Coronavirus_Africa

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As the global pandemic spreads, Africa faces its own set of challenges聽

The effects of the coronavirus (COVID-19) pandemic are proving devastating for many countries around the world, but Africa is facing very specific economic and healthcare constraints.聽

In mid-June, the number of COVID-19 cases in Africa exceeded 240,000, with fears that this figure was聽. So far, the areas hardest hit by the virus have been in North Africa and the country of South Africa but it is unclear why this is the case, and whether it will remain so.聽

Experts have predicted Sub-Saharan Africa will experience its first recession in 25 years

Many of the challenges faced by African nations are the same as those faced by other countries. After all, saving lives while preventing devastating damage to the economy in light of measures intended to limit the spread of the virus, such as full lockdown, is something a great number of the world鈥檚 leaders are grappling with.聽

But there are major differences to consider; the main challenge may be the same, but the context is very different, even when comparing Africa with other emerging economies.聽

Healthcare challenges

Despite recent economic growth, a large proportion of Africa鈥檚 population still lives in poverty and healthcare systems are generally ill-equipped and easily overwhelmed, particularly as many of them are already fighting other serious illnesses, including HIV, Ebola, malaria and tuberculosis.聽

Worryingly, in some countries, a portion of the population relies on informal healthcare providers, most of which are incapable of responding to a pandemic. Poverty levels also mean more people are suffering from comorbidity factors with COVID19, including diabetes and high blood pressure.聽

Healthcare systems are generally ill-equipped and easily overwhelmed

Through all this, developing economies are competing with the developed world for essential medical resources, such as ventilators and personal protective equipment (PPE). Mass testing and case-tracing, which many argue is necessary to ease lockdowns, is also challenging in some African countries due to low-testing capacity.

Economic challenges聽

In addition to the numerous health challenges, Africa also faces serious economic hurdles.聽

The weight of the聽聽is a major concern. A total of 42 per cent of African citizens rely on the informal sector for their daily income and this has been squeezed during the pandemic, owing to limited working hours and restrictions on movement.聽

On top of which some of the sectors that have boosted growth in recent years, including tourism and exports, have been heavily impacted by the pandemic, with new trade agreements between Africa and Europe聽.听听

A total of 42 per cent of African citizens rely on the informal sector for their daily income

Meanwhile, rising unemployment in developed countries has left many African migrants out of work and unable to send as much money to their families at home. In 2020, the amount of money being transferred to Sub-Saharan Africa by migrants in the developed world is expected to drop by more than 20 per cent.聽

Experts from the World Bank predict聽the region will experience its first recession in 25 years. One of the knock-on effects of this will be聽people with very low incomes significantly reducing聽their consumption, including of agricultural products聽鈥撀爋ften produced by other low-income workers. As a result, the estimated economic and social impacts are immense, with the situation expected to cost the region聽聽in 2020 alone.

Resilience, experience and innovation

Despite all these constraints, the story of coronavirus in Africa is, so far, a positive and hopeful one, especially when we compare it to the current situation on the聽American continent. The reasons for this positive response are not obvious. But unlike many other parts of the world, Africa frequently faces public health challenges and has learnt how to deal with them. Extreme economic distress, as well as extreme political uncertainty, are also not unprecedented situations.

The fact that African countries were the last to be hit also bought them some time to prepare, with most nations taking the threat very seriously. Mozambique, for example, started preparing for COVID-19 in January, as soon as the World Health Organization launched the alert. Over the years they have built up extensive experience in health screening and contact tracing. Their health systems may be limited but they are also resilient.

Resource constraints can also foster creativity and innovation to help overcome these challenges. Ghana has been using an innovative technique that consists of 鈥減ool testing鈥, in which multiple blood samples are tested and then followed up as individual tests only if a positive result is found.聽Meanwhile, Senegal 鈥 in collaboration with a UK-based company 鈥 is developing a COVID-19 testing kit that costs about $1 per patient.聽

Africa frequently faces public health challenges and has learnt how to deal with them

From an economic standpoint, most African countries have implemented stimulus packages aimed at encouraging low-income households to continue to consume. Esther Duflo, the recent Nobel laureate in economics, has argued that this can only be assured through聽. Although businesses in developing economies are certainly struggling to survive, the measures that have been used across the developed world in order to protect jobs would be insufficient in developing countries given the weight of the informal economy.

Taking all of this into account, while there are challenges ahead, many African nations are well-versed in resilience and strength in the face of extreme adversity. With that in mind, there is good reason to be hopeful that the continent will weather this storm as well, or perhaps even better than more developed parts of the world.

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Main image:聽nattrass / E+ via Getty Images.

Claudia_Custodio

About Cla虂udia Custo虂dio

Professor of Finance
Cla虂udia Custo虂dio is Professor of Finance at 911今日黑料 Business School and a research associate for the Centre for Economic Policy Research, the European Corporate Governance Institute,鈥痑nd the鈥疐inancial Markets Group鈥痑t the London School of Economics.

Prior to joining 911今日黑料 London, she worked at Nova School of Business & Economics in Lisbon and Arizona State University. Professor Custo虂dio鈥檚 research interests are mainly in corporate finance, including corporate diversification, mergers and acquisitions, capital structure and risk management.

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