Will Africa’s economies buckle coronavirus

WILL AFRICA’S ECONOMIES BUCKLE UNDER THE CORONAVIRUS? By Ronak Gopaldas

Since January across the world, governments had States and China weighed on growth. The epidemic to rethink their operation as the newly formed already has economists downwardly revising their global pandemic, the COVID-19 has been infecting growth forecasts with some suggesting it may tip the their economies, healthcare systems and work world into recession. Since China’s and US’s GDP was environments. Compared to the most affected fallen along with numerous other significant economies, countries such as the United Kingdom, United States trading, investing and consumption will be particularly or Italy or China, the number of cases in the African hit worldwide as a result. continent is pretty minimal thus it is worth to examine the possible reasons and even future consequences. Africa greatly depends on mining, having a wide variety of minerals including iron in South Africa, oil in Nigeria The slow propagation of the virus in Africa does not or copper in Zambia. If trading partners are unable to mean that the countries there will not suffer human buy the minerals Africa’s income will not be adequate and economic consequences later on, but it does mean to continue financing their own economies and that they have more time to prepare and learn from development. Next to mining, tourism is another sector others’ mistakes. To understand the negligible presence in Africa, which will suffer enormously due to travel of the Covid-19 in Africa it is important to note that the restrictions, Mauritius, Madagascar, Kenya, Seychelles governments there have an outmost experience with the and Tanzania are among the countries where tourism negative influence of pandemics and epidemics as up to adds a big amount to the total revenue. this date malaria, HIV, cholera and Ebola still present there. Despite tourism and mining will be in crisis, it is What will happen to Africa is not something that impossible to completely separate the economic effects solely depends on the African governments’ security from the political issues. While trade under the African measures or health equipment quantity but rather on the Continental Free Trade Area agreement has yet to world’s performance in fighting the virus. Everything is commence, any dramatic falls in trade or border closures interconnected, Africa’s export and import maintains a close volumes could push out free trade ambitions and curtail relationship with China, Europe and the US and if these acceleration in African growth over the medium term. countries increase their export prices or lower their product demand, even if Covid-19 didn’t directly damaged the African economies, through the commerce it will, indirectly. Xenophobia could also increase against people of Asian origin for their perceived link to the coronavirus – a situation that will be exacerbated by rising Consequently, it is foreseen that Africa’s economy, if unemployment, youth disaffectedness and competition affected, will experience a severe and long-lasting fallout. for scarce resources as trade volumes contract. Also African currencies have inevitably weakened while leaders can use this situation to implement racist or bond yields have soared. The rand shed 5% against the protective approach in their election campaign to win greenback while South African 10-year bonds jumped the next national election. 32.5 basis points. The Zambian kwacha lost more than 3% to the dollar in the same period. This is crucial because weaker currencies mean that the cost of repaying debts and continuing trade will rise dramatically. Although Africa has yet been greatly influenced by the coronavirus, it is easy to see that the worst is yet to come. The economic and health shock globally is not something that will only influence a part of the world, but rather each The global economy was under pressure before the country will somehow experience the negative effects COVID-19 outbreak as the trade war between the United either monetary-, economic- or health-wise.