Apr 20, 2020 - World

Africa's coronavirus crisis arrived before the outbreak

A local official in Kampala, Uganda spreads the word about social distancing. Photo: Badru Katumba/AFP via Getty Images

The global economy has never faced a challenge like the coronavirus, but it’s in Africa that the pain could be deepest and recovery slowest.

Why it matters: Years of progress on alleviating extreme poverty will be undone, and economies that had been among the world’s fastest growing could face deep recessions. That’s even if Africa averts a Europe-style public health catastrophe.

Flashback: “Long before we began to see any of the health impacts of this virus, Africa was already feeling the brunt of the economic impact,” says W. Gyude Moore, a former Liberian public works minister now at the Center for Global Development.

  • As China shut down ports and then factories early in the outbreak, countries like Kenya that rely heavily on trade with China were hit hard.
  • As demand for exports fell, revenues plummeted — particularly in oil exporters like Nigeria and Angola.
  • Meanwhile, investors were fleeing emerging markets. Borrowing costs increased and existing debts weighed more heavily, just as spending was needed to prepare for a public health crisis.

Many African countries went into lockdown even before they had significant outbreaks.

  • Economies are largely informal so most people can’t earn money without leaving home — and massive stimulus packages are out of the question.
  • Some fear the health crisis will yield security crises across the continent, foreshadowed by the recent deadly crackdowns in Kenya from police enforcing a curfew.

What they're saying:

  • The UN warns that 29 million more Africans could be pushed into extreme poverty, reversing a decades-long decline. Jakkie Cilliers of the Institute for Security Studies in South Africa says it could rise as high as 94 million in a slow-recovery scenario.
  • Marius Oosthuizen of CUSP Consulting predicts "a difficult period in the next two to three years, and then a medium-term filled with lots of difficult challenges to overcome before we see a return" to high growth levels.
  • Rwandan President Paul Kagame told the FT it could take “a generation or more" for the continent to recover. He says at least $100 billion in international support to the continent is needed this year alone.

Where things stand: G20 countries agreed last week to freeze payments on bilateral loans to poor countries until the end of this year.

  • China is party to that agreement, and it holds the lion's share of Africa's bilateral debt. But it tends to renegotiate debts on a country-by-country basis to maximize political leverage.
  • "Some African governments already bilaterally petitioning China for relief say Chinese envoys are citing provisions in loan agreements that would transfer collateral, in some cases strategic state assets, into Beijing’s hands," WSJ reports.

What to watch: Moore, who was in government during the 2014 Ebola outbreak, said at that time “the rest of the world could mobilize resources to help three small countries."

  • "At this point, though, every country and territory is fighting the same thing."

The bottom line: Moore says that if Italy can't even get the help it's demanding from the EU, "you can imagine what the response to Africa will be."

Go deeper: African nations scramble for supplies

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