By Jeph Ajobaju, Chief Copy Editor
Lagos, the commercial hub of Nigeria and the fifth largest economy in Africa, remains in coronavirus lockdown for another two weeks from April 13, which may even be extended, underlining fears the country is set to lose big this year.
A study by the African Union (AU) shows the continent’s largest oil producers, Nigeria and Angola, could jointly lose $65 billion oil revenue as weak demand, caused by the spread of the disease, drives price down.
African oil exporters are expected to see their budget deficits double this year while their economies shrink 3 per cent on average, Reuters adds.
The AU study warns that about 20 million jobs are at risk on the continent as its economies are projected to slump this year because of coronavirus.
Tourism alone, the mainstay of countries such as Seychelles and The Gambia, is projected to nose dive 7 per cent and lose 2 million jobs and $50 billion.
So far, Africa accounts for just a fraction of total cases of the disease which has infected more than one million people worldwide, according to a Reuters tally.
But African economies are already facing an impending global economic downturn, plummeting oil and commodity prices and an imploding tourism sector.
Before the onset of the pandemic, continentwide Gross Domestic Product (GDP) growth had been projected by the African Development Bank to reach 3.4 per cent this year.
However, in both scenarios modelled by the AU study – entitled “Impact of the coronavirus on the Africa economy” – GDP will now shrink.
Under what the AU researchers deemed their realistic scenario, Africa’s economy will shrink 0.8 per cent, while the pessimistic scenario said there would be a 1.1 per cent dip.
Exports, imports may drop 35%
Up to 15 per cent for foreign direct investment could disappear.
The impact on employment will be dramatic.
“Nearly 20 million jobs, both in the formal and informal sectors, are threatened with destruction on the continent if the situation continues,” the analysis said.
African governments could lose up to 20 to 30 per cent of their fiscal revenue, estimated at $500 billion in 2019, the study found.
Exports and imports are meanwhile projected to drop at least 35 per cent from 2019 levels, incurring a loss in the value of trade of around $270 billion.
This at a time when the fight against the virus’ spread will lead to an increase in public spending of at least $130 billion.
Tourism takes a hard hit
African tourist destinations will also suffer.
Africa has in recent years been among the fastest growing regions in the world for tourism. But with borders now closed to prevent the spread of the disease and entire airlines grounded, the sector has been almost entirely shut down.
Countries where tourism constitutes a large part of GDP will see their economies contract by an average of 3.3 per cent this year.
However, Africa’s major tourism spots Seychelles, Cape Verde, Mauritius, and Gambia will shrink at least 7 per cent.
“Under the average scenario, the tourism and travel sector in Africa could lose at least $50 billion due to the covid-19 pandemic and at least 2 million direct and indirect jobs,” the AU study said.
Remittances from Africans living abroad – the continent’s largest financial inflow over the past decade – are unlikely to cushion the blow.
“With economic activity in the doldrums in many advanced and emerging market countries, remittances to Africa could experience significant declines,” the analysis found.