One thing is certain about COVID-19. We don’t know how long it will last, how many will be affected, and what the impact will be on society and the economy. Even the medical science questions – such as vaccines, mutations, explanations for variations in death and infection rates – remain currently unresolved, and approaching epidemiological uncertainty radically increases again. One way of observing this epistemic dissonance is to see the very different policy responses taken in dealing with the pandemic, where some countries have imposed radical shutdowns to halt infection rates, and yet others have emphasized a liberal approach to aim at herd immunity.
The impact of COVID-19 on African countries has been shrouded in even greater uncertainty. The initial numbers all pointed to a surprisingly low spread of the pandemic on the continent, but the lingering doubt was that low testing and lack of reporting through administrative systems has meant that infection rates have been, and continue to be, underreported.
Since many countries, in particular Nigeria, have basic problems of getting the total population number right, there are issues with demographics. Moreover, universal systems of birth and death registration are incomplete, so that the prevalent numbers rely on estimates and guesses similar to statistics on the prevalence of malaria or HIV/Aids: they are best-guesses based on some observed cases, rather than a complete count of known cases.
In short, the error margins in the reported numbers are large. Potentially very large. My best guess here is that the error margins are not large enough to totally upend the general perception: namely that COVID-19 has thus far impacted the African continent to a much smaller extent than, for instance, the European continent. This may in part be due to climactic factors (relatively warm), demographic factors (relatively young populations) and infrastructural/mobility factors (relatively less long-distance commuting and air travel). That being said, the real downside of the lack of a basic reporting system means that the response systems will be hampered when dealing with outbreaks. Successful intervention to halt infections in some European countries has been helped by effective tracing and mapping of infections quickly and effectively.
There is thus great uncertainty surrounding the direct impact of the pandemic in Africa and beyond. But there is certainty regarding one simple fact thus far. The indirect economic impact of the COVID-19 has been very large on the global economy. This is true also for those countries that have been less directly impacted. The economic impact has of course been local as well, during specific lockdowns, but the greatest part of the economic downturn has been caused by a reduction in global demand and production.
In general, the fortunes of African economies have always been, in an increasing trend, dependent on the world economy. According to the best available estimates, the economies of West Africa were already well integrated into the world economy in the late 19th century, with the share of the international economy in the domestic economy being about 10-15 percent in the middle of the 19th century, and perhaps increasing to 20 percent in the beginning of the 20th century. At the end of colonial rule, openness (export+imports as a share of GDP) had increased to 50 percent. This share remained stable for 4-5 decades but was measured as high as between 70 and 80 percent at the beginning of the financial crisis in the late 2000s. Thus, the typical African economy is very dependent on world markets, and the growth during the ‘Africa rising’ period since the early 2000s was associated with a markedly increased reliance on international markets.
One general lesson from the so-called ‘lost decades’, referring to the 1980s and 1990s, in African economic development was that the world economic crisis, such as the one experienced in the late 1970s, hit all economies hard, but it hit African economies relatively harder, and the economic downturn lasted much longer on the African continent. If anything, external dependence has increased since then. While the industrialisation attempts from the 1960s and 1970s were largely reversed in the 1980s, there is some evidence of pockets of diversification. Part of this diversification is the growing importance of the tourism industry and exports of air-freighted flowers and vegetables.
The economic downturn since the 2009 financial crisis did slow down growth in some African economies as well, but growth remained strong in pockets due to continued demand for natural resources, particularly from Asia. The question is whether such a lifeline is available this time. European economies are muddling through the COVID-19-caused economic decline, relying on a wide range of stimulus packages. Most African states rely on exports and royalty payments on natural resource extraction for revenue, and therefore such stimulus is not likely to be available.
In the aftermath of the economic shocks in the 1970s African economies turned to the IMF and the World Bank for loans. The loans were made conditional on liberalization policy packages that were supposed to spur growth. Growth did return to the continent in the 1990s, but only when external markets and demand recovered. The big question is whether such external assistance will be available this time, and on what conditions it will be made available.