Sub-Saharan Africa is set to fall into its first recession in 25 years as its growth declines sharply due to the coronavirus pandemic, a report has found.
The World Bank’s twice-yearly economic update for the region forecast growth to drop sharply from 2.4% in 2019 to between minus 2.1% and minus 5.1% in 2020.
The pandemic is set to cost the region between $37bn and $79bn in output losses for 2020 due to disruption to commodity exporters and countries with strong value chain participation, and difficulties caused by lockdowns.
The region’s three largest economies – Nigeria, Angola and South Africa – are expected to be hit hardest because of their persistently weak growth while oil-exporting countries are also likely to suffer as a result of lower oil prices and the wider effects of the outbreak.
Two fast-growing areas, the West African Economic and Monetary Union and the East African Community, are also anticipated to face severe impacts casued by weak external demand, disruptions to supply chains and domestic production, the report said.
Agricultural production could shrink by between 2.6% and 7% if there are widespread trade blockages, while food imports could decline by up to 25% due to higher transaction costs and reduced domestic demand.
Large and densely populated urban informal settlements, poor access to safe water and sanitation facilities, and fragile health systems are likely to exacerbate the impact of the virus.
“The Covid-19 pandemic is testing the limits of societies and economies across the world, and African countries are likely to be hit particularly hard,” said Hafez Ghanem, World Bank vice president for Africa.
“We are rallying all possible resources to help countries meet people’s immediate health and survival needs while also safeguarding livelihoods and jobs in the longer term – including calling for a standstill on official bilateral debt service payments which would free up funds for strengthening health systems to deal with Covid-19 and save lives.”
Meanwhile, the International Monetary Fund (IMF) has granted debt service relief to 25 of the IMF’s member countries, mostly African countries, as part of its response to the outbreak.
The IMF said the funds would cover the countries’ debt obligations for an initial phase over the next six months and help them pay for emergency medical and other relief efforts.
The African countries that will receive debt service relief as part of the package are Benin, Burkina Faso, Central African Republic, Chad, Comoros, Congo DR, The Gambia, Guinea, Guinea-Bissau, Liberia, Madagascar, Malawi, Mali, Mozambique, Niger, Rwanda, São Tomé and Príncipe, Sierra Leone, and Togo.