UNECA on COVID-19’s impact on African economies

The United Nations Economic Commission for Africa has released alarming statistics that predict a 1.4% reduction in the continent's $2.1 trillion GDP due to the widespread disruption caused by the COVID-19 pandemic. Dr. Mama Keita, the Director of the UN Economic Commission for Africa in Eastern Africa, shed light on the current situation in an interview with CNBC Africa. With over 40 countries in Africa reporting COVID-19 cases, the economic impact is severe. From an initial estimation of over $30 billion in losses, countries are scrambling to implement health responses to tackle the crisis. The economic losses are not only confined to GDP reduction but also manifest in various forms such as dwindling public revenues, reduced business profitability, and job losses. The repercussions extend to decreased investment, poverty effects, and loss of purchasing power at a societal level. To combat these multifaceted challenges, governments need to focus on preserving jobs, purchasing power, and limiting the adverse effects on the vulnerable segments of society. This requires facilitating business operations through enhanced access to credit, loan repayment rescheduling, and the provision of social safety nets. Specific attention needs to be given to vulnerable groups such as women in the service sector, urban dwellers, and small and medium-sized enterprises. Dr. Keita stressed the importance of deploying social measures to cushion the impact on businesses and vulnerable communities. Looking ahead, the pandemic's disruption of supply chains presents an opportunity for African countries to reassess their trade and industrial strategies. The crisis underscores the need for greater self-reliance and regional integration to ensure economic resilience. Dr. Keita highlighted the importance of reorganizing production chains, emphasizing the potential for the African Continental Free Trade Area (AFCFTA) to boost intra-regional trade. The pandemic has laid bare Africa's overreliance on imports, particularly in the pharmaceutical sector, where 70% of drugs are sourced from outside the continent. The crisis serves as a wake-up call for African nations to strengthen regional value chains and enhance industrial capacity to mitigate future shocks. Dr. Keita's insights shed light on the urgent need for proactive measures to address the economic fallout of the pandemic and pave the way for a more resilient and self-sufficient African economy.