Even as many African nations struggle to contain third and fourth waves of the COVID-19 pandemic, experts say financial woes around the continent may linger long after the health crisis passes.
Analysts say high unemployment, ongoing unrest, plummeting tourism, declining revenues from natural resources, and massive debts owed to other countries all spell trouble for Africa’s future economic outlook.
Ahunna Eziakonwa, director of the United Nations Development Program’s regional bureau for Africa, told United Kingdom newspaper The Guardian that African countries have been disproportionately hit by the economic shock from COVID-19.
“The continent is at a big disadvantage,” Eziakonwa said. “Many African countries are still lifting the key basic things, people out of poverty, providing basic education and health services. Now spending and investment are drying up, and that translates into distress and destitution.”
The International Monetary Fund (IMF) has projected that while the global economy is estimated to grow 6% in 2021, Sub-Saharan Africa’s economy will grow by just 3.5% — up from minus 1.8% in 2020. Developed countries such as the U.K. and the United States each are projected to grow by 7%, while Asia could grow by 7.5% this year.
The IMF outlined three priorities for post-pandemic recovery: halting the outbreak’s effects through vaccinations, implementing financial measures to kick-start growth measures, and lowering carbon dependence while boosting digitalization.
“In all of these areas, the continent’s outlook is not promising,” African author and journalist Ciku Kimeria wrote in Quartz Africa in early August.
But there are potential paths toward more stable financial footing.
As Africa’s second-largest copper producer, Zambia has about $12 billion in external debt, including $3 billion in international bonds and large loans from Chinese state-owned lenders, The Wall Street Journal newspaper reported. It was the first African nation to default on a debt during the pandemic in November.
Zambian Finance Minister Situmbeko Musokotwane, appointed to the post August 24, told Al Jazeera he is keen to agree to an IMF lending program because it would give creditors confidence and the government cheaper and longer financing.The government has a $750 million Eurobond due next year that it cannot pay.
“We don’t have the money to pay back. This is why it is important that we get on [an] IMF [program] so that we can rearrange not to pay next year,” Musokotwane told public broadcaster ZNBC. “I am 100 percent confident that it will be done.”
Rising copper prices could help Zambia’s financial outlook, analysts say.
Likewise, South Africa’s industrial sector, particularly mining and manufacturing, has demonstrated positive growth rates due to increased global demand and high commodity prices, according to financial consultants NKC African Economics.
“Google Mobility data, which has proven to be a good indicator of economic activity, has improved to its best levels since the coronavirus shock occurred,” Pieter du Preez of NKC African Economics said in a late May report by CNBC.
Still, it will take time for the effects of COVID-19 on African economies to dissipate because massive production losses from the recession could keep unemployment high. A report by ideas4development.org says that incomes are not expected to reach pre-pandemic levels until between 2022 and 2025, meaning that 32 million people in Sub-Saharan Africa could experience increased poverty.