COVID-19 in Africa: The Implications for Macroeconomic and Socioeconomic Dimensions
The COVID-19 outbreak began in December 2019 in the Wuhan city of China and has continued to spread globally. As of this writing, 28.2 million cases have been recorded globally with 910,000 deaths. Aside the health impact, the pandemic has led to an unprecedented disruption in economic activities, initiating a sudden demand, supply, and financial shock. The mitigation strategies put in place by governments across the world to curb the virus as well as the uncertainty associated with the pandemic has led to a reduction in the consumption of non-essential commodities. Meanwhile, disruptions to global supply chains in a closely connected world as well as the reduced demand have necessitated a slowdown in production. Furthermore, investors have become more risk averse with the prices of risk assets falling to levels experienced in the 2007-20008 global financial crisis. The paper examines the early impact of the pandemic on Africa along economic and social dimensions. However, prevailing vulnerabilities and strengths that are influencing Africa’s response to the pandemic such as low growth and constrained fiscal space, poor social infrastructure and services as well as the continent’s previous experience in handling pandemics and epidemics, and the rise of non-state actors are analyzed to provide context. Furthermore, the mitigation strategies put in place to curb the virus and the policy responses deployed to alleviate the economic impact are examined in great detail. For countries with available data, the paper finds that the majority of the continent (94%) adopted partial work from home policies for only some sectors or categories of workers, schools in 98% of the continent were closed with some countries reverting to partial school closure for only some categories such as middle school or universities, and 86% of the continent enforced partial stay at home requirements. On fiscal policies, interventions to vulnerable population, affected businesses and sectors, and the health sector were implemented in 89%, 92%, and 90% of the continent respectively. On monetary policies, 90% of central banks embarked on interest rate cuts, while 38% cut the reserve requirement ratio for commercial banks and 26% provided direct liquidity. The remainder of the paper is structured as follows. Section 2 investigates the pre-existing weaknesses and strengths that are influencing the continent’s outcomes. The mitigation strategies and policy responses deployed by African governments are analysed in section 3. In section 4, the impact of the pandemic and mitigation strategies on the macroeconomy and social service delivery are discussed; section 5 offers policy recommendations to state and non-state actors while section 6 concludes.