Covid-19 pandemic affecting socioeconomic condition of “almost all” African countries

South African President Cyril Ramaphosa
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ADDIS ABABA (Xinhua) – The Covid-19 pandemic has affected the socio-economic condition of “almost all African countries” and appears to worsen dramatically as the tourism, air transport and the oil industry sectors “visibly impacted,” according to a new report published by the African Union (AU) on Monday.

Noting that the current Covid-19 crisis is affecting the entire world economy and that of Africa, the 55-member pan African bloc said in its latest report on the impact of Covid-19 on African economies issued on Monday stressed that “some key sectors of the African economy are already experiencing a slowdown as a result of the pandemic.”

“The Covid-19 pandemic has hit almost all African countries and appears poised to worsen dramatically. The disruption of the world economy through global value chains, the abrupt falls in commodity prices and fiscal revenues and the enforcement of travel and social restrictions in many African countries are the main causes of the negative growth,” the newly published report read.

The AU also projected exports and imports of African countries to drop by at least 35 percent from the level reached in 2019, in which the loss in value is estimated at around 270 billion U.S. dollars.

“The fight against the spread the virus and medical treatment will lead to an increase of public spending in Africa estimated to by at least 130 billion U.S. dollars,” the report argued.

According to the AU, due to the African continent’s openness to international trade and migration, the continent is not immune to the harmful effects of Covid-19, which are of two kinds endogenous and exogenous.

Noting that the exogenous effects of Covid-19 come to have an impact on Africa’s direct trade links between affected partner continents such as Asia, Europe and the United States, the AU stressed that the tourism sector, the decline in remittances from African diaspora, reduced foreign direct investment and official development assistance, as well as illicit financing flows and domestic financial market tightening, are among the major exogenous impacts of COVID-19 on African economies.

The endogenous effects of Covid-19 also occur as a result of the rapid spread of the virus in many African countries. On one hand, they are linked to morbidity and mortality. On the other hand, they lead to a disruption of economic activities,” the AU stressed.

“It is important to assess the socio-economic impact of Covid-19, although the pandemic is at a less advanced stage in Africa, due to its lesser quantity of international migrants’ arrivals relatively to Asia, Europe, and North America and strong precaution measures in some African countries,” the report read.

The newly published report, which noted that African economies remain informal and very extroverted and vulnerable to external shocks, envisaged on understanding the possible socio-economic repercussions in order to propose policy recommendations to respond to the crisis mainly due to the difficulty of quantifying the real impact as a result of the uncertainty as well as the rapidly evolving nature of the pandemic and scarcity of the data.

According to the report, tourism, air transport, and the oil sectors are “visibly impacted.” It, however, stressed that the invisible impacts of Covid-19 are expected in 2020 regardless of the duration of the pandemic.

“The socio-economic impact of the Covid-19 crisis is real. It is therefore essential to inform the populations on the impact and advice policymakers in order to better prepare and lessen the adverse impact of the pandemic,” the report stressed.

“With the negative impact on key sectors of the economy such as tourism, travel, exports; with falling commodity prices, declining governments’ resources to finance public investment, it would be quasi impossible to achieve this optimistic forecast of growth rates in 2020,” the AU stressed.

The report, which noted the higher impact of Covid-19 on Africa’s tourism industry, also stressed that for 15 African countries, the tourism sector represents more than 10 percent of the GDP and for 20 of the 55 African states, the share of tourism in the national wealth is more than 8 percent.

Figures from the AU also show that the tourism sector contributes much more to GDP in countries like Seychelles, Cape Verde and Mauritius (above 25 percent of GDP) while it also employs more than a million people in each of Nigeria, Ethiopia, South Africa, Kenya, and Tanzania. Tourism employment comprises more than 20 percent of total employment in Seychelles, Cape Verde, Sao Tome and Principe, and Mauritius.

The newly published report came as the death toll from the ongoing Covid-19 pandemic on the African continent has reached 414 as confirmed positive cases reached 9,178, the Africa Center for Disease Control and Prevention revealed on Monday.