About 20 million jobs are at risk in Africa as the continent’s economies are projected to shrink this year due to the impact of the coronavirus pandemic, according an African Union (AU) study.
Even though Africa accounts for just a fraction of total cases, African economies are already facing an impending global economic downturn.
Before the onset of the pandemic, continent-wide gross domestic product (GDP) growth had been projected by the African Development Bank to reach 3.4% this year.
However, in both scenarios modeled by the AU study entitled “Impact of the coronavirus on the Africa economy”, GDP will shrink.
Under what the AU researchers deemed their scenario, Africa’s economy will shrink 0.8%, while the pessimistic scenario said there would be a 1.1% dip.
“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% of their fiscal revenue, estimated at 500 billion in 2019, it found.
Exports and imports are meanwhile projected to drop at least 35% 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.
Africa’s oil producers, which have seen the value of their crude exports plunge in past weeks, will be among the worst hit.
Africa has in recent years been among the fastest growing regions in the world for tourism. But with borders now closed to prevent the disease’s spread and entire airlines grounded, the sector has been almost entirely shut down.
“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.
“With economic activity in the doldrums in many advanced and emerging market countries, remittances to Africa could experience significant declines,” the analysis found.