Hard lessons and decisive action: COVID-19 and Africa

Bongiwe Mbunge, Partner at Mazars

Past pandemics have left African countries better-prepared for COVID-19, but more needs to be done to mitigate its economic consequences, says Mazars

African countries have so far been particularly resilient in their responses to the global COVID-19 pandemic, with many countries having taken decisive steps to contain the spread of the pandemic and keep their citizens safe very early on in the pandemic. However, the economic consequences of lockdowns, social distancing and other such measures are increasingly worrying, with more needing to be done to mitigate the impact of the pandemic on African countries’ economies and lower income and middle class citizens.

This is according to Bongiwe Mbunge, Partner for Advisory Services at Mazars, discussing COVID-19 issues specific to Africa. Mbunge noted the important role that past pandemics have played in informing many African countries’ responses to the current COVID-19 pandemic. Past outbreaks of the Zika and Ebola viruses in previous years have hit several African countries hard, making governments across the country more attuned to the consequences of pandemics.

“Decisions to close borders and effect lockdown procedures happened very quickly in Africa, as opposed to other regions, perhaps because the continent has seen these types of disasters before. The impact of this pandemic has thus far been far less severe on the populace here. It has also been interesting to see how resources and funds have been made available to support businesses and households in countries like South Africa, Senegal, Morocco and Mauritius through public and private sector cooperation. These measures will be paramount to helping African economies recover over the coming years.”

With that said, there is still a lot of work to be done in responding to the pandemic and rebuilding the economy on the continent, says Mbunge. The International Monetary Fund forecasts that Sub-Saharan Africa’s GDP for 2020 will shrink by 1.6% and that per capita income will drop an average 3.9%[i]. The World Bank has said that COVID-19 is likely to cause the first increase in global poverty since 1998, projecting that as many as 23 million people in the Sub-Saharan region[ii] could be pushed into poverty.

Africa has “…taken good measures to support lower income segments of the population and the informal sector through efforts like solidarity funds, but we are still missing specific measures for the middle class, which is also severely affected. Secondly, while we are still fighting the crisis, it is also important to look towards the future. We believe that there are not enough measures in place to help the impacted business sectors to rebuild themselves in the long-term.”

However, there are opportunities on the horizon for African countries to not only rebuild, but to emerge stronger in the aftermath of the pandemic, notes Mbunge. She indicates that policy makers must be pro-active and need to find the liquidity to relaunch Africa’s economies, and should focus on re-launching local industries where possible.

“International partnerships are going to become even more important in the years to come. We can look at the example of Ethiopia, where many Chinese companies are investing to be closer to their markets and to supply the rest of the world. I believe some interesting countries that have already developed their industries – such as Morocco, Kenya, Egypt and South Africa – can really take advantage of striking new partnerships with China in order to become supply chain hubs for the rest of the world in the future.”

There will also be more opportunities for Africa’s integration into the global value chains for the automotive, aeronautic, textiles and various other industries, on the back of such partnerships. “Africa is dealing well with the health and safety aspect of this pandemic. While there is still much to be done to mitigate the economic aspect, we believe that the continent now has some promising opportunities to grow markets and develop better intercontinental free trade practices,” Mbunge concludes.