Enhancing Resilience in African Economies: Policy Responses to the COVID19 Pandemic in Africa

An introduction to a series of interviews conducted by Dr. Dr. Folashadé Soulé and Dr. Camilla Toulmin in support of INET’s Commission on Global Economic Transformation (CGET)

The vulnerability of any population to COVID19 is linked to the demographic structure of the population, and associated vulnerabilities, due to underlying health conditions which aggravate the impact of the virus on the body’s system. Mortality rates in China, South-East Asia and a number of European countries show that older people are much more likely to be severely affected by COVID19, and to die from the infection, than younger people. Amongst elder people, men are twice as likely to die as women. Underlying health conditions of particular relevance include lung disease, diabetes, heart-related problems, and other consequences of obesity. People under the age of 60 are much less likely to die from infection by the virus. Although there are a significant number of deaths amongst younger people, they are often associated with pre-existing health problems. In this way, the COVID19 virus is quite different from the 1918-19 influenza pandemic which led to 50 million deaths worldwide, since this preferentially attacked and killed young people.

A comparison of the African population with those of Asia, and Europe shows a very different demographic structure, especially for the proportion of people over the age of 60 years. For Europe, in the cases of Italy, UK, Spain and France each of which have had more than 20,000 deaths (as of April 27th 2020), the proportion of people over the age of 60 in these four countries is: 28, 23, 26 and 24% respectively. A significant share of the deaths in these countries has been amongst residents in old peoples’ homes – as many as 25-30% in some cases, with the full figure unlikely to be known for some weeks.

The African continent has the good fortune with this virus of having a population which is much better able to withstand the consequences of infection, because it is far younger in age, with the proportion of people over 60 ranging from: Egypt 6.9%, Morocco 9.6%, Ghana 7.9%, Niger 4.0%, Senegal 4.0%, Ethiopia 4.8%, Rwanda 3.8%, Tanzania 4.5%, Malawi 4.8%, and South Africa 10.4%. In general, countries with a higher average level of income have a lower birth rate, and a higher proportion of people in the aged category. Hence, the vulnerability of the African population to COVID19 is relatively lower than for other parts of the world, despite the low level of health expenditure per head of population in most parts of Africa (averaging less than $100/person for the poorest countries, to $250/person for Ghana, $450-500/person for Morocco and Egypt, to $1,086/person for South Africa) compared to Italy, for example at $3,400/person. Added to this is the far lower number of people in Africa with diseases related to obesity, although the prevalence of such ailments is rising, especially amongst the urban middle-class.

The WHO urges testing to establish the scale of the infection, but there is limited capacity in many African countries to test and trace effectively. Ghana has chosen to lift the lockdown policy on the cities of Accra and Kumasi, recognising the grave economic damage caused for poorer people, and to use its existing network of TB labs around the country to go for testing, contact tracing and isolation of positive cases. But Ghana has a better-financed health service than many other African nations. Much has been made of the very low number of ventilators available per person in many African countries, but evidence from Europe shows access to oxygen for the worst affected cases seems as important in severe cases. In practice a large number of people may get the virus, but it will not be reported as COVID19 because they are asymptomatic, or misdiagnosed as malaria, or some other fever.

Hard choices

All governments face a hard choice between economic and health objectives. China, South Korea and New Zealand have aimed to eliminate the virus, through rigorous control of human movement. Most Western governments have tried to suppress the virus with mitigating its spread through lockdown measures, while keeping at least part of the economy open for business. Key sectors of the economy have been identified which need to carry on (such as agriculture, medical services, telecoms, food retail), while providing public funds to partially protect businesses in “non-essential” sectors. As lockdown measures have been eased, more and more businesses are being allowed to operate again. For many Western countries, the economic costs of even a few weeks of lockdown have, nevertheless, been huge and public finances have taken an enormous hit. It is unclear as yet whether and when the economy will return to “normal”, with some level of disruption likely till the end of 2020, at the least, when it is hoped that a vaccination may become available. Neither China’s strategy of elimination nor Europe’s mitigation are feasible options for African countries.

The lockdown option in Africa is rightly questioned, given the difference in age profile, greater trade-off between health and economic loss, impact on food security and lesser availability of public funds for major transfers to support people and businesses. An increasing number of African governments have amended lockdown policies or been challenged to lift them.

The spread of the virus is still accelerating in many African countries on average at 30% every week. A different set of measures is needed which builds greater trust and communication between government and its citizens, rather than rely on heavy-handed implementation of lockdown by the police and security forces.

These include:

· Clear recognition by government of the difficulties faced by poorer groups in making a living, given the collapse in jobs and economic activity;

· Work with community leaders, religious organisations – mosques, churches - neighbourhood associations, NGOs and other bodies to spread good information about how to prevent infection; Research has shown that population trust health message more when delivered by local officials/entities rather than national ones.

· Mobilise teachers, youth, and students to help with health campaigns;

· Reliance on curfews, to limit spread, rather than forcing people to stay at home;

· Protection of the most vulnerable, especially the elderly and those with serious health problems;

· Use existing networks for social protection payments to distribute cash to the most vulnerable, such as impoverished elderly, women and children;

· Invest in prevention, especially through treatment of existing diseases that multiply COVID19 risks, such as TB, HIV, and respiratory infections.

· Use schools for communal kitchens and provision of meals for vulnerable;

· Experiment, learn and share innovations in policy and technologies, especially mobile applications for e-money, e-health, e-education provision, chatbots.

Domestic economic policy and financial measures

The World Bank estimates that growth in sub-saharan Africa has been significantly impacted by the ongoing coronavirus outbreak and is forecast to fall from 2,4% in 2019 to -2,1 to -5,1% in 2020, the first recession over the past 25 years. This will be a shock in a region where roughly 8 out of 10 people are engaged in low-wage informal employment.

The World Bank also estimates that African governments will need an additional 2-3% of GDP for increased health spending – but where will this money come from?

There have been calls for debt relief and cancellations, given rising levels of indebtedness in many countries. However, some argue that African governments should avoid seeking debt cancellation as this would damage the hard-won creditworthiness of African governments. Rather they should rely on issue of additional special drawing rights at the IMF, and of public bonds, such as those proposed for the WAEMU (West African Economic and Monetary Union) area, expected to raise 1.29b Euros and the $10 bn Response Facility (provided to governments and the private sector) launched by the African Development bank built on the efforts in raising a social impact bond of social bond of $3 bn to help alleviate the economic and social impact the pandemic will have on livelihoods and Africa’s economies. The moratorium in payments of interest until December 2020 (and possibly for a further 12 months) should also provide significant relief to government budgets.

Other measures could include:

Ø Establishing a pooled fund at national level to draw in contributions from diverse sources.

Ø Re-setting fiscal policy to raise Africa’s tax capacity closer to the global average, and demand a fair contribution to public funds from all citizens and businesses.

Ø Abolishing fossil fuel subsidies, and investing in renewable energy, which offers a more resilient, decentralised energy source, vital to transform African economies for a zero carbon world, and address the risk of “stranded fossil fuel assets”.

Ø Re-allocating spending to shift existing budgets in favour of health.

Africa in the global economy - Seizing opportunities and re-thinking long-term strategy.

Over the last decade, many African economies had been doing well, with a number amongst the fastest growing economies globally. However, many observers note that such growth has been fragile, and highly dependent on exports of natural resources, often largely unprocessed. Oil exporting countries have been particularly badly hit, given the collapse in world demand for oil, with Brent crude trading at $21 today versus $68 at the end of December 2019. With export earnings and government revenue highly dependent on oil sales, this crisis has forced countries such as Nigeria, Angola, Algeria and Egypt to recognise the damaging consequences of such dependence. Economic diversification has been limited to date, with progress towards industrial development very patchy. While there has been substantial growth of the service sector, observers ask: can this substitute for productive manufacturing?

The crisis also offers an occasion to focus on growth in the domestic economy within its regional context, and ensure production of basic necessities. Agriculture and food marketing and processing are core activities. Transport networks need to be maintained so farmers can get their produce to town markets and access fertiliser and other essential inputs. Farmers need to work, and should not be locked down. The rural-urban food system is critical, especially for those countries which rely on substantial cereal imports. Governments need to keep food prices under control, through regulated prices, to avoid stock-piling and speculation.

Triple crisis of COVID19, conflict and climate change in the Sahel.

The countries of the Sahel now face a triple threat: the pandemic, climate change and conflict. These crises urgently need increased humanitarian funding. But the EU should look beyond the pandemic and use this moment to re-evaluate the current European approach that has failed to stabilize the region. The Sahel region faces more than 20 million people in need of humanitarian aid, and more than 5 million people displaced by conflict. A hard lockdown enforced by the security forces further drives a wedge between state and citizens. The focus on military engagement should shift in favour of peace-building, access to health and education services, and re-building trust between government and people.

In conclusion, COVID19 presents African countries with both a crisis and an opportunity. African governments and thinkers should use this opportunity to design measures which fit with the specific characteristics of their own populations, and the key trade-offs to be made between health and economic well-being. Equally, now is the time to recognise the fragility of past patterns of economic growth and take-up the challenge of effective transformation of the economy, to build the cities, energy and jobs needed for Africa’s long-term prosperity. African policy-makers can show the rest of the world a different approach to managing the crisis, better-suited to the diverse characteristics and needs of the continent.


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