The effects of Covid-19 on Africa

The current numbers for Covid-19 in the countries where BWAUK have projects are gradually on the increase: Burundi: 3, Kenya: 172, Rwanda: 105, Sierra Leone: 6, Zimbabwe: 11 (2 death). As the numbers of Covid-19 cases start to rise in Africa, we look at likely socio-economic effects of the pandemic.

As the virus took hold in Europe, coupled with state-imposed self-isolation measures, TV screens were full of people panic-buying, and fighting over food in supermarkets. Will these scenes be repeated across Africa?

Covid-19 causes “sheer panic”

Initially panic buying was thought unlikely as 60% of the Africa’s population is engaged in agriculture, including many-small scale farmers – like many families BWAUK supports. It was hoped that subsistence farmers could survive and larger farmers who sell at the market, would continue to operate, making food shortages unlikely. 

However, Covid-19 in Africa is already affecting people’s buying habits. John D. Sandy, Director of the We Are the Future center in Sierra Leone reports that threats of Covid-19 have led to “sheer panic across the population, because of its experience of Ebola. People have heard that it is far more dangerous than Ebola, especially in terms of spread”.  As a result, food prices have risen by 30%.

People running up and down looking for food….

There has been a similar reaction in Burundi, with reports that in local markets, staples like haricot beans have risen from 69p to 94p a kilo – again almost 30%. In response, the Burundian government has fixed prices for 17 food items including rice, sugar and cooking oil.

A national lock down means there is no food in the house. This is worrying everyone. Everyone is running up and down looking for food, asking for money.

While food price rises are partly the result of panic-buying, a government lockdown to stop the spread of the virus is also causing problems. “A national lock down means there is no food in the house. This is worrying everyone. Everyone is running up and down looking for food, asking for money”, continues John Sandy.

What are the socio-economic effects likely to be?

These are some of the domestic effects, so how will the virus affect Africa’s international financial prospects?  In a report released on 3 April Tackling COVID-19 in Africa, McKinsey and Company, calculate that “Africa's economies could experience a loss of between $90 billion and $200 billion in 2020".

A completely empty street by Lumley beach in Freetown, Sierra Leone due to Coronavirus lockdownThe normally bustling Lumley street in Freetown is now completely empty due to police enforced lockdown

Over recent years African economies have worked strenuously to integrate into world markets, selling oil, precious metals, scarce minerals needed for electronic goods, cotton, and agricultural products on the world market. This will decline, as will foreign direct investment as global growth sees a sharp downturn.

Remittances and donor aid will also decline. John Sandy, “In Sierra Leone we are dependent on donor aid and remittances. Most families rely on remittances, these are not very huge, but are the basis of their survival.  A global pandemic will affect these”.

Informal workers take the biggest hit

Africa’s informal workers will also take a big hit. In many countries the informal economy is larger than the formal economy, and informal workers without any form of social protection will be badly affected, particularly as African countries don’t have the resources to bail out workers in their ‘gig economies’.

Children in Freetown, Sierra Leone, waiting in line to receive food during COVIDChildren seen begging for food during the short lockdown measures lift in Freetown

Debt forgiveness

According to calculations by the Jubilee Debt Campaign, the 76 countries which have huge debt repayments, of which 30 are in Africa, are due to spend $18.1bn (£15.5bn) in 2020 on debt payments to other governments, $12.4bn to multilateral institutions and $10.1bn to external private creditors.

Add to this, the loss calculated by McKinsey, and the situation is impossible. This has led the IMF and World Bank to urge creditor countries to defer interest payments on bilateral poor-country debt this year, saving them $14bn. However, a group of 165 global leaders – including former heads of state, economists and financiers - have called for the international community to go further and agree on a more generous package to tackle the twin health and economic emergencies caused by COVID19 in developing nations, worth $44bn for Africa alone.

This still leaves a big hole in Africa’s future economies. Can we depend on the richest economies to pump money into Africa? Will aid organisations also step in to fill the gap? This could represent a step back for Africa’s independence and future growth. But in an interconnected world, leaving poor nations to handle the virus alone will only result in a prolonged global crisis.

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by Daphne Davies, volunteer journalist.