Lusaka – Africa’s recovery from the COVID-19 pandemic will remain sluggish as compared to other regions due to a multiplicity of factors, and the continent should formulate and implement a cocktail of measures to quickly build resilience to shocks, leading multilateral financial institutions have said.
In a joint statement this week, the African Development Bank (AfDB) and the IMF called on Africa to prioritise the health sector, effectively deploy monetary and fiscal support, expand social safety nets and intensify structural transformation through digitalisation and economic diversification.
They two institutions also said there was need to foster regional and multinational co-operation to ensure sustained and widespread recovery.
Global growth is this year projected to average 5.2 percent, compared to Africa’s 3.4 percent. While this is higher than the 2.1 percent recorded last year, Africa lags behind other region’s in terms of recovery.
Recovery will also vary across African countries. Tourism-dependent economies are projected to recover from an 11.5 percent decline in 2020 to grow 6.2 percent in 2021; oil exporting countries, from a 1.5 percent decline to growth of 3.1 percent; other resource-intensive economies from a 4.7 percent decline to 3.1 percent growth; and non-resource-intensive countries from a 0.9 percent decline to growth of 4.1 percent.
Fiscal deficits are estimated to have doubled in 2020 to a historical high of 8.4 percent of GDP. Debt burdens are likely to rise by 10 to 15 percentage points in the short to medium-term.
Exchange rate fluctuations have been elevated, and inflation has inched up, with external financial inflows heavily disrupted.
Revised estimates show that up to 38.7 million more Africans could slide into extreme poverty in 2020–21, pushing up the total to 465.3 million people, or 34.4 percent of the African population in 2021.
Inequality is also likely to increase, and school closures could have long-lasting consequences for human capital accumulation and productivity growth.
Lockdowns have been effective in curbing COVID–19 infections in Africa but at the expense of economic activities.
The AfDB and IMF note that Africa’s growth performance and outlook since July 2020 has been characterised by, among other factors, capital flight.
GDP per capita is estimated to have contracted by 10 percent in nominal terms in 2020. Because of the pandemic’s lower-than-expected impact on Africa, the recession in 2020 was not as severe as the Bank projected earlier.