $100bn needed to bridge funding gap and propel the
Decade of Action
THE CHANNELS OF IMPACT IN AFRICA
COVID-19
Africa is increasingly interconnected with the rest of the world
12
Channels of Transmission
Social 1. Human movement
2. Trade (China, USA, EU etc.)
Price 1. Inflationary Pressures
2. Exchange Rate Instability
Fiscal 1. Increase in health expenditure
2. Decline in revenue linked to economic slump Trade 1. Directly through trade links with China, US and
Europe
2. Indirectly through trade links between China, Europe and the rest of the world
3. Remittances and Tourism Investments/financial
markets 1. Decline in FDI flows 2. Capital flight
3. Domestic financial market tightening
Impact of COVID-19 on Africa
• Health-‐related disruptions in output
• Disruption in supply chains
• Inflationary pressures
• Compression in demand (economic slowdown)
– Decline in trade in goods (primary
commodities) and services (transport and tourism)
– Deterioration in current account balance
• Decline in investments (uncertainty)
• Job losses
(cont’d) Impact of COVID-19 on Africa
• Drop in remittances
• Deterioration in the fiscal position – lower tax revenues and
– higher social protection spending
• Increased debt
• Banking sector fragility (NPLs)
– Drop in liquidity/trade credit
• Social impacts – poverty, gender,
inequality, access to social services
FOCUS ON GROWTH AND EMPLOYMENT
The Economic dimension in Africa
Africa: Corona Virus new blow to economy Growth expected to drop from 3.2% to 1.8%
0 1 2 3 4
2017 2018 2019 2020
% ch an ge
1.4 percentage point GDP decline equivalent to $29bn (i.e., from US$
66 Bn in 2019 to US$ 37 Bn in 2020)
Economic growth – employment effects
48 percent decline in employment
3,5
1,8 -‐1,43
-‐0.74
0 0,5 1 1,5 2 2,5 3 3,5 4
Normal scenario Coronavirus scenario
Pe rc en ta ge %
Economic Growth -‐ Employment Effects (based on 0.41 elasticity)
Economic growth figures Employment generation effect
Economic growth – poverty effects
48% fewer people will be lifted out of poverty
Using the upper level of growth-‐poverty elasticity of 0.68, these are the results with differing economic growth rates, due to coronavirus of 1.8% growth. The poverty reducing effect would be halved in this case.
3,5
1,8 -‐2.3
-‐1.2
0 0,5 1 1,5 2 2,5 3 3,5 4
Normal scenario Coronavirus scenario
Pe rc en ta ge %
Economic Growth -‐ Poverty Effects (based on .68 elasticity)
Economic growth figures Poverty effect
FOCUS ON TRADE IN GOODS
The Economic dimension in Africa
51% of Africa’s exports go to countries highly impacted by COVID-19
0 20 40 60 80 100
0 20 40 60 80 100 120 140 160
Canada Japan Korea,
Republic of Russian
Federation United
Kingdom United States
of America China EU27 (European Union 27)
Pe rc en ta ge
Bi lli on s U SD
Africa's merchandise exports flows with its main trading partners (based on annual average, 2016-‐18)
Merchandise exports in Billion USD (left axis) Percentage of Africa's total exports(right axis)
Source : Based on data from UNCTADstat
53% of Africa’s imports originate from highly impacted COVID-19 countries
0 20 40 60 80 100
0 20 40 60 80 100 120 140 160 180
Canada Japan Korea,
Republic of Russian
Federation United
Kingdom United States
of America China EU27 (European
Union 27)
Pe rc en atg e
Bi lli on s U SD
Africa's merchandise imports flows with its main trading partners (based on annual average, 2016-‐18)
Merchandise imports (Billion USD) Percentage of Africa's total imports
Source : Based on data from UNCTADstat
High trade vulnerability to COVID-19
Africa’s Top 25 exports and imports of goods – Average (2016-‐18)
Source: ECA based on UNCTADStat
117,0 27,5
18,4 15,8 11,3 10,4 10,0 8,5 8,4 8,4 7,0 6,0 5,7 5,2 5,0 4,4 4,4 4,0 3,6 3,6 3,5 3,4 2,8 2,8 2,8
0 20 40 60 80 100 120
Petroleum oils, oils from bitumin. materials, … Gold, non-‐monetary (excluding gold ores … Natural gas, whether or not liquefied Petroleum oils or bituminous minerals > 70 …
Copper Pearls, precious & semi-‐precious stones Fruits and nuts (excluding oil nuts), fresh or … Motor vehicles for the transport of persons
Cocoa Ores and concentrates of base metals, n.e.s.
Silver, platinum, other metals of the … Coal, whether or not pulverized, not … Equipment for distributing electricity, n.e.s.
Fertilizers (other than those of group 272) Iron ore and concentrates Liquefied propane and butane Pig iron & spiegeleisen, sponge iron, powder …
Vegetables Motor vehic. for transport of goods, special …
Articles of apparel, of textile fabrics, n.e.s.
Aluminium Inorganic chemical elements, oxides & … Fish, fresh (live or dead), chilled or frozen
Women's clothing, of textile fabrics Ships, boats & floating structures
Top 25 Exports (US$ bn)
42,9 16,3
13,6 12,9 12,0 9,9 8,0 7,3 6,7 6,5 6,5 6,1 5,9 5,2 5,1 5,0 4,9 4,8 4,8 4,7 4,6 4,6 4,5 4,5 4,5
0 20 40 60
Petroleum oils or bituminous minerals > 70 % oil Motor vehicles for the transport of persons Telecommunication equipment, n.e.s.; & … Petroleum oils, oils from bitumin. materials, … Medicaments (incl. veterinary medicaments) Wheat (including spelt) and meslin, unmilled Motor vehic. for transport of goods, special …
Civil engineering & contractors' plant & … Ships, boats & floating structures Parts & accessories of vehicles of 722, 781, … Other machinery for particular industries, n.e.s.
Apparatus for electrical circuits; board, panels Sugar, molasses and honey Rice Manufactures of base metal, n.e.s.
Paper and paperboard Equipment for distributing electricity, n.e.s.
Electrical machinery & apparatus, n.e.s.
Tubes, pipes & hollow profiles, fittings, iron, … Aircraft & associated equipment; spacecraft, … Iron & steel bars, rods, angles, shapes & … Articles, n.e.s., of plastics Pumps (excluding liquid), gas compressors & …
Automatic data processing machines, n.e.s.
Heating & cooling equipment & parts thereof, …
Top 25 Imports (US$ bn)
Commodity prices expected to continue declining
Source: ECA based on UNCTADStat
Focus on fuels: Largest export – 7.4% of GDP
§ Fuels account for 7.4% of Africa’s GDP for average period 2016-18;; peaked at 20% of GDP in 2008);;
§ Africa is a large net exporter of fuels;; exports of fuels tend to fluctuate and closely following evolution of crude oil prices:
Evolution of Africa’s total exports vs. imports of fuels (left axis; US$ billion) and crude oil price (right axis; US$/bbl) – 1998-‐2018
Source: ECA based on UNCTADStat 26,7
153,3
10,7
82,1
0 20 40 60 80 100 120
0 50 100 150 200 250 300
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Exports Imports Crude oil, average
42,7
33,9 33,3
15,5 9,2 6,0 4,8 4,2 3,2 3,1
0 20 40 60
Nigeria Algeria Angola Libya South Africa Egypt Equatorial
Guinea
Congo Gabon Ghana
Focus on fuels: over US$65bn losses in revenue expected
§ Average 2016-18 yearly exports revenues from fuels for Africa were US$ 166 billion, with WTI average yearly price for the period at US$ 57.6;;
§ Top 10 African exporters of fuels will be hit (based on 2016-18 averages):
Source: ECA based on UNCTADStat
Fu el E xp or ts (U S$ bn )
Share of Total Exports
Share of GDP
91.7%
10.7%
95.7%
20.0%
97.4%
29.4%
88.4%
62.1%
10.8%
2.7%
22.3%
2.5%
86.8%
38.4%
61.2%
35.3%
55.4%
20.9%
23.3%
5.2%
Fuels cont’d: zoom on Nigeria up to $19b loss
Ø COVID-19 could reduce Nigeria’s total exports of crude oil in 2020 by between US $14 billion and US$ 19 billion (compared to predicted exports without COVID-
19).
33,4 21,4
28,5
38,9 36,7
19,4 14,2
0 5 10 15 20 25 30 35 40
2016 2017 2018 2019 2020
Predicted before COVID-‐19
Predicted with COVID-‐19: average oil price falling to US$35/bbl in 2020
Predicted with COVID-‐19: average oil price falling to US$35/bbl in 2021 + halved export quantities in 2020
Evolution of crude oil exports from Nigeria – 2016-19 (observed) and 2020 (predicted under various scenarios) – US$ billion:
Expected Pressure on Naira
Source: ECA based on Central Bank of Nigeria (observed; prices and quantities) and Trading Economics (predicted; quantities) as well as EIA and WTI (predicted prices)
Remark: observed export values here are for strictly crude oil when there were based on fuels (i.e. mineral fuels and lubricant as per STIC 3 nomenclature)
13,1
9,3 8,3
7,3
2,7 2,3 1,8 1,7 1,6 1,6
0 5 10 15
South Africa Egypt Nigeria Morocco Tunisia Kenya Ethiopia Algeria Tanzania Côte d'Ivoire
Focus on fuels: fuel importers save about USD$19.6bn
§ Average 2016-18 yearly import revenues from fuels for Africa were US$ 54 billion, with WTI average yearly price for the period at US$ 57.6;;
§ Top 10 African importers of fuels (based on 2016-18 averages):
Source: ECA based on UNCTADStat
Fu el Im po rts (U S$ bn )
Share of Total Imports
9.8% 10.3% 18.5% 12.4% 10.0% 11.4% 8.8% 2.5% 12.8% 11.1%
5,2
3,7 3,3 2,9
1,0 0,9 0,7 0,7 0,6 0,6
-‐
2,00 4,00 6,00
South Africa Egypt Nigeria Morocco Tunisia Kenya Ethiopia Algeria Tanzania Côte d'Ivoire
Sa vi ng s (U S$ bn )
§ Potential savings for top 10 African importers of fuels (at oil price of US$ 35):
Focus on basic food: heavy reliance on imports
§ Only 15 African countries are net exporters of basic food
§ Countries do not consume what they export
Net trade balance of basic food – African countries – Average 2016-‐18 – US$ billion
Source: ECA based on UNCTADStat
-‐10 -‐8 -‐6 -‐4 -‐2 0 2 4 6
Al ge ria Eg yp t Ni ge ria An go la Lib ya Be ni n De m . R ep . o f t he C on go Tu ni sia Su da n Co ng o Bo ts w an a Gu in ea Zi m ba bw e Mo za m bi qu e Ma li Se ne ga l Eq ua to ria l G ui ne a Ga bo n Le so th o Ma ur iti us So m al ia Ni ge r Ch ad Si er ra Le on e Bu rk in a Fa so Ca m er oo n Ca bo V er de Rw an da Ga m bi a To go Dj ib ou ti Bu ru nd i Ce nt ra l A fri ca n Re pu bl ic Co m or os Sa o To m e an d Pr in cip e Lib er ia Ma la w i Za m bi a Es w at in i Se yc he lle s Gu in ea -‐Bi ss au Ma ur ita ni a Un ite d Re pu bl ic of T an za ni a Ke ny a Mo ro cc o Na m ib ia Ma da ga sc ar Et hi op ia Ug an da Gh an a So ut h Af ric a Cô te d 'Iv oi re
Focus on basic food: 10 basic foods constitute $50bn (66%) of total food imports
§ Top 10 exported basic food items by Africa (average 2016-18):
§ Top 10 imported basic food items by Africa (average 2016-18):
Source: ECA based on UNCTADStat
1,7 1,7 1,8 1,8 2,0
2,2 2,8
4,0
8,4
10,0
0 2 4 6 8 10 12
Fish, prepared, preserved Tea and mate Shellfish Oil seeds Sugar, molasses and honey Coffee and substitutes Fish, fresh, chilled or frozen Vegetables
Cocoa Fruits and nuts (excl. oil nuts)
2,9 3,2 3,2 3,4
4,0 4,2
4,3 5,2
5,9
9,9
0 2 4 6 8 10 12
Fixed vegetable fats & oils, fractio.
Animal Feed Milk and cream(excl. butter, cheese) Fish, fresh, chilled or frozen
Maize, unmilled Fixed vegetable fats & oils, fract.
Edible products, n.e.s.
Rice Sugar, molasses and honey Wheat and meslin, unmilled
Exports (in US$ bn)
Imports (in US$ bn) 72.4%
Top 10 Food Exports
65.7%
Top 10 Food
Imports
Edible products and preparations, n.e.s.
Nigeria Algeria South Africa Egypt Senegal Angola Ghana Morocco Ethiopia Mali Others
Fixed vegetable fats & oils, crude, refined, fract.
Egypt Kenya South Africa Ethiopia Tanzania Benin Ghana Nigeria Uganda Angola Others
Total
Imports:
US$ 5.9 bn
Total Imports:
US$ 5.2 bn
Food: dependence spread across the continent
§ 10 Largest Importers of Top 5 Imported Foods in Africa (average 2016-18):
Source: ECA based on UNCTADStat Rice
Benin Côte d'Ivoire South Africa Ghana Senegal Cameroon Guinea Kenya Angola Madagascar Others
Sugar, molasses, and honey
Algeria Egypt Nigeria Sudan Morocco South Africa Kenya Tunisia Angola Tanzania Others 3.5%
3.2%
Wheat (incl. spelt) and meslin, unmilled
Egypt Algeria Morocco Nigeria Tunisia Sudan South Africa Kenya Libya Ethiopia Others
Total
Imports:
US$ 9.9 bn
20.4%
17.9%
11.9%
11.6%
4.9%
3.9%
3.0%
2.9% 20.4%
Total Imports:
US$ 5.9 bn
Total Imports:
US$ 5.2 bn
14.6%
30.8%
10.8%
9.2%
6.5%6.7%
4.7%4.8%
4.5%
4.0%
3.5%
Total Imports:
US$ 4.3 bn
Total Imports:
US$ 4.2 bn
27.8% 12.7%
11.6%
6.2%
6.2%
3.9% 4.0%
3.4%
3.1%
2.9%2.9%
12.7%
11.6%
6.2%
6.2%
3.9%4.0%
3.1%3.4%
2.9%2.9%
42.9%
29.6%
14.0%
10.4%
8.6%
8.6%
6.7%
4.7% 5.7%
4.6%
4.0%
3.2%
Pharmaceuticals: High external dependence $16bn or 94 percent (imported)
§ All African countries are net importers of medicinal and pharmaceutical products;;
Top 10 African exporters/importers of medicinal and pharmaceutical products– Average (2016-‐18)
Source: ECA based on UNCTADStat
2 382 2 306 2 065
943
678 614
539 483 418 374
0 500 1 000 1 500 2 000 2 500 3 000
Eg yp t So ut h Af ric a Al ge ria Ni ge ria Mo ro cc o Et hi op ia Tu ni sia Ke ny a Su da n Ta nz an ia
460
238
104 102
52 34 27 20 15 14
0 100 200 300 400 500
So ut h Af ric a Eg yp t Ke ny a Mo ro cc o Tu ni sia Ma ur iti us DR C Ug an da Es w at in i Gh an a
Top 10 African Importers (in US$ mm) Top 10 African Exporters (in US$ mm)
75% of pharmaceuticals imports are from Europe, India and China
Source: ECA based on UNCTADStat
Top Import Source
EU-‐27 India
Switzerland China
US UK
Exports: Top 5 Destinations
Africa EU-‐27
Saudi Arabia US
Yemen
FOCUS ON TRADE IN SERVICES
The Economic dimension in Africa
Slump in air travel will impact current account
• IATA forecasts a 0.6% global contraction in passenger demand for 2020
• This would bring total global lost revenue to
$29.3 billion
• Carriers outside Asia-‐Pacific are forecast to
bear a revenue loss of $1.5 billion, linked to
China.
Slump in air travel will impact current account
0 5000000 10000000 15000000 20000000 25000000
2015 2016 2017 2018
Number of arrivals and departures, for 7 countries with complete data, 2015-‐2018
International tourism, number of arrivals [ST.INT.ARVL]
International tourism, number of departures [ST.INT.DPRT]
Substantial losses in air transport revenues expected Top African Air transport exports, USD Millions, 2017
86 114
122 125 139
155 156 183
256 274
337
580
828
1 439 1 598
2 576
0 500 1000 1500 2000 2500 3000
Cabo Verde
Namibia
Ghana
Côte d'Ivoire
Togo
United Republic of Tanzania
Seychelles
Rwanda
Algeria
Mauritius
Madagascar
Tunisia
Kenya
Egypt
Morocco
Ethiopia
Decline in tourism receipts will disproportionately impact African SIDS
36,9 24,9
18,5 14,9
8,7 7,9 6,7 5,6 5,5 5,0
Seychelles Cabo Verde Sao Tome and Principe Mauritius Gambia Morocco Madagascar Comoros
Rwanda Togo
0,0 5,0 10,0 15,0 20,0 25,0 30,0 35,0 40,0
% of GDP
International tourism receipts,
(Average 2015-‐2018)
FOCUS ON REMITANCES
The Economic dimension in Africa
Decline in remittances will impact African SIDS, LDCs and conflict affected countries,
7,9 8,2
8,6 9,5
10,1
12,3 12,8
12,9
16,2
20,9
0,00 5,00 10,00 15,00 20,00 25,00
Egypt, Arab Rep.
Zimbabwe Togo South Sudan Senegal Cabo Verde Comoros The Gambia Liberia Lesotho
% of GDP
Remittances, (average 2015-‐2018)
FOCUS ON FINANCIAL SECTOR
The Economic dimension in Africa
0 0,5 1 1,5 2 2,5 3 3,5 4
0 10000 20000 30000 40000 50000 60000 70000
20082009201020112012201320142015201620172018
FD I, % G D P
FD I i n U S$ m ill io ns
FDI (in US$ millions) FDI, % FDI
Declining trend in FDI inflows to Africa (2008-2018)
likely to persist in short run
Disruptions in access to trade credit will impact pre-financing options of food exporters and importers
§ Trade credits – countries will need liquidity help, especially those which are net food exporters to avoid increase in Non Performing Loans (NPLs)
§ Fragilities in the sector leading to economic uncertainties;;
Source: ECA based on UNCTADStat
0 1 2 3 4 5 6
Zambia Eswatini Seychelles Guinea-‐Bissau Mauritania Tanzania Kenya Morocco Namibia Madagascar Ethiopia Uganda Ghana South Africa Côte d'Ivoire
US$Bn
Net Food Exporters
POVERTY, GENDER AND URBANIZATION
The Social dimension in Africa
Female care-givers will be disproportionately impacted by COVID-19
• The vast majority of nurses are females in Africa: 65% of all nurses are females, while 72% of all doctors are
males.*
• Evidence from the Ebola crisis in West Africa from 2014 to 2016 shows that health workers were more likely than other groups to become infected and die after being infected (Table 1).
• Since they will be more involved in the care of those
infected by COVID-‐19, it is expected that female health
workers are more likely to be infected with the virus.
• 587 million persons (43.5% of total population) live in urban areas in Africa
• 55.9% of Africa’s urban population (excluding North Africa) live in slums presenting specific challenges for the COVID-‐19 outbreak
• Surveillance, monitoring, containment, mitigation challenges for infectious disease outbreaks are acute in slums
• Slum challenges for infectious diseases include – Population density
– Overcrowding in households
– Service and infrastructure deficits (water, sanitation) – Lack of fixed address of residents
– High mobile population – Poor health care access
– Quarantine enforcement challenges (majority daily income earners)
Increased risks in urban slum areas
THE FISCAL IMPLICATIONS
The Economic dimension in Africa
Spending on health will increase as
Governments set aside funds for COVID-19
47
0,0 1,0 2,0 3,0 4,0 5,0 6,0
% of G D P
Commodity price shocks will lead to decline in
revenue for commodity exporters and undermine the current account balance
48
0,0 1,0 2,0 3,0 4,0 5,0 6,0 7,0 8,0 9,0 10,0
Lybia Gabon Angola Algeria Ghana Egypt South Africa Equatorial Guinea Nigeria Congo
% of GDP
More than half of African countries have deficits above 3% of GDP
49
-‐9,0 -‐8,0 -‐7,0 -‐6,0 -‐5,0 -‐4,0 -‐3,0 -‐2,0 -‐1,0 0,0
% of G D P
COVID-19 shock will further impact debt sustainability (Debt/GDP)
50
0,0 50,0 100,0 150,0 200,0 250,0
Af ric a Ke ny a Se ne ga l Bu ru nd i Gh an a Si er ra L eo ne Ma la w i Mo ro cc o Ma ur iti us Gu in ea -‐Bi ss au To go Tu ni si a Sa o To m e an d Pr in ci pe Co ng o, R ep . Ma ur ita ni a Gam bi a, T he Eg yp t, A ra b Re p. Za m bi a An go la Mo za m bi qu e Ca bo V er de Er itr ea Su da n
% of G D P
Weak macro-fiscal position will compromise response to COVID-19 crisis
51 Fiscal Deficit (% of
GDP) Debt (% of GDP)
Nigeria -2.6 29.8
South Africa -5.9 55.9
Egypt, Arab Rep. -8.0 84.9
Algeria -7.6 46.1
Angola 0.7 95.0
Ethiopia -2.7 59.1
Kenya -7.2 61.6
Cote d'Ivoire -3.2 52.7
Ghana -5.0 63.8
Zambia -4.6 91.6
Mozambique -6.1 108.8
Morocco -4.1 65.3
Cameroun -2.7 40.5
DRC -0.2 13.5
Senegal -3.9 63.3
Central Africa: Differentiated impact of Corona Virus
Central Africa 11
Oil prices -‐0.5
Tourism -‐56
Non-‐oil exports -‐20
-Challenged through tourism -Fiscal umbalances expected - Tight measures required - Tight measures required
-Challenged through oil prices -Fiscal umbalances expected
- Tight measures required
-Challenged through oil prices -Fiscal umbalances expected
- Tight measures required
-Challenged through tourism -Fiscal umbalances expected - Tight measures required - Tight measures required
-Challenged through exports and oil prices -Fiscal umbalances expected
- Tight measures required
-Challenged through exports -Fiscal umbalances expected - Tight measures required
-Tourism and non-oil exports channels higher
-Less challenged -Fiscal umbalances expected
-Challenged through oil prices -Fiscal umbalances expected
-Fiscal imbalances expected -Oil export channel most critical -Minor impact expected
-‐10 -‐8 -‐6 -‐4 -‐2
0 Oil prices Tourism Non-‐oil exports prices
Central Africa-‐11
-‐10 -‐8 -‐6 -‐4 -‐2
0 Oil prices Tourism Non-‐oil exports prices
Angola
-5.7%
-‐10-‐8-‐6-‐4-‐2 0
Oil prices Tourism Non-‐oil exports prices
Burundi
-‐10 -‐8 -‐6 -‐4 -‐2
0 Oil prices Tourism Non-‐oil exports prices
Cameroon
-‐10 -‐8 -‐6 -‐4 -‐2
0 Oil prices Tourism Non-‐oil exports prices
Central Africa Republic
-‐10 -‐8 -‐6 -‐4 -‐2
0 Oil prices Tourism Non-‐oil exports prices
Chad
-‐10 -‐8 -‐6 -‐4 -‐2
0 Oil prices Tourism Non-‐oil exports prices
Congo, DR
-‐10 -‐8 -‐6 -‐4 -‐2
0 Oil prices Tourism Non-‐oil exports prices
Congo, Rep
-‐10-‐9 -‐8 -‐7 -‐6 -‐5 -‐4 -‐3 -‐2
-‐10 Oil prices Tourism Non-‐oil exports prices
Equatorial Guinea
-‐10-‐9 -‐8 -‐7 -‐6 -‐5 -‐4 -‐3 -‐2 -‐1
0 Oil prices Tourism Non-‐oil exports prices
Gabon
-‐10-‐9 -‐8 -‐7 -‐6 -‐5 -‐4 -‐3 -‐2 -‐1
0 Oil prices Tourism Non-‐oil exports prices
Rwanda
-‐35 -‐30 -‐25 -‐20 -‐15 -‐10 -‐5 0
Oil prices Tourism Non-‐oil exports prices
Sao Tome and Principe
-4.7% -0.4% -3.1%
-0.9% -4.8% -1.9% -10.6%
-7.5% -5.0% -6.3% -34%
Policy Options
Key policy messages
1) Prioritize immediate health response through
procurement of surveillance and logistical supplies and involve all stakeholders;;
2) Mitigate socio-economic impacts through fiscal stimulus;;
3) Manage liquidity in the financial sector;;
4) Protect/increase funding for social protection;;
5) Involve private sector in the response to the crisis 6) Maintain the momentum towards AfCFTA’s
implementation.
Recommendations
1) Health response: Focus on immediate health response through improved health systems, logistics, equipment, and pharmaceuticals
a. Fund virus preparedness, prevention and curative facilities including logistics.
b. Use crisis to improve health systems 2) Economic response : Fiscal Stimulus
a. Private Sector tax breaks to allow firms to keep jobs and maintain activity
b. Fast track procurement to provide liquidity to firms c. Ensure no arrears
d. Review and revise budget to account for increase health expenditures and prioritize labor-intensive investment projects
e. Immediately launch labour intensive capital projects. Rural roads etc.
f. Advance purchasing to contain inflation
g. Reduce costs of remittances for populations
h. Increase amount of transactions on Non Bank Financial Institutions platforms (e.g. Mpesa)
i. Ensure trade where possible continues ( open borders)
Recommendations
3) Financial Sector: Manage Liquidity
a. Ensure Banking system remains sound while providing liquidity to SMEs.
b. Encourage Banks to restructure trade credits and other loans c. Consider lowering capital requirement to make liquidity
available 4) Social Sector
a. Stimulus to support distance learning and those who have lost jobs
b. Strengthen the existing social protection systems and programs for the vulnerable groups of society through
technology based systems
c. Protect health workers: by prioritizing their access to
disposable filtering face-piece respirators, given that these are
in limited supply.
Recommendations
d. Support social distancing measures through temporary social assistance to ensure that workers can remain
employed even if quarantined or forced to stay home to look after dependents.
e. Increase supply of hygiene products – accessible clean water, sanitizers, etc.,
Cross-cutting
• Mobilize the private sector and Civil Society in all response initiatives
5) Maintain momentum on CFTA as mechanism for building long term continental resilience and volatility management. For example
increase intra Africa trade on pharmaceuticals and basic food
products
COVID19 reinforces case for intra-‐African trade
• A rapid and ambitious implementation of the AfCFTA, will hasten the recovery from COVID19 impacts, while inoculating Africa against future adverse effects of shocks such as COVID19;;
• But policy responses are undermining the AfCFTA
• Border closures and travel limitations make it difficult to conclude the outstanding negotiations on rules of origin and tariff offers, needed for trade to start under the AfCFTA;;
• Governments should allocate resources to accelerate negotiations once things get back to normal;;
• Meanwhile domestic consultations (national level work) should
continue, to stay on track for the July 1, 2020 start date of the
AfCFTA.
Role of science, technology
& innovation
Strengthening Africa’s internet infrastructure is
essential for effective responses
Mobile broadband penetration by country in Africa, 2018
Source World Bank 2019 Connecting Africa Through Broadband: A strategy for
doubling connectivity by 2021 and reaching universal access by 2030 Broadband Commission. Working Group on Broadband for All: A
“Digital Infrastructure Moonshot”
for Africa
4G Mobile broadband penetration by country in Africa, 2018
Source World Bank 2019 Connecting Africa Through Broadband: A strategy for
doubling connectivity by 2021 and reaching universal access by 2030 Broadband Commission. Working Group on Broadband for All: A
“Digital Infrastructure Moonshot”
for Africa
THANK
YOU!
Regional Highlights
Eastern Africa one of the fastest growing regions in the world
3,8
3,1
1,6
2,9 2,7
2,9 3,2
7,0 7,0
5,7
6,6 6,6
6,1 6,4
2,8 2,7 2,5 3,2 3,0
2,3 2,5
0%
1%
2%
3%
4%
5%
6%
7%
8%
2014 2015 2016 2017 2018 2019* 2020*
Eastern Africa-‐12
Afric a
World
Source: National sources, UNDESA, ECA calculations
Note: Eastern Africa average excludes Somalia and South Sudan; *Estimate/forecast
Average Growth Rates (%), 2014 -‐ 2020
In 2019, the fastest growing
economies were:
East Africa Regional exports heavily dependent on services, so if economic activity slows down and services are hit, effects could be substantial
Source: UNCTADStat
Transport Services
14%
Travel Services 5%
Other Services Merchandise 20%
Trade
61%
Trade deficits are less present in services than in Merchandises
-‐15 000 -‐12 000 -‐9 000 -‐6 000 -‐3 000 0 3 000
D.R. Congo Burundi Djibouti Somalia Rwanda Seychelles Madagascar Uganda Tanzania Kenya Ethiopia
Merchandise trade balance Service trade balance
USD million Source: UNCTADStat
In Eastern Africa the contribution of tourism to the economies varies across countries, and so COVID 19 will have different effects via this sector
0 10 20 30 40 50 60 70
Burundi Comoros Ethiopia Kenya Madagascar Rwanda Seychelles Tanzania Uganda Democratic Republic of Congo
EA Tourism Percentage Share of GDP
the region is a net commodity importer…
...and so the overall impact of CODIV
is likely to be more ambiguous as
prices of oil and other commodities
are goind down
Southern Africa countries most exposed through the three main channels (commodities, tourism and trade)
Source: World Bank Development Indicators Source: World Bank Development Indicators