Africa during the Pandemic

Africa was among the last continents to be affected by the Covid-19 outbreak. It was also widely seen as the least ready to handle its consequences. However, many governments including Nigeria have responded pro-actively drawing from their experiences in tackling Ebola and other epidemics. The economic consequences are proving far more difficult with the crash in commodity prices, drop in tourism and other projects driving Africa into its first recession in a quarter-century.

The African countries have been so far managing the situation. As Africa is the last continent to be affected by the virus, this remains a developing story so far. Different countries have had different outcomes in dealing with the pandemic. Some of them have done extremely well like South Africa, war torn Congo, Liberia and Senegal. This has been possible due to their previous experience with Ebola. North African/Maghreb countries have done quite poorly compared to other parts. This is especially noticeable in case of Libya, Algeria (has the highest death rate at 12%), Egypt, Morocco (whose COVID 19 related data is unavailable and Tunisia (claims to be over the hump but susceptible to a resurgence).

However, the common challenge that binds all of Africa is the looming economic crisis and the China factor as Beijing is not willing to write off debts as requested by some African states.

Tied to the economic crisis is the external debt factor especially the debt to China. As the Chinese investments/debts in Africa are opaque in nature, the actual volume of it remains a mystery. However, they form a large part of the USD 600 billion debt that Africa has incurred over the years.

Even though few countries have asked for debt forgiveness China has been unwilling to do the same. The inability of Africa to repay the debt means an enormous asset grab by China in the next few years which could prove a challenge for many countries like India, Europe and others who have significant infrastructure projects in many African countries.

Africa’s economy is particularly linked to commodity prices like oil. Over 85% of their exports are oil. Now collapse in global oil prices, slowing down production and decreased demand due to a slump in economic activities has added pressure to the economies of various African states.

Additionally, projects offered on Line of Credit to the African states are also at a standstill for the moment and need a revaluation post pandemic.

The tourism Industry has also taken a bad hit in the continent. Estimated air passage loss of USD 4 billion has been projected.

Remittances are predicted to drop by at least 25% while GDP will take a hit of at least USD 20-100 billion.

However, immense potential exists for India in Africa post pandemic if it continues its bilateral engagements with African nations and also looks beyond buying-selling commodities and engages in sectors like technology, defence and services.

 

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