The coronavirus pandemic caught the world totally unprepared! From Asia to America, from Europe to Africa, the crowned virus ravaged lives and livelihoods. Its impact on world economies has been widespread and very deep. To combat the pandemic, governments all over the world deployed a cocktail of responses ranging from: lockdowns to creation of Isolation centres; mobilization of healthcare personnel and facilities; palliatives for the vulnerable in the society; stimulus packages for businesses; issuance of covid-19 protocols for all forms of social gathering; and guided vaccinations.
Whereas the African countries largely copied the diverse and conventional measures deployed by the western countries to tackle the scourge, they recorded fewer fatalities than the later. However, the attempt to replicate the lockdown template in Africa proved rather costly as the continent lacked the institutional framework and finances to successfully execute such a strategy. Africa could not afford a lockdown given its peculiar social and economic circumstances. The application of this measure had dire consequences for Africa as it plunged the African economy into unending socioeconomic woes including poverty, job losses, insecurity, negative growth rates, unemployment and debt crises.
It is pertinent to note that the advent of covid-19 coincided with the period in which African political leaders choose to foster Africa’s economic integration through the African Continental Free Trade Area (AfCFTA). This would have laid a veritable foundation for a viable continental market that engenders long-term growth, develops commodity value chains and industries across borders. The potential for income and employment creation (and by extension poverty reduction) is equally largely acknowledged as one of the major benefits of AfCFTA. This initiative is laudable as it is poised to make Africa more competitive in global trade as trade is crucial to development. For a continent with weak growth statistics, AfCFTA is a welcome development and can be leveraged to deepen African countries’ integration into regional and global value chains. Although covid-19 interrupted the pace of the initiative, it still holds a lot of promise for the continent as it is a veritable tool for fastracking the process of economic recovery.
Covid-19 would not be the first health disaster the world has ever witnessed. The biggest pandemic in modern history was the Spanish Flu of 1918-1919, during which many service-based businesses suffered double digit losses. With the covid-19 crises, the impact was disastrous for Africa, the continent experienced an unprecedented economic loss: The recession in Africa reached 1.9% in 2020; cumulative production losses reached nearly 12 percentage points of GDP in 2020-2021; employment was down by 8.5% in 2020; and debt levels rose reaching 58% of GDP in 2020.
The socioeconomic risks of health shocks can be contained and managed with policies, plans and actions that reduce their likelihood and impact. Epidemic risk is complex and dynamic as its consequences are not distributed equally throughout the economy: some sections may benefit financially, while others will suffer disproportionately. To mitigate the adverse effects of health shocks on the economy, policy makers need to deploy the necessary tools in response.
What approaches should the African continent apply to stimulate the economy and create jobs, especially considering factors such as rising debts, etc?
Amid actions to contain new waves of the pandemic and speed up vaccine rollouts, economic recovery in African countries hinges greatly on deepening reforms that: support job creation; engender inclusive growth; encourage a rebound in private consumption and investment; and enhance competitiveness. It places a demand for the rollout of deliberate, strategic and ambitious efforts targeted at: reducing countries’ debt burdens to unlock resources for the provision of public goods; reducing widespread inequalities and imbalances; protecting the vulnerable in the society; and ensuring environmental sustainability. It’s a clarion call for strategic reforms that increases investments in human capital development in areas such as education, health and infrastructure. Indeed, the desire for economic recovery in Africa brings to fore the need for sustainable technologies within the framework of a robust and dynamic digital economy that disrupts the nature of work in Africa but creates jobs for the teeming youth population.
The pre-pandemic economic models employed by Africa countries may not be sustainable in the post-covid era. The pandemic not only revealed the vulnerability of the continent to health shocks, it created an urgent and desperate need for increased support for Africa. Thus, to fastrack economic recovery, the continent will need to forge new partnerships and alliances with the private sector, development partners and the international community.
International support in terms of measures to mitigate the impacts of new waves of covid is not only desirable but necessary to complement all economic recovery efforts. New alliances and understandings to tackle the looming debt crises in Africa will not only reduce Africa’s liabilities but will also unlock resources for purposes of development. Furthermore, strategic partnerships with the private sector are necessary preliminary steps to the creation of jobs in the continent. Such efforts should include reforms to provide the enabling environment for businesses to thrive as well as an improvement of the ease of doing business in the continent. Indeed the creation of investor friendly environments is a sine qua non for economic recovery.
Similarly, Foreign direct Investment (FDI) is still as relevant in the growth equation of the post-covid era in Africa as in the pre-covid era. On the average, after an initial panic flight of capital from Africa in 2020 (about 5 billion dollars in the first half of the year), capital inflows have picked up again. FDIs provide a ready source of capital for investments. Thus, reforms to attract and sustain foreign investments are required for economic recovery in Africa. However, African countries must ensure that the issues of corruption, bad governance, weak institutions, lack of transparency, low ratings in ease of doing business, infrastructure deficit, insecurity and skills deficit are addressed to reduce the attendant risks they pose to FDIs.
The coronavirus pandemic revealed a huge gap in the education sector in Africa: distance learning is inaccessible to most African students. They lost many school days and months compared to students in developed economies who simply switched to online platforms to interact with their tutors to continue their learning process. The long term implications of this gap on all the generations whose learning and socialization processes were interrupted by the crises are far reaching and complex. Thus, economic recovery efforts in the continent should include reforms in the education sector that allows for the existence of online learning platforms alongside conventional learning modules. Indeed the existence of an online learning infrastructure should be an imperative for operators at all levels of the educational sector in Africa.
Small businesses play a crucial role in the growth trajectory of countries in the global economy given their employment generating potential. Unfortunately, just as in the case of the Spanish flu of 1918-1919, small businesses in Africa suffered huge losses during the covid-19 pandemic. Thus, economic recovery efforts should include a cocktail of strategies to rebuild small businesses and make them more sustainable and resilient. Such strategies should include: improved access to finance and capacity building.
Interestingly, women and youths form a significant percentage of operators of small businesses in Africa. Thus, attempts to build small businesses will directly affect the women and youths. Women and youths should be highly engaged in all recovery efforts as they have the drive and energy to translate plans into sustainable actions. Strategic involvement of women and youth in the development process will not only close the yawning gender gaps (that exists in all spheres of the African society), but will also reduce inequalities and its attendant hostilities to the barest minimum.
Trade is crucial for development. Covid-19 disrupted regional and global trade. Efforts should be made to re-gig the regional and global trade wheels to encourage domestic industries and create jobs. African countries can leverage on AfCFTA to log onto regional trade networks as well as global trade alliances. Indeed, African governments can go the extra mile to play an intermediary role by initiating and forging strategic linkages between domestic industries and high-end markets. Furthermore, the productive capacity of domestic industries should be developed to meet domestic demand and demand for exports. Africa tends to depend on imports. Post-covid era requires a paradigm shift that promotes domestic production of basic consumer goods. The short term and long term benefits of these efforts are multi-dimensional: value chain development, forward and backward integration, job creation, increased incomes, increased taxes and inclusive industrialization.
Whereas, the foregoing approaches to economic recovery in Africa are not exhaustive; however, the onus is on African governments to go for the low hanging fruits which the pandemic portends and leverage on them to make the most out of a bad situation. By implication, a careful analysis of the different sectors of the economy will reveal the sectors that have benefited immensely from the health shock. Thus, the appropriate strategic response to the disruptions of the novel corona virus pandemic in Africa is to go for the ‘low hanging economic fruits’ that this period offers while ensuring the safety of lives, livelihoods and the environment.
Is covid-19 in some sense an opportunity for Africa’s economic rise? How can that potential be seized?
Every shock or pandemic presents pains and opportunities. Although the pandemic has disrupted the African economy, it has also revealed a host of economic and business opportunities which could be leveraged to restore sound and quality livelihoods. To survive and prosper, and exploit the global opportunities offered by the crises, Africa needs to plan. Africa needs a comprehensive package for creating sustainable prosperity in a world of continuous disruptions. The health shock brings to fore the need for sustainable growth and development of the continent. Indeed, Covid-19 offers a fresh opportunity for Africa’s economic rise! However, the luxury of such a rise can only be enjoyed within the ambience of a well-structured and comprehensive long term development plan.
To plan effectively for Africa’s future, African countries need to adopt and domesticate the United Nations 2030 Agenda for Sustainable Development and the Sustainable Development Goals (SDGs) respectively. The 2030 Agenda for Sustainable Development envisions a present and a future that is economically sustainable, socially inclusive and environmentally resilient. Similarly, African governments should align with and equally domesticate Africa’s development Plan. Agenda 2063 is Africa’s blueprint and master plan for transforming Africa into the global powerhouse of the future. However, to achieve structural transformation and sustainable development in the continent, Financing for development is a critical factor. African governments need to explore creative solutions for their financing needs. They need to begin to look inwards for a greater proportion of their financing needs. Specifically, domestic resource mobilization must be elevated as a development priority.
Domestic Resource mobilization has become not only an imperative but a critical factor in the quest for economic development. Countries collect taxes and fees to generate public revenues domestically and internationally. This enables the government to provide public goods and welfare services in critical areas such as healthcare, education, infrastructure services, security, public order and other services for their citizens and businesses. Improvements in Domestic Resource mobilization efforts entail a whole range of reforms within the fiscal space. It also entails increased revenue to finance development. African countries need to deploy a lot of reforms to set the continent on the trajectory to sustainable growth and development. Indeed, the post-covid era offers Africa the opportunity to plan for a prosperous future. The potential to rise can be seized by deploying a whole range of strategic reforms.
Uduakobong Inam, PhD, is a senior lecturer and the coordinator of the postgraduate programmes at the Department of Economics, Faculty of Social Sciences, University of Uyo, Nigeria.
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