Abel Kinyondo, Riccardo Pelizzo
First Published March 8, 2021 Research Articlehttps://doi.org/10.1177/0043820021989681
Africa has experienced over a decade of sustained economic growth. However, since the outbreak of Ebola, there have been pertinent questions as to whether and what extent such outbreaks have developmental implications in the continent. It is in this context that this article investigates whether and to what extent the ongoing COVID-19 pandemic affects the development of Africa’s economies. Using data from various international organizations, we show that the pandemic has indeed slowed down African economies, albeit in differing degrees across various regions of the continent. However, the slowdown is moderate compared with economies in high-income countries and the world economies as a whole. We contend that while it is difficult to predict when the crisis is going to end, the continent can navigate itself out of it by leveraging on the ever-increasing global prices of agricultural products and natural resources.Keywords Africa, COVID-19, Coronavirus, Pandemic, International Organizations, African Economies, SlowdownPalabras clave:África, COVID-19, Coronavirus, Pandemia, Organizaciones internacionales, Economías africanas, Desaceleración关键词：非洲, 新冠肺炎（COVID-19）, 新冠病毒, 大流行, 国际组织, 非洲经济, 经济放缓
For the first 15 years of the new millennium, several countries in sub-Saharan Africa (SSA) have experienced longs spells of “sustained economic growth” that translated into considerable progress along the developmental path and in a sizable reduction in the level of poverty in the continent. While the literature (see, for example, Arrighi 2002) has long noted that SSA had alternated periods of economic expansion with periods of economic contraction, the sustained economic growth that SSA experienced at the beginning of the new millennium represented a certain novelty—because it reflected changes in both domestic and international conditions. Recent studies (see, for example, Pelizzo, Kinyondo, and Nwokora 2018) have observed, in this respect, that Africa’s development in the new millennium resulted from the interaction of domestic factors (such as the spread of democracy in the continent), improvements in public health and in the level of good governance, and international factors (such as the international community’s new approach to aid and development, the rise of China, the fact that Africa’s debt was canceled, and a growing inflow of foreign direct investments). After identifying such factors, and their interaction, as the main determinants of growth and development in the continent, Pelizzo, Kinyondo, and Nwokora (2018) hypothesized that the disappearance of one or more of the success factors identified in their study could have a detrimental impact on African economies’ ability to grow, slow down their progress along the developmental path, and prevent them from further reducing poverty in the continent.
The Ebola crisis that plagued Guinea, Liberia, and Sierra Leone from January 20141 to the first week of June 20162 took a heavy toll on these West African economies. The Ebola crisis in the Democratic Republic of the Congo (DRC; with a first outbreak in July 2018 and a new one at the end of May 2020), by contrast, does not seem to have taken a terribly heavy toll on DRC’s economic fortunes. One could, of course, formulate several educated guesses as to why the Ebola outbreaks in West Africa had deeper economic implications than the outbreak in DRC: Ebola in West Africa lasted longer, affected a greater number of countries, and led to a much higher number of deaths. This was because, among other things, for most of the outbreak no vaccination was available to slow down and stop the spread of the disease.
While one could be tempted to reduce the differences in the economic hardship that was unleashed by Ebola in West Africa and in DRC to country-specific factors or the lessons learned, they raise nonetheless a very important question as to whether and to what extent disease outbreaks, epidemics, and pandemics have economic and developmental implications. The purpose of this study is to answer this question by conducting an early investigation into whether and to what extent the ongoing COVID-19 pandemic has taken, is taking, or will take a toll on Africa’s economies. We likewise address how it may prevent African countries from achieving their developmental objectives in a timely fashion and from making greater progress in the eradication of poverty.
The article is divided into six sections. We first review the literature on the economic consequences of epidemics and pandemics. In doing so, we highlight that from antiquity to the present, from West to East, from the Global North to the Global South, from plague to SARS and Ebola, epidemics and pandemics have always had significant economic implications. The evidence presented in this section provides, in our opinion, a justification for exploring the economic consequences of COVID-19—the most global and most lethal pandemic of the 21st century. In the second section, after reviewing the data on COVID-19 in SSA, we show that there are significant differences in the number of cases and in the lethality of COVID-19 both at the cross-national and at the cross-regional level. We also explore the economic consequences of the pandemic. We find that COVID-19 slowed down economic growth in the entire continent and that the economic slow down caused by COVID-19 was more marked in some countries/regions than in others. We then pick out some of the factors that allowed certain African economies to be more resilient than others. As national debt in the 1990s was one of the factors that prevented African countries from making greater progress along the developmental path, we also discuss the extent to which COVID-19 has affected the deficit and the debts of African countries. In the third and fourth sections, we focus on the impact of the COVID-19 crisis on, respectively, nascent African democracies and public health, while in the fifth section we offer tentatively what we believe may form the basis of an exit strategy from the COVID-19 trap in the region. In the final section, we formulate some conclusions and policy recommendations.
The Economic Dividends of Pandemics
Historians have long documented the frequency, the incidence, and the lethality of pandemics. In doing so, considerable attention has been paid to both the policy response (Cipolla 1976) and the economic consequences of pandemics (Cipolla 1978). Some studies focused on the impact of the plague in antiquity (Harper 2015; Little 2012). Others explored the demographic and economic consequences of the plague in Medieval times.
Boroda (2008) notes that the economic development that Europe experienced from 760 to the beginning of the 13th century was, among other things, made possible by the fact that in that period Europe was not “struck by any major epidemic.” The economic success of these years resulted in major population growth, higher population density, in the agricultural sector’s inability to satisfy the demands of a rapidly growing population, and in the corresponding decline of the standard of living—all conditions on which the Black Death could and did capitalize upon and “its effects on Europe were catastrophic” (Boroda 2008, 49).
Hatcher (1977, 11) noted that by affecting the size of the population that had been the main determinant of the output of the distribution of wealth and the structure of society in late Medieval and Tudor England, the plague had obvious economic implications. The Black Death, just like the Justinianic Plague, was not only a European Affair. Boroda (2008, 50–51) notes in this regard that it “first struck in the Central Asian steppes. In 1331 the epidemic reached China . . . In 1346, the disease was first recorded in the Black Sea region and Asia Minor. In 1347, it was brought to Italy” and eventually spread to the rest of Europe. Africa was not left untouched. As Borsch (2015, 125) reported, once the plague hit Egypt, it led to depopulation and economic decay.
The Black Plague, just like the Justinianic plague that spread in the mid-6th century (Harper 2015; Little 2012), altered the course of history. Yet, while the role of the plague in shaping and reshaping human affairs (the economy, demographic trends, and the course of history) has extensively been investigated, the Black Death was not the only pandemic with far-reaching socioeconomic implications. Studies have in fact documented the economic implications of SARS in China (Hai et al. 2004; Rawski 2005), Ebola in West Africa (Adegun 2014; Omoleke et al. 2016), and HIV/AIDS in Africa (Dixon, McDonald, and Roberts 2002).
There are various ways in which a pandemic can undermine economic performance and/or generate economic losses. In DRC, the monetary/economic losses were connected with, and caused by, the loss of human lives (Kirigia et al. 2019). In West Africa, the Ebola outbreak that ravaged Guinea, Liberia, and Sierra Leone in the 2014–2016 period produced economic losses not only because it caused a large number of fatalities but also because it affected the agricultural sector, the mining sector, employment, production, and ultimately trade (Adegun 2014). Scholars estimated that, by hurting the tourism industry and other service sectors, SARS could slow down China’s gross domestic product (GDP) growth by between 1 and 2 percent in 2003 (Hai et al. 2004). Similarly, HIV/AIDS has affected the economies of SSA by reducing labor supply, labor productivity, and exports (Dixon, McDonald, and Roberts 2002)—an economic loss that, at the beginning of the new millennium, was estimated to be between 2 and 4 percent a year (Dixon, McDonald, and Roberts 2001). A more recent study has argued that a 1-percent increase in HIV incidence in Africa reduces the income per capita by 0.59 percent (McDonald and Roberts 2006). What such studies show, consistently, is that epidemics and pandemics do not simply have social and demographic implications; they have additional clear and significant economic implications.
Given the economic consequences of pandemics and given the interest that scholars have long had in exploring the impact that epidemics and/or pandemics have on economic performance, it is worth exploring whether and to what extent the COVID-19 pandemic has impacted African economies. This is precisely what we plan to do in the remainder of this article.
The Economic Consequences of COVID-19
As of January 5, 2021, there have been 86,589,145 COVID-19 cases and 1,870,978 deaths due to the virus worldwide.3 The African Press4 reported that as of December 19, 2020, there have been 2,469,099 cases and nearly 60,000 deaths in Africa. If the data are to be trusted (see Baris and Pelizzo 2020), Africa was hit by the pandemic, but not as much as other regions. The economic consequences of COVID-19 in the continent are not as dire as they have been and are going to be for other regions. According to the World Economic Outlook, released by the International Monetary Fund (IMF) in June 2020, economic growth for Africa for that year was projected at −3.2 percent. This contraction of the African economies is lower than the global average (−4.9 percent) and the average recorded for advanced economies (−8 percent). See Table 1.
Table 1. Average Projected Economic Growth for 2020.View larger version
In commenting on these projections, the IMF noted that “for the first time, all regions are projected to experience negative growth in 2020.” Yet, as Table 1 reveals, the projected economic contraction is larger in some regions than in others, and in Africa, or rather in SSA, it is considerably lower than that in advanced economies and the world as a whole.
The IMF projections nevertheless make it clear that while all regions in the world and all countries in Africa are estimated to experience slower growth—and, in many instances, negative growth—the economic slowdown has varied considerably, not only between regions but also within regions. In the African case, for instance, 31 countries out of the 45 for which IMF projections were estimated are expected to experience negative growth, while the remaining 14 countries are expected to experience some positive, however feeble, economic growth. Specifically, the data presented in Table 2 show that Seychelles, Mauritius, Zimbabwe, Botswana, Congo (Republic of), Equatorial Guinea, and South Africa are expected to experience the largest economic contractions—with negative growth ranging from a minimum of −8 percent in South Africa to a maximum of −13.8 percent in Seychelles. By contrast, South Sudan, Benin, and Rwanda are all expected to experience positive growth—ranging from a minimum of +2 percent in Rwanda to a maximum of +4.7 percent in South Sudan.
Table 2. Projected Economic Growth in Sub-Saharan Africa.View larger version
The data presented in Table 2 allow one to formulate two considerations. The first is that, as a result of COVID-19, economic growth is expected to be slower in each of the 45 SSA countries. The second is that some economies are expected to slow down more than others. While there are, as we show later on, several reasons why there is such variation in the extent to which various economies have slowed down, visual inspection of the data in Table 2 suggests the presence of strong regional factors. To test whether this is indeed the case, in Table 3 we computed the average slowdown of the economy for four groupings of countries, namely:
- the West African Economic and Monetary Union (WAEMU), which includes Benin, Burkina Faso, Ivory Coast, Guinea Bissau, Mali, Niger, Senegal, and Togo;
- the Economic and Monetary Community of Central African States (CEMAC), which includes Cameroon, Central African Republic, Chad, the Democratic Republic of the Congo, Equatorial Guinea, and Gabon;
- the East Africa Community (EAC), which includes Burundi, Kenya, Rwanda, Tanzania, and Uganda;
- the Southern Africa Customs Union (SACU), which includes Botswana, Eswatini, Lesotho, Namibia, and South Africa.
Table 3. Economic Slowdown by Regional Groupings.View larger version
The data on public finance paint a fairly similar picture. Both budget deficit and government debt are expected to rise as a result of COVID-19 in nearly all the countries of SSA. By comparing the predictions made by the IMF in October 2019 with the predictions made in April 2020, it is possible to see that, with the exception of six jurisdictions (Burundi, Ethiopia, the Gambia, Lesotho, Liberia, and Madagascar) in which there was either no change (Ethiopia) or a slight reduction in the projected size of the deficit, in all other countries the budget deficit has increased.
The data on government debt likewise paint a fairly similar picture. The IMF projections included in the Regional Economic Outlook issued in April 2020 indicated that the expected level of government debt was considerably higher than what had been previously anticipated for 36 of the 45 countries/economies in SSA. For the remaining nine countries (Benin, Ivory Coast, Ethiopia, Gambia, Guinea, Madagascar, Niger, Togo, and Zimbabwe), the Regional Economic Outlook predicted a decrease in the expected level of the government debt.
Considering that economic performance, both globally and in SSA, has worsened from April 2020 onward (as documented in Table 1), it is not unlikely that COVID-19 may take a heavier toll on public finances than IMF officials could have imagined in April 2020. While the World Economic Outlook, released in June 2020, does not include in its statistical appendix any estimates concerning the budget deficit and the government debt, it does indicate that government debt and deficit will continue to rise. The IMF, in fact, reported that “under the baseline scenario, global public debt is expected to reach an all-time high, exceeding 101 percent of the GDP in 2020-21 . . . the average overall fiscal deficit is expected to soar to 14 percent of GDP” (IMF 2020f, 17). Even with respect to the deficit, SSA will do better than the global average, but, as the Regional Economic Outlook issued in June 2020 underlined, “fiscal deficits are projected to increase on average to 7.6 percent of GDP in 2020, almost doubling from their average of about 4.4 percent of GDP in 2019” (IMF 2020f, 3, as shown in Table 4). As a result of higher fiscal deficit, slower growth, and exchange rate depreciation, government debt “is projected to cause the debt-to-GDP ratio to rise on average by 7.3 percentage points of GDP in 2020 to 64.8 percent of GDP” (IMF 2020f, 4). The debt situation (Table 5) in Africa has resulted in a situation that African countries are faced with acute liquidity constraints. Indeed, according to the United Nations (2020), spending has outpaced revenues in Africa so much so that, as of June 2020, the continent accounted for seven of eight debt distress countries and 12 of 23 high risk of debt distress countries in the world—a situation which could spell a solvency crisis if it continues unabated.
Table 4. Fiscal Deficit.View larger version
Table 5. Government Debt.View larger version
The IMF (2020f, 4) Regional Economic Outlook went on to say that this increase in government debt “will further weaken debt sustainability indicators”—and insofar as a rising debt was one of the factors that prevented forward movement along the developmental path, the COVID-19-induced rise in government debt may also slow down socioeconomic progress in the African continent. The Broker (2020) puts this situation into perspective by predicting that the continent is bound to shrink by between US$349 billion and US$643 billion in 2030 than the pre-COVID-19 predictions. The Broker goes on to argue that the earliest the continent can go back to 2019 GDP levels will be in 2024, with the worst-case scenario in 2030.
An Assault on Africa’s Democracy
COVID-19 has somehow managed to affect the nascent democracies of Africa. This has mostly happened in two main ways. First, a number of elections which were scheduled to take place in 2020 have had to be postponed, some indefinitely (see Table 6). In total, 17 elections, ranging from local- to national-level elections, were rescheduled across 15 African countries (The International Institute for Democracy and Electoral Assistance 2020). This is quite a significant number in a continent with 54 countries.
Table 6. Elections Postponed in 2020.View larger version
Moreover, in countries where elections of some sort were allowed to take place, COVID-19 has been used selectively to infringe people’s democratic rights. In Uganda for instance, the biggest threat to President Museveni’s 35-year iron rule, Robert Kyagulani (who is popularly known as Bobi Wine) has been tormented and arrested, together with his followers for breaching COVID-19 rules during his campaigns (Okikor and Burke 2020). Sadly, up to 50 people were reported to have died following protests that ensued after the arrest of the popular and youthful politician. Similar events took place in neighboring Kenya where rallies organized by Vice President William Ruto (who also has virtually assumed the role of the opposition leader) were outlawed due to “COVID-19 concerns” (Capital News 2020). An outrage ensued as Ruto’s supporters accused the police of enforcing the law selectively. A few days later, the outlawed rallies were approved following sustained pressure. The list could go on and on, but the bottom line is that COVID-19 has evidently been used to suppress democratic voices in the continent.
COVID-19 and Engendered Health
In their recent study on “Human Capital Contribution to the Economic Growth of Sub-Saharan Africa,” Kinyondo and Byaro (2020) show not only that health matters, it in fact contributes more to economic growth in Africa than education. If they are right, it appears to be crucial to look at how COVID-19 has affected health and, by extension, the economic growth of the continent. According to the World Health Organization (WHO 2020), as the pandemic spreads, it overwhelms the health system; worse still, it has disproportionally affected women and girls in the SSA region. Specifically, women constitute 40 percent of infections, with the proportion going as high as 55 percent in countries such as South Africa (WHO 2020). But the indirect ways in which women are affected by COVID-19 are becoming more salient. Lockdowns resulting from the pandemic have prevented women from accessing crucial sexual and reproductive health care services. For instance, the WHO (2020) reports that there was a decrease of 42 percent in the number of cesarean sections performed between January and April 2020 in Zimbabwe compared with the same period in 2019; the number of births in health facilities also dropped by 21 percent; and similar numbers have been recorded in Burundi where births with skilled attendants fell from 30,826 to 4,749 between April 2019 and April 2020 (WHO 2020). All these numbers suggest an increase in maternal deaths in the tens of thousands in Africa and other low- to middle-income countries around the world as predicted by Lancet Global Health (WHO 2020). Women in Africa are also affected as the pandemic impacts the informal sector which employs 90 percent of the workforce in Africa, with mostly women employed in that sector.
Ready-Made Exit Route?
In the midst of all the doom and gloom surrounding the pandemic, there nevertheless do seem to be readily available means that might offer Africa a way out of the COVID-19 trap—at least when it comes to economic questions. For the purposes of this study, we will only mention two of them very briefly here, in the hope that more detailed future research can be encouraged. The first involves Africa’s vast natural resources endowment. It so happens that as the pandemic hits the world and mining of natural resources is scaled down due to lockdowns, their prices have been skyrocketing. Indeed, Koh and Baffes (2020) report an overall increase in prices of precious metals by 13 percent compared to 2019 expectations due to the current high level of global economic uncertainty and the low interest rates available in capital markets. As a result, for instance, gold is expected to top an all-time high of US$1,902/toz, with silver prices reaching a seven-year high of US$22.9/toz (Koh and Baffes 2020). In the presence of stronger institutions (see Byaro and Kinyondo 2020), Africa can take advantage of these prices and more than rebound their ailing economies.
Agriculture, a sector that continues to employ the majority of the workforce in Africa, could be a second surprising winner in the current situation. Indeed, perhaps buoyed by lockdowns, prices of agricultural products have also been on the rise the world over. We can use one agricultural product to support this argument: coffee. According to the International Coffee Organization (2020), world coffee exports have increased from 9.37 million bags in October 2019 to 9.67 million bags by October 2020. Meanwhile, the world coffee production has fallen as a result of the decline in production by the world biggest coffee producer, Brazil, due to cyclic seasonality. Moreover, the production of coffee from other competitors such as Central America and Mexico has also declined by 4.5 percent to 20.76 million bags during the period when that of Africa firmed at the usual 18.86 million bags (International Coffee Organization 2020). While these changes are mostly cyclical, they provide for a niche that African countries can take advantage of under current economic conditions.
The purpose of this study was to offer an early analysis of the economic consequences of COVID-19 in SSA. The evidence at our disposal—evidence made available by the IMF in several of its Regional Economic Outlooks—sustains the claim that COVID-19 is taking a toll on the performance of African economies. The outbreak of COVID-19, as evidenced by the growth projections estimated by IMF officials, has slowed down economic growth. The slowing down of African economies or, to be more precise, the slowing down of SSA economies is not as large as the slowdown experienced by the economies in high-income countries and the world economy as a whole. The data, however, show that, while the magnitude of the economic slowdown in countries belonging to WAEMU, EAC, and CEMAC are nearly identical, countries affiliated with SACU, in Southern Africa, have experienced a considerably more severe economic downturn. Furthermore, the data show that, in addition to cross-regional variation, the slowdown in the rate of economic growth varies, more or less considerably, in each of the four regions. Finally, COVID-19 is not simply expected to slow down economic growth. It is also expected to increase the fiscal deficit and the government debt in nearly all of the countries in the continent.
Previous studies have defined “strong sustained growth experience” as “an uninterrupted period of ten years or more, during which time the five-year moving average of annual GDP growth exceeds 3.5 percent” (Arrighi 2002, 12). They additionally noted that strong sustained growth experiences could yield developmental dividends and allow countries to continue to progress along the developmental path. In a review of the factors responsible for economic expansion and development in SSA at the beginning of the new millennium, Pelizzo, Kinyondo, and Nwokora (2018) noted that Africa’s recent economic success has been triggered by a combination of domestic and global factors, which included more democracy, better governance, more aid, more foreign direct investments, lower government debts, more trade, high commodity prices, and progress in containing outbreaks, diseases, epidemics, and pandemics.
The evidence presented here makes it clear that, because of COVID-19, the “strong sustained growth experience,” which countries in SSA had enjoyed at the beginning of the new millennium, will come to an end. And it will come to an end for some of the reasons that Pelizzo, Kinyondo, and Nwokora (2018) had anticipated. Yet it will also come to an end for some of the reasons that nobody anticipated. Pelizzo, Kinyondo, and Nwokora (2018) were correct in claiming that the worsening of public health in SSA would take a toll on the economies in the region. What they failed to consider was how a global pandemic—largely occurring outside the African continent—would detrimentally affect the performance of the SSA economies. The economic slowdown induced by COVID-19 shows that African economies, to a smaller or larger extent, can be negatively affected by local, regional, and global health emergencies alike.
African economies will eventually be back on the right track once the COVID-19 crisis is over. Indeed, good prospects on prices of natural resources and agricultural produce suggest that Africa can find a ready-made route to circumvent, or at least mitigate the effects of, the current economic crisis. Nevertheless, what nobody is able to predict is when the crisis will come to an end. And in the absence of a sustainable solution for the COVID-19 emergency, there is little hope that African economies may experience a major expansion.
Abel Kinyondo https://orcid.org/0000-0003-4071-4799
Riccardo Pelizzo https://orcid.org/0000-0001-7581-7689