Sub Saharan Africa (SSA) is facing the worst recession in 25 years as the COVID19 pandemic continues to spread and halt operations. According to Africa Pulse, a bi-annual World Bank publication, SSA growth is projected to fall sharply from 2.4% in 2019 to between -2.1% and -5.1% in 2020 impacted by the ongoing COVID19 outbreak.
In addition, SSA risks losing between $37 billion and $79 billion in output losses for 2020 due to trade and value chain disruption, reduced foreign financing flows from remittances, foreign direct investment, foreign aid, combined with capital flight.
World Bank’s VP for Africa, Hafez Ghanem, reiterated that they are rallying all possible resources to help countries meet people’s immediate health and survival needs while also safeguarding livelihoods and jobs in the longer term – including calling for a standstill on official bilateral debt service payments which would free up funds for strengthening health systems to deal with COVID 19.
The region’s three largest economies – Nigeria, Angola, and South Africa – will experience sharp decline in GDP growth due to persistently weak growth and investment. Oil exporting countries will be hard hit. In addition, growth will weaken in two of the fastest growing areas – the West African Economic and Monetary Union and the East African Community due to weak external demand, disruptions to supply chain, and domestic production.
The World Bank remains worried about a contraction in agricultural production between 2.6% and upto 7% in case there are trade blockades. Moreover, food imports are likely to decline (as much as 25% or as little as 13%) occasioned by higher transaction costs and reduced domestic demand.
The Pulse report recommends that African policymakers focus on strengthening health systems to save lives. Further to protect livelihoods, policymakers need to implement social protection programs such as cash transfers, food distribution, and fee waivers to support citizens especially those in the informal sector. Several factors that pose challenges to the containment and mitigation measures, in particular the large and densely populated urban informal settlements, poor access to safe water and sanitation facilities, and fragile health systems.