Africa is expected to see a dip in its GDP growth rate of between five and eight percentage points, due to the novel coronavirus outbreak, a study warned.
“Africa’s economies could experience a loss of between $90 billion and $200 billion in 2020,” according to a study entitled Tackling COVID-19 in Africa, which was released this week by global auditing firm McKinsey & Company’s experts.
Noting that these losses stemmed mostly from cuts in private spending and widespread travel bans in Africa, as well as supply-chain disruptions, lowered demand for the continent’s non-oil exports, and delays or cancelations foreign investments caused by the ongoing epidemic, the report argued that roughly 15% were due to “oil-price effects.”
“Africa is likely to experience delayed or reduced foreign direct investment (FDI) as partners from other continents redirect capital locally,” it added.
While the economic impact of the virus, alongside the oil price shocks, are expected to be serious across Africa, the study predicts that these effects will manifest “differently in different countries,” such as Nigeria, South Africa, and Kenya.
“If leaders across sectors translate their already proven resolve into more targeted, collaborative action in the coming weeks, we believe they can make significant progress in mitigating the economic impact of the pandemic,” said the study.
“To help them do so, we suggest an organizing framework for action,” the study stressed.
The report advised African governments and development partners to “explore several far-reaching solutions, such as stimulus packages or economic development plans “modeled on the Marshall Plan that provided aid to Europe following World War II.”
It also recommended an “Africa Solidarity Fund” that would allow businesses and individuals to contribute to relief efforts for “the most vulnerable households and businesses.”
Further, a liquidity fund for the private sector could be established to offer grants, loans or debt for equity swaps to “support businesses and limit job losses.”
As demand for personal protective gear against the virus mounts, the report also advised governments to form a common African platform to “procure medical supplies and equipment to combat the pandemic could provide an Africa-wide solution to challenges that each individual country is trying to address.”
According to the study, the deadly contagious disease has infected roughly 5,300 cases across 47 African nations as of March 31.
“Even though the rate of transmission in Africa to date appears to be slower than that in Europe, the pandemic could take a heavy toll across the continent if containment measures do not prove effective,” the study warned.
Since appearing in Wuhan, China, last December, the novel coronavirus has spread to at least 181 countries and regions, according to data compiled by the U.S.-based Johns Hopkins University.
The data shows more than one million cases have been reported worldwide so far, with the global death toll around 58,000, and recoveries over 225,400.