Economic contraction in Africa due to the corrosive effect of Coronavirus pandemic is going to cost the gross domestic product of the continent a whooping $409.1 billion in two years from 2020 to 2001, the African Development Bank (AfDB) has projected.
The bank estimated that Africa could lose $173.1 billion in gross domestic product (GDP) in 2020 and $236.7 billion in 2021 because of the pandemic, totaling $409.1 billion in two years.
This emerged as the 55th annual meetings of the AfDB and the 46th meetings of the board of governors of the African Development Fund (ADF) began Wednesday in Abidjan, Côte d’Ivoire.
This year’s meetings being held virtually due to restrictions occasioned by the COVID-19 health crisis are aimed at a renewed commitment to economic resilience in Africa.
The restrictions and strict lockdown measures imposed at the start of the virus crisis, some of which are being gradually relaxed, have resulted in mass closures of businesses and millions of job losses.
The meetings being convened by AfDB are aimed at softening the impact of the anticipated recession.
True to the projection, African countries are already showing sign of distress as could be seen in the -6.10 per cent in GDP recently reported for Q2 by Nigeria, the largest country and biggest economy in the African region.
Africa, a continent of over 1.2 billion people with a combined GDP of $3 trillion, has most of its 55 nations highly dependent on primary commodities, especially oil, for their foreign revenues.
However, these commodities are witnessing their worst demand drop in history. Worst hit is crude oil where Africa’s upstream spend is down by $14 billion, while foreign direct investments (FDIs) into the continent’s LNG is down from 22 to only three, a report by Africa Oil Week (AOW) said.
“With the pandemic, Africa has lost over a decade of gains of economic growth. Africa’s recovery will be long and difficult. Now we must help Africa to build back, boldly, but smartly, paying greater attention to quality growth: health, climate and the environment,” said Akinwunmi Adesina, AfDB Group president, while addressing the audience.
He said back in April, the bank reacted swiftly to the pandemic, with a series of bold measures to support its regional member states to help cushion them against the impacts of the outbreak. “One example was the launch of the COVID-19 Response Facility of up to $10 billion.
“The response, like the crisis, is now on a continental scale. From the north to the south of the continent, the Bank has provided massive support to strengthen the resilience of regional member states.
‘The Bank has provided support worth $22 million to regional bodies such as ECOWAS in West Africa, to strengthen the health systems of low-income countries, and to CEMAC in central Africa. It also assisted the G5 countries in the Sahel to the tune of $20 million,” Adesina said.
Nialé Kaba, Ivorian minister for planning and development in Côte d’Ivoire and president of the AfDB’s Board of Governors, stressed that the pandemic was, in spite of all, an opportunity to “take up the challenge of the digitization of our economies.”
She encouraged the bank’s management “to provide substantial support to African countries individually and collectively in order to strengthen national and regional digital infrastructure for greater connectivity.”