Coronavirus has bred illness, death and anxiety everywhere. The COVID-19 impact on Africa is starting to show. The global markets have felt it.  Stock markets have crashed. We are living in worse times than the 2008 global financial crisis and even the Great Depression.  During those times stock markets collapsed by 50% or more, credit markets froze up, massive bankruptcies followed, unemployment rates soared above 10%, and GDP contracted at an annualised rate of 10% or more.

 

Projected impact on the world

According to the WEF, markets are down 35%, credit markets have seized up, and credit spreads (like those for junk bonds) have spiked to 2008 levels. United Nation’s trade and development agency (UNCTAD) envisage a slowdown in the global economy to under two per cent for this year, and that will probably cost in the order of $1 trillion.  World trade is expected to fall by between 13% and 32% in 2020 as the COVID-19 pandemic disrupts normal economic activity and life around the world (World Trade Organisation).

COVID-19impact  on Africa : The IMF described the decline as the worst since the Great Depression of the 1930s

What about Africa?

Globally there are over 4,35 million confirmed cases, 297,000 deaths and 1,55 million recoveries.  In Africa there are 72,336 confirmed infections, 2,475 deaths and 25,270 recoveries.  South Africa is the epicentre of COVID-19 on the continent.  Life has changed for everyone.  At this stage it is difficult to quantify the real impact on COVID-19 on the continent. However it is important to consider the unfolding backlash and possible socio-economic repercussions on Africa.

Poverty

More than half of the extreme poor live in Sub-Saharan Africa. In fact, the number of poor in the region increased by 9 million, with 413 million people living on less than US$1.90 a day in 2015, more than all the other regions combined.  Coronavirus will probably exacerbate poverty in Africa and hit the most vulnerable the hardest.

COVID-19 impact on Africa : young boy waits in a queue for cooking gas in Harare Zimbabwe. Credit: Tsvangirayi Mukwazhi/The Associated Press.

Unemployment

2 crises have collided: COVID-19 and unemployment in Africa.  Africa has one of the highest levels of unemployment in the world.  In 2018 the unemployment rate stood at 6.10%.  In South Africa there are more than 10.3 million people actively looking for work but cannot find one (Centre For Development and Enterprise 2019 report). Further only 42% of adult South Africans work (compared to 61% for middle-income countries, on average).  Coronavirus may increase unemployment as companies will be sizing down due to the financial hit during this uncertain time. The future prospects of the unemployed is more bleak than before.

 

COVID-19 impact on Africa : people wait for food parcels in South Africa. Credit: unknown

Formal sector

It is not only the unemployed who are at risk but also the employed. Once lockdown restrictions are finally lifted, these workers are still not safe. The COVID-19 pandemic has pushed employers to seriously consider how they can do more work with less employees. Company downsizing will be a fallout of the pandemic in Africa.  Companies will be reducing jobs and in other circumstances implementing automation.  According to analyst company, Forrester many companies are set to invest more in automation than in rehiring in the wake of the coronavirus pandemic. 

Informal sector 

The informal sector in Africa is one of the largest in the world. It contributes between 25 and 65 percent of Africa’s GDP and accounts for between 30 and 90 percent of total non-agricultural employment. 9 in 10 rural and urban workers have informal jobs. Most are women and youth. Cross border traders will be severely hit by the CV19.  Informal cross border trade(ICBT) constitutes 30-40 percent of total intra SADC trade. ICBT in SADC is valued at $ 17.6 billion. 70 percent of ICBT in Africa is done by women trading in a variety of commodities. Their jobs cannot be conducted from home.  Another large category of affected workers are domestic workers.  13.6 percent of paid female employees make their living as domestic workers and there are more than 5.2 million domestic workers in Africa.  Under lockdown restrictions (level 4 and 5) only live-in domestic workers can work. The rest cannot.  Other workers in sectors such tourism and beauty industry also face bleak situations. Most Africans cannot afford to stay home. Simply put – if they stay home, they cannot eat.

COVID-19 impact on Africa : police arrest street vendors for selling food in market in South Africa.

Strain on the social welfare system

International Labour Organisation estimates that in sub-Saharan Africa only about 10 per cent of the economically active population is covered by statutory social security schemes, most of these being old-age pension schemes, while in some cases also providing access to health-care.  Unemployment and retrenchment loom in the wake of COVID-19. More Africans are looking for assistance from an already weak social welfare system wrought with corruption. Then there are those whose livelihoods are adversely affected but cannot lean over the government for help. The silent cries of undocumented workers intensify the devastation of the pandemic.

COVID-19 impact on Africa : A 91 year old woman died while waiting in a queue to receive her social welfare payment. Photo credit: Alaister Russell

 

Gender inequality

COVID-19 could affect gender equality mainly in two ways. First, lockdown measures could contribute to increased levels of violence and curtailing women’s ability to access to help.  As lockdown and ‘stay at home’ measures are enforced, there is increased contact and interaction between domestic partner and their abusers.  

Second the new wave of poverty caused by Coronavirus will increase gender inequality. Here is why: poverty is sexist. Women have less resources and tools to escape poverty. There is a 7% gender gap in access to bank accounts, which widens to 9% in developing countries. In most countries, women earn 60-75% of men’s wages on average. Covid-19 could push women further into poverty.  

COVID-19 impact on Africa : secondary school students wash their hands at a temporary hand washing point, March 16, 2020. The Rwandan government decided to send home all students of boarding schools after the first case of COVID-19 was found Friday in Kigali, Rwanda

 

What is certain is that the future is unknown. Like 9/11, the world will never be the same. Everyone will be affected.  Half of the African population is either in the category of poor or is one paycheque away from poverty.  Covid-19 and its lockdown restrictions will intensify the suffering of the unemployed, working poor and informal traders.  African governments must plan and implement solid socio-economic recovery plan to mitigate the consequences of COVID-19 in Africa.

 

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