How Covid-19 is shaping Africa’s prospects

The COVID-19 pandemic has had a profound impact on Africa's economic prospects, exacerbating structural challenges that were already in place on the continent. According to the IMF's economic forecast released in April, Africa is expected to contract by 1.6 percent this year, with a projected recovery of 4.1 percent next year. However, the continent faces significant revenue shortfalls due to declining commodity prices, particularly for countries heavily reliant on exports such as oil. This situation is likely to lead to increased debt levels, posing a challenge for many African countries to generate the necessary growth to repay this debt in the future. Additionally, the current trend of de-globalization, with countries turning inward, is expected to impact trade, hindering the benefits that were anticipated from the African Continental Free Trade Area, which was postponed from its initial start date on July 1st. However, amidst these challenges, there are opportunities emerging in Africa, particularly in the digital economy. The continent has been making strides in mobile technology and internet connectivity, with significant investments being made in infrastructure to improve access to the internet. The pandemic has accelerated this digital transformation, highlighting the importance of data as the new 'oil' in Africa's context. As companies explore opportunities for investment in the digital sector, governments are also focusing on infrastructure development, especially in technology, to drive economic growth. Despite the current economic uncertainties, Africa still presents investment opportunities that could yield significant returns. The shift towards unlisted projects, rather than traditional investments in the listed space, is seen as a potential driver of economic growth on the continent. As global bond yields remain low, Africa stands to benefit from increased inflows once the health crisis is resolved. In light of the changing business landscape, companies are advised to rethink their strategies and structures to adapt to the 'new normal' brought about by the pandemic. With remote work becoming more prevalent, regulators are opening up spectrum for advanced technologies like 5G, signaling a shift in benefit structures for employees. Companies are encouraged to prioritize health and safety measures, such as social distancing and data solutions, to ensure a smooth transition back to the workplace. This 'reset' prompted by COVID-19 presents an opportunity for businesses to rethink their operating models and cost structures, paving the way for a new way of conducting business in Africa. Overall, while the economic outlook for Africa may seem challenging in the short term, there are signs of optimism and potential for growth in the midst of adversity. By embracing the opportunities presented by the digital economy and investing in critical infrastructure, Africa can navigate through the current crisis and emerge stronger in the post-pandemic era.