WB: Africa must focus on steps that save livelihoods

Dar es Salaam. While countries across Africa - including Tanzania - are focusing on healthcare measures to try and save lives, they also need to protect livelihoods through taking right steps that will ensure continuity of economic activities, the World Bank has advised.

World Bank Africa Chief Economist Albert Zeufack said this when discussing the latest findings of the Africa’s Pulse Report amid coronavirus pandemic predicted to drive sub-Sharan countries towards first recession in 25 years.

The Pulse authors recommend that African policymakers should focus on saving lives and protecting livelihoods by focusing on strengthening health systems and taking quick actions to minimize disruptions in food supply chains.

They also recommend implementing social protection programmes, including cash transfers, food distribution and fee waivers, to support citizens, especially those working in the informal sector.

He said growth in Sub-Saharan Africa has been significantly impacted by the ongoing coronavirus outbreak and is forecast to fall sharply from 2.4 percent in 2019 to -2.1 to -5.1 percent in 2020.

“At this point in time, African countries that have the means need to provide wage subsidies and help poor households with cash transfers, food distribution as well as work to support the private sector avoid layoffs,” he said.

He noted that the region also needs to delay payment of taxes, cut basic service fees like electricity and mobile money transfer charges in a bid to allow activities continue.

According to him, while Covid-19 arrived late in the continent, it is massively impacting on economic growth and welfare which could drive the standard of living to below or just about the poverty line.

“Agriculture production is contracting between 2.6 and 7 percent, the region could be faced with potential food crisis,” he said.

Explaining he said the food input is declining from 13 percent to 25 percent and the crisis could result to welfare loss of 7 percent in 2020 and worst case scenario to 15 percent depending on corporation or not.

Explaining why the impact of Covid-19 could be so negative in Africa, he said there is disruption in value chains and collapse of commodity trade prices while citing an example of mineral and oil prices collapsing.

Further, he noted that financial flows to Africa have declined including Aid remittances, DFL, and tourism.

“Capital flows for African countries including remittances that are channels from Diaspora sent to families for livelihoods because of the pandemic has affected activities globally with at least 6 million employments that are currently in the US part of them being Diaspora,” he said.

He said in policy response, African countries need to create command control teams lead by scientists and technical people to give information.

Meanwhile according to World Bank Vice President for Africa, Mr Hafez Ghanem, they 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.

“We are 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, social safety nets to save livelihoods and help workers who lose jobs, support to small and medium enterprises, and food security,” he said.

The analysis shows that Covid-19 will cost the region between $37 billion and $79 billion in output losses for 2020 due to a combination of effects. They include trade and value chain disruption, which impacts commodity exporters and countries with strong value chain participation; reduced foreign financing flows from remittances, tourism, foreign direct investment, foreign aid, combined with capital flight; and through direct impacts on health systems, and disruptions caused by containment measures and the public response.

While most countries in the region have been affected to different degrees by the pandemic, real gross domestic product growth is projected to fall sharply particularly in the region’s three largest economies including Nigeria, Angola, and South Africa as a result of persistently weak growth and investment. In general, oil exporting-countries will also be hard-hit; while growth is also expected to weaken substantially in the two fastest growing areas that are the West African Economic and Monetary Union and the East African Community due to weak external demand, disruptions to supply chains and domestic production. The tourism sector is expected to contract sharply due to severe disruption to travel.

Several African countries have reacted quickly and decisively to curb the potential influx and spread of the coronavirus, very much in line with international guidelines. However, the report points out several factors that pose challenges to the containment and mitigation measures, in particular the large and densely populated urban informal settlements, poor access to safe water and sanitation facilities, and fragile health systems.