Impacts of Corona Virus on African Economies
Since the outbreak of Coronavirus infections in Wuhan, China, the global economy has been struck by the implications of the pandemic. The disease has spread to many countries globally, claiming lives and resulting in lockdowns by nations in efforts to combat the spread of the disease. More than 20 countries have reported cases of the disease in Africa. The majority of African countries imposed lockdowns that bar foreign travels into and out of their boundaries. Some states have also suspended local travel and business activities by advising people to stay at home. All these restrictions have had a significant impact on the economies of many African countries.
The majority of African countries rely on export and import business. According to the Economic Commission for Africa, half of the African Gross Domestic Product (GDP) comes from the export business. The countries export crude petroleum products such as crude oil and agricultural products such as coffee and tea. Some states are known to export other minerals such as gold, copper, and diamond. The products are usually exported to America, Europe, Asia, and Australia. With the current situation brought about by COVID-19, all these business activities between the specific and their customers in the global market are no longer possible. This is because the countries have imposed lockdowns for foreign travel involving business people and their products. The Economic Commission for Africa has estimated that oil-exporting countries such as Egypt, Tunisia, Morocco, Nigeria, and Libya are going to lose over the US $65 (ECA estimates billions worth of losses in Africa due to COVID-19 impact | Africa Renewal. (n.d.). This is due to the current unconducive market conditions for oil products in the leading global economies such as the European Union, China, and the United States of America.
Many countries in Africa also depends on imports of finished products from industrialized nations such as China, Britain, France, Canada, Russia, and the United States of America. The products are usually electronics, machines, finished petroleum products, and houseware (Slide of the month (SOTM) July. Africa’s top imports in 2018 - africon GmbH. (n.d.). With the current bans of international travels between countries, these products are not available in the markets due to the lack of imports by retailers and wholesalers. The majority of retail and wholesale businesses right now are closed due to the lockdowns imposed by the different governments. Without business activities going, as usual, the governments have not collected any revenue from businesses that inform custom duties and taxes imposed on the goods (Fernandes, 2020). As a result, the GDP of these countries has significantly reduced hence curtailing economic growth. Some states are anticipating economic collapse if the current bite of COVID-19 continues.
It is also evident that the majority of the countries in Africa are still underdeveloped and rely on foreign aids and debts to sustain their economies (The impact of foreign aids in Sub-Saharan Africa. (n.d.). Since the emergence of the pandemic in Africa, several states have devoted their inadequate resources to finance their ailing healthcare systems to fight the COVID-19 pandemic. This means increased debts for some countries which are unable to pay them back in time. Increased foreign debts have been a significant factor curtailing the growth of so many African countries economically since a substantial part of their revenues are channeled towards settling the ever-growing foreign debts (ECA estimates billions worth of losses in Africa due to COVID-19 impact | Africa Renewal. (n.d.).
Africa is known to be a destination for many tourists. Economic Commission for Africa ranks tourism as the second largest industry after the export business. Tourism is known to contribute 8.5% of the total GDP of Africa (An analysis of Africa's tourism market for April 2019. (n.d.). Since the outbreak of the COVID-19 pandemic, international travels have been suspended by many countries. Tourists are no longer visit Africa as they use to. As a result, several states are not earning revenue from the tourism sector. This has had a significant impact on the overall economic performance of many countries. If the situation is not significantly contained, the consequences are going to be huge, where some countries will have problems in returning back to the initial economic positions.
ECA estimates billions worth of losses in Africa due to COVID-19 impact | Africa Renewal. (n.d.). Retrieved from https://www.un.org/africarenewal/news/coronavirus/eca-estimates-billions-worth-losses-africa-due-covid-19-impact
Fernandes, N. (2020). Economic Effects of Coronavirus Outbreak (COVID-19) on the World Economy. Available at SSRN 3557504.
An analysis of Africa's tourism market for April 2019. (n.d.). Retrieved from https://www.atta.travel/news/2019/04/an-analysis-of-africas-tourism-market-for-april-2019/
Slide of the month (SOTM) July. Africa’s top imports in 2018 - africon GmbH. (n.d.). Retrieved from https://www.africon.de/africas-top-imports-in-2018/
(PDF) The impact of foreign aids in Sub-Saharan Africa. (n.d.). Retrieved from https://www.researchgate.net/publication/330934586_The_impact_of_foreign_aids_in_Sub-Saharan_Africa