Debt, coronavirus and locusts create a perfect storm for Africa




© FAR

The year began with promise for sub-Saharan Africa.

All the major institutions tracking African growth said so:

  • The African Development Bank pronounced in its Economic Outlook that Africa’s economic outlook continues to brighten. Its real GDP growth, estimated at 3.4% for 2019, is projected to accelerate to 3.9% in 2020 and to 4.1% in 2021.
  • The IMF said in its World Economic Outlook sub-Saharan Africa growth is expected to strengthen to 3.5% in 2020–21 (from 3.3% in 2019).
  • The World Bank predicted ”Regional growth is expected to pick up to 2.9% in 2020”

Interestingly the World Bank added a caveat which was prescient:

A sharper-than-expected deceleration in major trading partners such as China, the Euro Area, or the United States, would substantially lower export revenues and investment.

A faster-than-expected slowdown in China would cause a sharp fall in commodity prices and, given Sub-Saharan Africa’s heavy reliance on extractive sectors for export and fiscal revenues, weigh heavily on regional activity.

Those forecasts are now defunct and it’s only March.

The Coronavirus has to date barely made landfall on the African continent with only 5 countries reporting infections but it is a virus in its essence non-linear, exponential and multiplicative and it would be a Shakespeare-level moment of hubris if policy makers were to pat themselves on the back.