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COVID-19 pandemic and the African economy

Africa is the youngest continent with more than sixty per cent of its population under the age of 25. It is the prime reason why the mortality rate due to COVID-19 pandemic is low in the continent. However, according to a modelling study by World Health Organisation (WHO), if the containment measures fail, even with a lower number of cases requiring hospitalisation than anywhere else in the world, the medical capacity in most parts of Africa would be overwhelmed. Due to strained health systems, the looming health shock of COVID-19 can have a disastrous impact on the continent even though the number of cases and deaths are comparatively low.

 

Apart from the health risks, the pandemic has also led to lower trade and investment from China, the slump in demand due to lockdown in the European Union and OECD (Organisation for Economic Cooperation and Development) countries and a supply shock affecting domestic trade. Food insecurity is yet another emerging threat that demands the prioritisation of agriculture as a critical sector that should not be interrupted by COVID-19 related measures.

 

Global perspectives, a virtual speaker series at Northeastern University analysed the impact of the pandemic and oil price collapse on the African countries. The pandemic has led to a fall in GDP, worsening of the trade balance, loss of jobs and livelihood, depletion of wealth, an increase in healthcare expenditure, a crash in oil prices, and lack of infrastructure. Before COVID-19, the continent had already experienced a slowdown in growth but it was able to reduce overall poverty. This crisis could erase years of developmental gains for the nation and make it susceptible to even lower growth periods.

 

In the absence of any concrete steps, this can even lead to a situation of social and economic emergency. Increased capacity to test, protect, treat and cure is much essential. Significant policy measures to protect income and jobs and a strong recovery strategy to reduce the dependence on external financial flows can revive as well as make the African economy resilient against future crises.

 

Kriti Vishwakarma