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18 March, 2020

Addis Ababa, Ethiopia Economic Commission for Africa

Economic Effects of the COVID-19 on Africa

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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.

(3)

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

(4)

THE STATUS IN AFRICA

COVID-19

(5)

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

(6)

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

(7)

….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)

(8)

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)

(9)

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

(10)

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

(11)

THE CHANNELS OF IMPACT IN AFRICA

COVID-19

(12)

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

(13)

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  

(14)

(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

(15)

FOCUS ON GROWTH AND EMPLOYMENT

The Economic dimension in Africa

(16)

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)

(17)

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

(18)

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

(19)

FOCUS ON TRADE IN GOODS

The Economic dimension in Africa

(20)

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

(21)

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

(22)

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)

(23)

Commodity  prices  expected  to  continue  declining

Source:  ECA  based  on  UNCTADStat

(24)

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

(25)

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%

(26)

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)  

(27)

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):

(28)

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

(29)

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

(30)

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%

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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)

(32)

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

(33)

FOCUS ON TRADE IN SERVICES

The Economic dimension in Africa

(34)

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.  

(35)

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]

(36)

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

(37)

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)

(38)

FOCUS ON REMITANCES

The Economic dimension in Africa

(39)

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)

(40)

FOCUS ON FINANCIAL SECTOR

The Economic dimension in Africa

(41)

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  

(42)

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

(43)

POVERTY, GENDER AND URBANIZATION

The Social dimension in Africa

(44)

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.

(45)

• 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

(46)

THE FISCAL IMPLICATIONS

The Economic dimension in Africa

(47)

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

(48)

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

(49)

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

(50)

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

(51)

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

(52)

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%

(53)

Policy Options

(54)

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.

(55)

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)  

(56)

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.

(57)

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

(58)

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.

(59)

Role of science, technology

& innovation

(60)

Strengthening Africa’s internet infrastructure is

essential for effective responses

(61)

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

(62)

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

(63)

THANK

YOU!

(64)

Regional Highlights

(65)

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:

(66)

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%

(67)

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

(68)

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

(69)

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

(70)

Southern Africa countries most exposed through the three main channels (commodities, tourism and trade)

Source:  World  Bank  Development  Indicators Source:  World  Bank  Development  Indicators

(71)

Serious challenge to SDGs’ achievement as we are entering the decade of action

SDGs implementation which should be gaining momentum during this decade will slowdown thus putting many countries off target

• Reduction  in  social   protection  programmes   means  more  

vulnerabilities

• Significant  job  losses,   particularly   in  the  

informal  sector  where  job   protection  is  weaker

• Levels  of  inequalities,   already  very  high  in   Southern  Africa,  will  

continue  to  increase

Source:  ECA  SRO-­‐SA  calculations,  World  Bank  Development  Indicators   Source:  UNDP  (2017)

(72)

…fuels:  Price  declines  and  demand  contraction

• COVID-­19  could  lead  to  Africa’s  export   revenues  from  fuels  falling  to  around  US$  

101  billion  in  2020  vs.  $166bn  average  for   the  period  2016-­2018;;

• Further  drops  in  demand  could  compound   price  drops  (e.g.  cancellation   of  flights,  

lower  use  of  cars  due  to  lock  downs  and  

quarantine  measures,  etc.).

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