With the World Bank predicting that the ongoing economic impact of the coronavirus could push Sub-Saharan Africa into its first recession in over 25 years, international charity organisation Oxfam is urging rich countries to step in and help poorer nations prevent catastrophic poverty levels.
According to separate reports released by the organisations on Thursday, countries in Africa need to act swiftly to cushion their economies against the economic and humanitarian shocks of the deadly virus.
This comes as global deaths from the virus have exceeded 88 000 in just under six months.
The World Bank, in its bi-annual Africa’s Pulse report, said that growth in sub-Saharan Africa had been “significantly impacted” by the outbreak.
The World Bank states that growth in sub-Saharan Africa, the region, could fall sharply from 2.4% in 2019 to -2.1 to -5.1% in 2020, sending the county region into recession, the first in over 25 years.
Countries in the region would be unevenly affected by the pandemic, however. The GDP of three largest regional economies, South Africa, Angola and Nigeria, Angola are projected to “fall sharply” as a result of persistently weak growth and investment.
Although governments in the continent have acted quickly to attempt to curb the spread of Covid-19, the crisis has the potential to spark a food security crisis, with agricultural production potentially contracting by between -2.6% to -7% if there are trade blockages.
“The immediate measures are important but there is no doubt there will be need for some sort of debt relief from bilateral creditors to secure the resources urgently needed to fight Covid-19 and to help manage or maintain macroeconomic stability in the region,” said Cesar Calderon, Lead Economist and Lead author of the report.
Food imports would decline substantially, as much as 25% or as little as 13%, due to a combination of higher transaction costs and reduced domestic demand.
Half a billion in poverty
In its ‘Economic Rescue Plan For All’, Oxfam outlined a battery of measures that could be adopted in order to cushion poorer nations from the economic effects of the pandemic.
The charity said that at least US$2.5 trillion must be mobilised to tackle the pandemic and prevent global economic collapse. Unlike ordinary assistance, the plan suggests prioritising helping people directly, giving cash grants to those in need and the immediate suspension of the debt payments of poor countries.
This should be combined with a one-off economic stimulus by the IMF and an increase in aid and taxes, according to the organisation.
Oxfam further predicts that the economic crisis caused by coronavirus “could push over half a billion people into poverty” unless urgent action is taken.