Africa’s post-COVID-19 recovery: Assessing areas of growth, opportunities and challenges

Vendors sell fresh produce on stalls at Garki Model Market in Abuja, Nigeria, on Tuesday, Sept. 1, 2020. By the end of the year, as many as 12,000 people globally could die a day from hunger linked to Covid-19, potentially more than those perishing from the virus itself, charity Oxfam International estimates. Photographer: KC Nwakalor/Bloomberg via Getty Images

Africa will rebound in its post-pandemic economic recovery and rediscover its pre-pandemic growth levels as it shrugs off the slump caused by the coronavirus, according to a continental socioeconomic commentator.

Dr. Aslam Dasoo, co-convener of the Progressive Health Forum, however, said the rebound, though uneven, will taper off with time and the continent must take advantage of the coming windfalls and build their capacities for posterity.

FILE PHOTO: Traders work on the floor of the Zimbabwe Stock Exchange in Harare, Zimbabwe. /Getty Images

“We are optimistic that governments and private sector enterprises will begin to see the merits of taking the learnings that the pandemic has given and capitalizing on them through greater collaboration, greater synergy, focus on investment on growth and social protection,” Dasoo said.

According to Dasoo, Africa has found itself “quite far back” in terms of economic progress that had been occurring before the onset of the pandemic.

Africa experienced a sharp economic downturn and slid into recession in 2020 with several key sectors, such as agriculture, transport (particularly aviation), tourism, mining, oil and gas, and manufacturing, being adversely affected.

This, in turn, resulted in financial losses worth billions of dollars, business closures and job losses in addition to millions of people being pushed into extreme poverty.

Dasoo noted that while the effects of the pandemic on African economies were devastating and uneven, more developed economies, like South Africa and Kenya, that implemented tough measures, like lockdowns, early on were hardest hit.

The aviation industry was one of the hardest hit economic sectors by the coronavirus pandemic. /CFP

“Even countries with economies of deep obsolescence, which means they can take shocks, will eventually feel the consequences of that (lockdowns).”

“The pandemic represents, not only the worst health calamity in 100 years, it also represents the biggest shock to the global economy in 100 years. Africa, whose fragile economies get swayed by the global winds of trade, are buffeted and often left at a disadvantage in these ‘trade winds’, bore the brunt of that shutdown.”

Dasoo said the continent’s recovery will be driven by gains in those aforementioned sectors that were hardest hit, including the health sector, which should be seen as an area of growth.

“What the pandemic delivered a very acute lesson on is the need to make sure that countries have healthcare resilience, capacity and capability. It exposed the very uneven presence of robust health systems, even here in South Africa, which has, probably, the most developed healthcare system on the continent.”

African governments were also urged to take advantage of the Africa Continental Free Trade Area (AfCFTA) in order to rapidly accelerate intra-African trade as the bedrock of the continent’s future economic development.

According to the African Union (AU), the AfCFTA will offer Africa an opportunity to reconfigure its supply chains, reduce reliance on other regions and speed up the establishment of regional value chains which will boost intra-Africa trade.

“While we would still be open to the world and integrate with the global economy, there is such a lack of intra-African economic integration that it must be seen as a huge opportunity that this pandemic has made very stark.”

Two key factors, Dasoo said, will, however, affect the recovery of the continent’s economies: the reopening of global supply chains and rate of inflation.

The spectre of inflation has been identified as one of the factors affecting Africa’s economic recovery. /Getty Images

“If you have consumer demand rising, prices will rise commensurate with that. But if the supply side is still lacking, either through supply chain issues and so on, inflation is going to emerge, and we are seeing this all over.”

“Inflation in our economies will have a devastating impact. In South Africa, we have noticed a gradual ticking up of inflation which has resulted in tightening monetary policy; interest rates have gone up. This will put a brake on growth.”

One other serious challenge that the continent will have to tackle in its post-pandemic economic recovery is the proliferation of the contraband market which will deprive governments of significant amounts of revenue and crowd out legal businesses.

“That (growth of black markets) has its own problems, post-pandemic, because you have a huge criminal enterprise operating in legitimate business space,” Dasoo noted.

“You cannot shut down legitimate commerce and expect everything to stop. People have requirements and there will be someone willing to meet those requirements, even if it is illegal, and that is what we saw, quite clearly.”

Dasoo pointed out the example of South Africa, reported to be one of the world’s biggest markets for illicit cigarettes, which saw its black market flourish in 2020 despite a total ban on the sale of the commodity for five months.

Local media reported an explosive growth in the cigarette black market as smokers sought ways to source the product.

South Africa is reported to have one of the largest black markets in cigarettes. /AFP

In August last year, British American Tobacco (BAT) said illegal cigarettes made up more than half of South Africa’s market and local authorities would miss their targets for duties from cigarettes and related products in the year through March this year.

However, even with these challenges, Dasoo said there are more reasons for optimism with the emergence of positive trends which will also drive the recovery process.

One of those is digitization, which will offer Africa a “quick jump” towards greater capability and quick wins.

Kenya has established itself as a powerhouse in mobile money transfers and is witnessing a behavioural shift leaning more towards such transactions spurring the country’s digital economy. Several other African countries are also moving rapidly towards developing their digital capabilities.

Another one is an increase in technology transfer, one example being the recent announcement that six African countries will receive technology from the global mRNA technology transfer hub needed to produce mRNA vaccines on the continent.

This will strengthen the continent’s COVID-19 response, spur more research and development, and play a part in growing the health sector which was previously identified as an area of focus in the recovery.

For Africa to effectively recover and buttress the gains from these processes, the overarching factor, Dasoo said, that will blend them lies in the quality of the continent’s leadership.

“Whatever is latent here may get accelerated. Whatever is possible here, on our continent, may just find the impetus if there’s leadership that can drive it to take us in leaps and bounds in terms of development.”