Signage hangs at the International Monetary Fund (IMF) headquarters in Washington, D.C., U.S., on Tuesday, April 14, 2020. In its first World Economic Outlook report since the spread of the coronavirus and subsequent freezing of major economies, the IMF estimated today that global gross domestic product will shrink 3% this year. Photographer: Andrew Harrer/Bloomberg via Getty Images
The lingering effects of the COVID-19 virus remain to be seen in full as the world grapples with the third wave of infection.[1] A little more than a year after COVID-19 was declared a pandemic by the World Health Organization, however, Sub-Saharan African countries have developed a level of expertise in not only protective health measures, but also in fiscal policies that allow them to curb and recover from the hard-hitting economic depression they experienced at the start of 2020.
While individual nations have experienced their unique successes and challenges, a recent World Bank report stated that overall, Sub-Saharan Africa is projected to experience an economic gross domestic product growth of 2.3% to 3.4% in 2021, sharply contrasting to its 2% decline in 2020.[2] The significance of this feat can be found in the fact that such growth is attributed to economies heavily reliant on tourism and trade; by contrast, global economic powerhouses like Germany and France are predicted to grow on a similar scale of 3.6% and 4.2%.[3]
In a virtual briefing with Albert Zeufak, the World Bank’s Chief Economist for Africa, multiple reasons were cited to explain the successful recovery, the first being stronger agricultural growth and a recovery in commodity and consumer prices that was faster than expected. In splitting Sub-Saharan African economies into three – the largest (i.e. Nigeria, South Africa, and Angola), diversified (i.e. Kenya), and mining economies (i.e. Botswana) – an analysis of the International Monetary Fund’s (IMF) Regional Economic Outlook for Sub-Saharan Africa can lend insight into Zeufak’s claim.The average consumer price percent change in South Africa dropped from 4.1 to 3.3 in 2020 and quickly recovered to 3.9; in Kenya, from 5.2 to 5.3 in 2020 and a return to 5.0; and in Botswana, from 2.8 to 1.6 and a return to 3.0.[4]
Zeufak further attributes the success of Sub-Saharan African economies in the face of COVID-19 to a “clear rebound in consumption and investment confidence returning to countries that have managed to contain the virus.”[5] Although it is true that the third and current viral wave has boiled down to infection numbers 41% as high as the previous wave, weighing on the World Bank and IMF’s growth projections, steadily increasing vaccination coverage rates spearheaded by donations and supranational alliances such as GAVI, a supranational health partnership for vaccine distribution, have served as a plus-point for these nations.[6] The unique commodity outputs of different Sub-Saharan African nations have also been attracting investors around the world; diversified economies and rising mining economies are looking more appealing as the rest of the world also suffers from the economic stress due to the virus. Diversified economies like the Ivory Coast and Zambia (whose exports number around 700) have enjoyed a total investment increase of 1% and 0.6% respectively, and mining economies like Guinea have experienced an increase of 3%.[4] While the numbers may not seem incredibly set apart from the trends in previous years, the mere fact that these countries experienced an increase and not a decrease in investment during a pandemic is impressive.
Debt suspensions and loans also happen to be at the forefront of the predicted 3.4% GDP growth for Sub-Saharan Africa. Several African countries have signed up to be a part of a debt relief plan announced near the end of 2020. Led by the world’s top 20 economies, the task force called Group of 20 (G20), officiated a debt suspension plan that entailed the freezing of all debts until mid-2021.[7] In addition, G20 called upon private creditors to take part in implementing a comparable initiative, their goal being to defer $12 billion in extra liquidity. While they experienced little to no luck on that end, the G20 Initiative still managed to assist more than half of the countries on their list, generating around $5.7 in debt payments. Additionally, supranational organizations like the IMF have been coming to provisional agreements on programs and packages that could support the COVID-19-induced crises.[3] Considering that debts have only been temporarily suspended, it is plausible that come mid-2021, some indebted countries may return back to their initial position with the loaner state. It is also reasonable, however, to assume that with many SubSaharan African states finding success in their economies, the financial pressure they face may wane slightly.
The economic rebound of Sub-Saharan Africa portrays an economic triumph for the continent in global fiscal context. The World Bank projects a 4% GDP growth rate by 2022; this means that from 2020 to 2022, the years the COVID-19 virus was and is most active, the Sub-Saharan African region will have experienced a percent change of 2%.[3] The world’s largest economies pale in comparison: the United States will have experienced a 0% change and the Eurozone, a negative 2.8% change in those two years.[11],[12] It certainly is a strange twist in the typical order of affairs, where the ex-imperial developed nations of the West dominated the global economy and free trade markets in every way possible; the irony of it all exists in the fact that within a pandemic, Sub-Saharan Africa experienced the greatest increase in real GDP growth in the past two decades while the Eurozone and United States experienced one of the lowest changes in real GDP growth in that same time period. Perhaps the potential for a future in which the developing, ex-colonial countries of Sub-Saharan Africa match the economic prowess of the developed nations of the West exists. And perhaps, then, the return of these countries to their pre-colonial glory is feasible after all.
References
[1]The Guardian. “Covid Third Wave May Overrun Africa’s Healthcare, Warns WHO,” March 26, 2021. http://www.theguardian.com/global-development/2021/mar/26/covid-third-wave-threatens-african-healthcare-who.
[2]Reuters. “Sub-Saharan Africa Economies to Grow 2.3%-3.4% This Year – World Bank,” March 31, 2021. https://www.reuters.com/world/middle-east/sub-saharan-africa-economies-grow-23-34-this-year-world-bank-2021-03-31/.
[3]IMF. “World Economic Outlook, April 2021: Managing Divergent Recoveries.” Accessed April 25, 2021. https://www.imf.org/en/Publications/WEO/Issues/2021/03/23/world-economic-outlook-april-2021.
[4]IMF. “Regional Economic Outlook for Sub-Saharan Africa.” Accessed April 25, 2021. https://www.imf.org/en/Publications/REO/SSA/Issues/2020/10/22/regional-economic-outlook-sub-saharan-africa.
[5]“Bloomberg – Sub-Saharan Africa Set for Uneven Rebound, World Bank Says” Accessed April 25, 2021.https://www.bloomberg.com/tosv2.html?vid=&uuid=2 f8277f0-a60c-11eb-87c7-8f0662665b7e&url=L25ld3MvYXJ0aWNsZXMvMjAyMS0wMy0zMS9zdWItc2FoYXJhbi1hZnJpY2Etc2V0LWZvci11bmV2ZW4tcmVib3VuZC13b3JsZC1iYW5rLXNheXM=.
[6] “Covid-19 Africa: Who Is Getting the Vaccine?” BBC News, March 19, 2021, sec. Reality Check. https://www.bbc.com/news/56100076.
[7]Shalal, Davide Barbuscia, Andrea. “G20 to Extend Debt Relief to Mid-2021, Pushes Private Sector to Help.” Reuters, November 22, 2020. https://www.reuters.com/article/us-g20-saudi-debt-idUSKBN2820NJ.
[8]IMF. “IMF Loan to Support Economic Recovery in Kenya.” Accessed April 25, 2021. https://www.imf.org/en/News/Articles/2021/03/17/na031721-imf-loan-to-support-economic-recovery-in-kenya.
[9]Fairless, Tom. “As Covid-19 Vaccines Lag, Europe Keeps Cheap Money Flowing.” Wall Street Journal, April 22, 2021, sec. Economy. https://www.wsj.com/articles/ecb-expected-to-keep-policy-unchanged-split-on-what-to-do-next-11619066162.