Economic activity in Sub-Saharan Africa region is expected to contract by 2.8 percent in 2020, according to a regional outlook by the World Bank.
The Bank said that the contraction of the region, which is yet to see the COVID-19 pandemic peak, is the deepest on record.
The Bank predicts that the economy of Nigeria, the continent’s largest one, will reduce by about 3.2 percent due to the collapse in oil prices. Nigeria is heavily reliant on sales of crude oil for close to 90 percent of foreign exchange earnings and more than half of government revenue.
The figure given by the World Bank is more optimistic than one given by Nigerian government officials last month of 3.4 percent. Finance Minister Zainab Ahmed said that the economy could contract by as much as 8.9 percent this year in a worst-case scenario without any form of economic stimulus.
“Economic activity among commodity importing economies is anticipated to shrink this year despite lower oil prices, as international travel restrictions weigh on tourist visits,” the World Bank said.
Meanwhile, Africa’s second largest economy, South Africa, is expected to reduce by 7.1 percent. This is attributed to the strict measures imposed by the government to contain the spread of the deadly virus. South Africa is the worst affected country by COVID-19 on the continent.
At the start of this month, The South African government began efforts to revive the battered economy by relaxing a number of measures. The government partially lifted the COVID-19 lockdown, allowing people to go to work, worship or shopping and mines and factories to run at full capacity.
“Industrial commodity exporters’ GDP is similarly anticipated to contract in 2020 as domestic disruptions are compounded by low prices for oil and metals,” the outlook said.
The South African Reserve Bank estimated that the economy, which is also grappling with a power crisis, could contract by 7 percent.
Agricultural commodity exporters are also expected to experience a collapse in economic activity this year as foreign direct investment and tighter financial conditions delay investment, the Bank added.
The World Bank said that a combination of factors arising from the COVID-19 pandemic has resulted in deep recessions in majority of global economies.
The effects of the pandemic have been felt as much economically as they have been on health and social sectors.
The United Nations Economic Commission for Africa (UNECA) projected that the pandemic could push 29 million people into extreme poverty across Africa.
According to the ECA, the containment measures have already cost the region about $69 billion per month and are expected to have a negative impact on the implementation of the Sustainable Development Goals (SDGs) in the region.
