Corona Virus Effects on African Economies
Corona Virus Effects on African Economies
The worldwide economy has been impacted by the pandemic’s consequences since the breakout of Coronavirus infections in Wuhan, China. The epidemic has spread to a number of countries worldwide, killing lives and prompting nations to implement lockdowns in an effort to halt the spread of the disease. In Africa, more than 20 countries have recorded cases of the disease. The majority of African countries have established travel restrictions that prevent foreigners from entering or exiting their borders. Additionally, some states have suspended local travel and economic activity, asking residents to stay put. All of these constraints have had a substantial effect on the economics of a number of African countries.
The majority of African countries’ economies are based on export and import. According to the Economic Commission for Africa, exports account for half of Africa’s Gross Domestic Product (GDP). The countries export crude petroleum goods like crude oil as well as agricultural products like coffee and tea. Several states have been known to export more minerals, including gold, copper, and diamond. Typically, the products are exported to North America, Europe, Asia, and Australia. All of these economic transactions between the specific and their clients on the worldwide market are no longer possible under the present COVID-19 condition. This is because the governments have enacted travel restrictions on businesspeople and their products. According to the Economic Commission for Africa, oil-exporting countries like as Egypt, Tunisia, Morocco, Nigeria, and Libya will lose more than US $65 billion (ECA anticipates billions in African losses due to COVID-19 impact | Africa Renewal) (n.d.). This is because the market circumstances for oil goods are currently unfavorable in the world’s top economies, including the European Union, China, and the United States of America.
Numerous African countries also rely on finished products imported from industrialized nations such as China, the United Kingdom, France, Canada, Russia, and the United States of America. Typically, the products are electronics, machinery, refined petroleum products, and housewares (July slide of the month (SOTM)). Top imports to Africa in 2018 – africon GmbH. (n.d.). Due to the present travel limitations between nations, many products are not readily available in markets due to a lack of imports by merchants and wholesalers. The bulk of retail and wholesale enterprises are currently shuttered as a result of the various governments’ lockdowns. Without normal commercial operations, governments have not collected any income from firms that are responsible for informing customs charges and taxes imposed on goods (Fernandes, 2020). As a result, these countries’ GDPs have decreased dramatically, thereby stifling economic growth. Certain states are bracing for economic disaster if the current COVID-19 outbreak persists.
Additionally, the bulk of African countries remain undeveloped, relying on foreign help and debt to sustain their economies (The influence of foreign aid in Sub-Saharan Africa. (n.d.). Since the pandemic’s inception in Africa, some states have used their meager resources to bolster their poor healthcare systems in order to combat the COVID-19 pandemic. This results in increasing debt for certain countries that are unable to repay them on time. Increased foreign debts have played a significant role in stifling economic growth in a number of African countries, as a significant portion of their revenues are used to service their ever-growing foreign debts (ECA estimates billions of dollars in losses in Africa due to COVID-19 impact | Africa Renewal (n.d.).
Africa is well-known as a tourism destination. The Economic Commission for Africa ranks tourism as the continent’s second-largest industry, behind exports. Tourism is estimated to account for 8.5 percent of Africa’s overall GDP (An study of Africa’s tourism market for April 2019). (n.d.). Numerous governments have suspended international travel since the start of the COVID-19 pandemic. Tourists are no longer flocking to Africa in the numbers they once were. As a result, numerous states are unable to generate cash from tourism. This has had a considerable impact on many countries’ overall economic success. If the situation is not sufficiently contained, the implications will be severe, with several countries struggling to reclaim their pre-crisis economic status.
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REFERENCES
ECA estimates the billions worth of losses in Africa due to COVID-19 impact | Africa Renewal. (n.d.). Retrieved from https://www.un.org/africarenewal/news/coronavirus/eca-estimates-billions-worth-losses-africa-due-covid-19-impact
Fernandes, N. (2020). Economic Effects of Coronavirus Outbreak (COVID-19) on the World Economy. Available at SSRN 3557504.
An analysis of Africa’s tourism market for April 2019. (n.d.). Retrieved from https://www.atta.travel/news/2019/04/an-analysis-of-africas-tourism-market-for-april-2019/
Slide of the month (SOTM) July. Africa’s top imports in 2018 – africon GmbH. (n.d.). Retrieved from https://www.africon.de/africas-top-imports-in-2018/
(PDF) The impact of foreign aids in Sub-Saharan Africa. (n.d.). Retrieved from https://www.researchgate.net/publication/330934586_The_impact_of_foreign_aids_in_Sub-Saharan_Africa
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