Dealing With the Micro - and Macroeconomic Impacts of Covid-19 On Africa

8 December 2020

Addis Ababa — Experts agree that Africa's governments will have to strike a balance between health, economic and social policy interventions in the coming months to mitigate the negative impact of the COVID-19 pandemic. Measures to prevent the spread of the virus have dampened prospects for economic growth on the continent, due to the prolonged impact of lockdowns and restrictions on travel and movement of goods.

The impact of COVID-19 on Africa was underscored on Tuesday during a session on its socio-economic effects at the Africa Economic Conference hosted by the Economic Commission for Africa (ECA), the Africa Development Bank (AfDB) and the United Nations Development Programme (UNDP).

Presenting a paper titled, "COVID-19 in Africa: The implications for macroeconomic and socioeconomic dimensions," Mma Ekeruche said that while Africa's young population shielded it from the worst of the pandemic, countries now face weak growth and a diversion of resources that may aggravate the economic impact of COVID-19. She argued that in the face of dwindling resources, the continent's policymakers will have to implement a wide range of macroeconomic policy measures to recover faster.

According to Mila Malavoloneke, who presented a paper called, "Rethinking China-Africa trade relations: The impact of a Sino-Africa FTA on trade balance", Africa's trade with China has been severely affected as manufacturing facilities in that country shut down during the pandemic.

"With COVID- 19, the challenge with the supply chain increased - some African countries had certain products disappear when China went into lockdown. Manufacturing was halted during the lockdown." she said, adding that countries have to implement structural reforms to address the existing production capacity.

She argued that China is a strategic commercial partner for Africa, although there is a need to address the industrial divide for the continent to make significant gains.

Malavoloneke said, "There is a need to examine existing preferential trade agreements," and African countries should boost trade by looking at negotiating a free trade area with China.

However, Rachael Nsubuga from ECA's Sub-regional Office for Eastern Africa, challenged the idea of using the African Continental Free Trade Area (AfCFTA) as a benchmark to negotiate other free trade agreements. "Meaningful growth will only happen if this FTA happens at 100 percent liberalization which is not realistic. Model results show no economic benefits for Africa (worsened trade deficit) to support the formulation of the FTA (with China)," Nsubuga said, commenting on the paper's findings and recommendation for an FTA with China. She added, "I agree with the authors, we need to examine existing trade agreements between China and Africa like the China duty free /quota free market access for LDCs into the African market."

Another paper presented during the session was, "Income-related health inequalities associated with the Coronavirus epidemic in South Africa: A decomposition analysis" by Chijioke Nwosu. He used national surveys to compare the health situation before and during the pandemic, finding that poor health worsened in vulnerable households. He recommended addressing income and racial inequalities as key to mitigating the negative impact of the COVID-19 pandemic, and improving health outcomes for vulnerable populations.

However, Sidzanbnoma Nadia Denise Ouedraogo, Sub-Regional Office for West Africa, ECA, queried the reliability of the data used in the research. She pointed out possible problems, "the sample of 4 000 is relatively small and the date of the data of the survey collected. Indeed, we know that African countries started feeling the negative impact of the pandemic in February - March but the data of the survey has been collected in June." She advised Nwosu to look for another motivation for the paper, such as quantifying the impact of the pandemic on healthcare in South Africa.

The 2020 edition of the African Economic Conference is being held virtually from 8 to 10 December 2020. The conference provides a platform for academics and young researchers to present solution-oriented research to policymakers.

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