Pandemic may cause sub-Saharan Africa’s 1st recession in 25 years

Agence France-Presse

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Pandemic may cause sub-Saharan Africa’s 1st recession in 25 years


(UPDATED) 'African countries are likely to be hit particularly hard' by the coronavirus pandemic, says Hafez Ghanem, the World Bank's vice president for Africa

JOHANNESBURG, South Africa (UPDATED) – The World Bank warned on Thursday, April 9, sub-Saharan Africa could slip into its first recession in 25 years because of the coronavirus and called for debt relief to ease the impact on the the world’s most impoverished region.

The virus has arrived late in Africa compared to elsewhere but is spreading rapidly in some countries, and the continent is highly vulnerable to declining trade and tourism and falling prices for oil and minerals.

“We project that economic growth in sub-Saharan Africa will decline from 2.4% in 2019 to -2.1% to -5.1% in 2020,” the World Bank said in an assessment.

The coronavirus could cost the region between $37 billion and $79 billion in output losses for 2020, said the twice-yearly update.

“The COVID-19 pandemic is testing the limits of societies and economies across the world, and African countries are likely to be hit particularly hard,” said Hafez Ghanem, the World Bank’s vice president for Africa.

The impact will vary between countries, however, with real gross domestic product (GDP) forecast to “fall sharply” in the region’s 3 largest economies – Nigeria, South Africa, and Angola – because of “persistently weak growth and investment” and declining commodity prices. 

The continent’s most industrialized country, South Africa, slipped into recession in the final quarter of 2019 and has posted its weakest growth rates ever in the past 5 years – never exceeding 1.3% and in some years falling below 1%.

“COVID[-19] is compounding already existing difficulties,” said Albert Zeufack, the World Bank’s chief economist for Africa, during a briefing streamed from Washington.

“That is dragging down growth…and therefore significantly reducing average growth across Africa.”


Zeufack predicted GDP shrinkage this year of between 6% and 7% in the region’s 3 economic superpowers.

The collapse in oil prices “is catastrophic” for public finances in the continent’s leading crude producers, Nigeria and Angola, he added.

“We are living in unprecedented times,” Zeufack said. “The world has not seen this since World War II.”

“This is going to be the deepest recession globally but also affecting Africa, and the reason why this is so serious is because it is not just a health crisis, it’s a health crisis that’s going to be combined with an economic crisis and potentially a food crisis in African countries.”

While governments are taking varying steps to deal with the economic fallout of the pandemic, the bank said African countries will inevitably require debt relief. (READ: African Development Bank creates $10-billion fund for virus aid)

“There is no doubt there will be need for some sort of debt relief from bilateral creditors to secure the resources urgently needed to fight COVID-19 and to help manage or maintain macroeconomic stability in the region,” said Cesar Calderon, lead author of the report.

The bank said it will be giving out up to $160 billion in financial support over the next 15 months to help countries protect the vulnerable, support businesses, and shore up economic recovery.

Looming food crisis

The pandemic will also worsen food shortages on a continent already grappling with drought, locust invasions, conflict, and violence, the World Bank said.

It predicted the region’s agricultural production to contract by up to 7% and food imports could decline by as much as 25% due to higher transaction costs and lower demand.

Domestic currencies are already losing value while prices of staple foods are rising in many parts of the continent. 

The United Nations World Food Programme said on Wednesday, April 8, that since December, hundreds of thousands more people had already slipped into the severely hungry category in Zimbabwe, where more than half of the population faces hunger.

“We can close borders to limit population from moving but trade needs to remain open,” within and between African countries, cautioned Zeufack.

The World Bank’s report was released on the back of an African Union (AU) study revealing that about 20 million jobs on the continent are at risk as economies shrink due to the coronavirus.

The AU study, published on Monday, April 6, also called for the cancellation of total African external debt, which is valued at $236 billion.

But the World Bank’s Zeufack pointed out that there could still be a silver lining to the crisis.

“This could actually be an opportunity to strengthen our regional value chains,” said Zeufack. “To produce some of the manufacturing goods that are so needed by African economies.” –

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