Africa’s growth stands to rebound to 3% in 2021, provided that governments manage the COVID-19 infection rate well, African Development Bank says in African Economic Outlook 2020 Supplement.
Governments and development partners must respond in a more coordinated, targeted, and rapid manner to be effective in limiting impact; An additional 49 million Africans could be pushed into extreme poverty by the pandemic and its aftermath; West and Central Africa stand to be worst hit.
In a comprehensive socio-economic assessment of the pandemic’s impact, the Bank said growth was now projected to rebound to 3% in 2021 from -3.4% in the worst-case scenario for 2020. The predictions are contained in a supplement to the Bank’s African Economic Outlook, which was released on 30 January. At the time, Africa’s growth was forecast at 3.9% in 2020 and 4.1% in 2021.
The supplement cautioned that the growth outlook for 2021 and beyond would depend largely on African governments’ effectiveness in flattening the curve of the outbreak and policies to reopen economies.
Charles Leyeka Lufumpa, Acting Chief Economist and Vice President for Economic Governance and Knowledge Management, at the African Development Bank, said: “To reopen economies, policymakers needed to follow a phased and incremental approach that carefully evaluates the trade-offs between restarting economic activity too quickly and safeguarding the health of the population. Economic activities can be restarted incrementally on the basis of the transmission risks of different sectors.”
The spread of the virus in Africa depends largely on the preparedness of countries to separate and treat infected patients, the supplement stated, noting that only 21 out of 54 African countries are clinically prepared to deal with epidemics.
Executive Director of the African Economic Research Consortium and Former Governor of the Central Bank of Kenya, Njuguna Ndung’u described the African Economic Outlook 2020 supplement as “a very important and useful policy tool for African countries who actually need it at this time.”
“It will be useful now and in the future. It gives us important short, medium- and long-term strategies,” he added, stressing crises like COVID-19 present a good opportunity for innovative reforms in countries.
The report called for urgent policy interventions to mitigate the impact of the pandemic: “Across Africa, the response must be well-sequenced and multipronged, involving a public health response to contain the spread of the virus and minimise fatalities, a monetary policy response to ease liquidity constraints and solvency risks, and a fiscal response to cushion the economic impacts of the pandemic on livelihoods and to assist businesses.”