The United Nations (UN) Economic Commission for Africa (ECA) launched the Economic Report on Africa 2021 (ERA2021) on May 15, 2022. The title of the report is Addressing Poverty and Vulnerability in Africa during the COVID-19 Pandemic.
ECA officially launched the report at the Economic Commission for Africa’s annual Conference of Ministers of Finance, Economic Planning and Development (CoM2022) in Dakar, Senegal.
The main aim of the report is to offer an analysis of the reasons and consequences of increased poverty in the African continent after the outbreak and spread of COVID-19.
Also, the report provides readers with perspectives on other phenomena caused by the epidemic. By analyzing the current economic situation in Africa, the report flexibly used a vulnerability–poverty–resilience framework.
Introduction
The report contains six main parts. Initially, the report introduces the structure, methodologies, and relevant concepts. After giving basic information, the report secondly focuses on the economic and social trends of the African continent during COVID-19.
Meanwhile, the report also analyzes policies’ implications in economic and social fields. Thirdly, the report comes to start with its main content.
In this part, the report fully offers the consequences and responses in Africa during COVID-19. Simultaneously, chapter 3 also introduces the logical linkage between pandemic and poverty which is a key base of the following analysis.
Following the link between pandemic and poverty, chapter 4 gives out the nexus of poverty, risk, and vulnerability in the African continent.
By figuring out the joint nexus, readers will be able to be more aware of how to respond to current situations and what are the necessities for a better future.
Afterward, chapter 5 offers a detailed discussion on the improvement of risk management and the embellishment of regional resilience.
To sum up, chapter 6 provides an overview conclusion of the whole report with recommendations on relevant policies. Moreover, to introduce the research methodology used by the report, there comes five main approaches.
They are micro-analysis with the individual or household as the unit of focus, analysis of vulnerability to poverty without estimating probabilities, mainly money-metric analysis, and the use of the international poverty line for comparability across countries.
Besides, the report also mentioned that the use of the inequality is implicit instead of explicit in the analysis
Discussion
What does COVID-19 bring to African Economy?
The outbreak of COVID-19 has brought African countries profound and complex effects in various fields. In addition, all kinds of impacts are not isolated, they interact with each other, and are highly influenced by each other.
In summary, the pandemic has caused a mutual effect on disrupted mobility of people, goods, services, and capital.
From a data point of view, before the outbreak of the epidemic, Africa’s GDP growth was projected to increase moderately, from 3.0% in 2019 to 3.2% in 2020, hopefully, followed by a 3.5% rise in 2021.
However, the outbreak of COVID-19 disrupted this positive trend. The pandemic brought a contraction of 3.2% in 2020 in African GDP.
Although the economy in the continent has started its recovery journey in the year 2021, the performance in the first quarter of 2021 was not positive as planned.
Since the second quarter of 2021, the recovery was slightly losing momentum, with GDP growth projected to rebound to 3.0% in the whole year, which is below the 3.5% growth projected at the start of 2021.
As a macro indicator of the economy, GDP is affected by many aspects. Commodity exporters were among the most affected by the pandemic according to the unstable global supply chain with restrains brought by COVID lockdown policies.
Moreover, the declining oil prices and the declining non-oil commodity prices also made the situation worse for African countries to export and explore currency. Furthermore, almost all African countries have to face rising fiscal deficits and external debt.
How’s African Society affected by COVID-19?
There are many ways to analyze the social impact of the epidemic on African countries, but the health sector is the one that deserves the most attention. African countries have long suffered from an under-served health sector and cannot produce medicines independently.
As a result, African countries do not have sufficient health resources to cope with the epidemic, but also lack the sustainability of development when facing a global health crisis.
On the other hand, the decline in private income during the pandemic is another important reason that ordinary citizens cannot access health services.
Thus, the lack of capacity to pay and the lack of medical resources have caused the health sector of African societies to be severely tested and hit during the pandemic.
Besides health sectors, other social problems have also been magnified during the pandemic. The declining access to education, the increasing gender inequalities, high rates of informal employment, and limited social protection programs are all proofs to show how African society has suffered from COVID-19.
During this difficult time, being aware of typical characteristics of the development in Africa could help to have a more detailed and comprehensive understanding of the situation in African societies.
For example, when talking about the impact of COVID-19 on all aspects of social life, the urbanization process that African countries are experiencing cannot be ignored.
Positively speaking, urbanization has created multiple new demands. Also, modern cities can support new ideas and initiatives. With urbanization, investors can be attracted to help create more competitive, innovative, and efficient markets.
However, the outbreak of COVID-19 has also brought more challenges to cities, especially large cities in many African countries where governance needs to be improved, population density is high and public services are limited.
Conclusion
COVID-19 Has Caused More Multidimensional Poverty in Africa
According to the ECA report, since the early 2000s, most African countries have had strong economic growth, but the pace of poverty reduction has been far slower than in other regions of the world.
However, African countries have been making consistent progress in getting rid of poverty. Unfortunately, COVID-19 has caused the poverty situation to worsen. The pandemic has already pushed 150 million Africans back into poverty.
Considering the concept of multidimensional poverty given by the ECA report, the term refers to not only monetary poverty but also a more multifaceted perspective involving concerns of health, education, and living standards.
Currently, Africa has the highest deprivation in multidimensional poverty, with more than half the population living in multidimensional poverty.
Although currently, some African countries are emerging from COVID lockdown policies, most African countries are facing limited resources when they are planning their recovery strategy.
Therefore, African countries still need more support from international society to accelerate economic recovery during the post-COVID era.
Poverty Reduction in Africa has shown vulnerability during the Pandemic
The vulnerability of Africa’s poverty reduction is not only embodied in how the pandemic has stopped the process of poverty reduction but is also reflected in how those vulnerable groups are affected.
As is already discussed above, children who have to drop out of school without choice, women who are facing growing gender inequality, and elders who are losing jobs can tell how vulnerable groups are having a rough time during the epidemic.
Significantly, the likely long-term effects of the current phenomena may also draw vulnerability in the future. For instance, pulling children out of school will jeopardize their future exit from poverty.
According to ECA’s report, nowadays, Africa has about 58 million people who are extremely vulnerable to falling into poverty because their mean consumption is only 0~10% above the poverty line.
In fact, just a very small drop in consumption could be enough to push them below the line. Such a group makes up most of the population that is newly poor because of the pandemic.
Furthermore, the non-poor but vulnerable group also needs more attention. Numbers of social protection policies linked with productivity gains and decent employment should be operated urgently.
Among this group, young people should get more focus since such policies will directly affect their career lives and living in the coming years.
Recommendations
The Recovery Approach should take a Long-term View
The recovery approach taken by African countries in the post-COVID era should have a long-term view. To prepare better for the next global challenge, Africa’s economic growth should focus more on sustainable ways.
Meanwhile, African countries should pay attention to developing their national crisis response capacity during the economic recovery.
For example, by developing local pharmaceutical enterprises, African countries can increase their capacity to produce their own medicines and create more jobs, while training relevant personnel to strengthen the service capacity of the health sector.
According to the report, centralized procurement of medicines is expected to create about 16 million jobs while upgrading the skills of young people in the workforce.
Therefore, increased pharmaceutical capacity will not only help African countries seize their own huge pharmaceutical markets but also help them better cope with health crises in the future.
Policymakers should make full use of Africa’s Integration Potential
The integration of the continent’s markets will help strengthen the continent’s internal economic recovery in the post-COVID-19 era.
At present, the supply chain and logistics of the entire international community have not been fully restored due to global geopolitical issues and different policies of various countries on the epidemic.
Therefore, it is particularly important to strengthen the flow of trade, people, and goods within the African continent. Now is the time to leverage the role of the Continental Free Trade Agreement (CFTA) to enhance the overall competitiveness of African countries in the global value chain through the creation of a unified African market.
Meanwhile, under the protection of the Rules of Origin, African countries should increase the processing of raw materials, and upgrade the value of products.
Thus, African countries will have opportunities to extend the local industrial chain, provide more effective and sustainable support for local economic development, and create more job opportunities to retain local talents.
Digital Development will give African Continent a Head Start
During the epidemic, online shopping, online office work, and online learning have fully demonstrated the importance of digital development. At present, there are outstanding local enterprises in Africa that have shown great potential in the field of digital trade.
For instance, especially in eastern Africa, the use of mobile-based banking systems is laying a good foundation for the continent’s full participation in the fourth industrial revolution.
Mobile-based banking systems can make finance more inclusive and improve trade opportunities. The new generation of the information technology revolution is both an opportunity and a challenge for the African continent.
The technical revolution is becoming even more popular with the outbreak of COVID-19. Therefore, the continent should take full advantage of this opportunity to achieve digital development.
African Countries should pay full attention to Regional Infrastructure Construction
Although many African countries have had significant success in generating quality economic growth over the past few decades, the continent continues to face a persistent infrastructure gap.
According to the African Development Bank (AfDB), this gap could be between 68 billion USD to 108 billion USD a year, hindering the continent’s economic integration and growth potential.
Consequently, there’s no doubt that African countries should not let the lack of both national and regional infrastructure get in the way of the continent’s development.
In the past, African countries always looked for infrastructure financing country by country. But to accelerate continental integration, African countries should make full use of regional banks and institutions to improve relevant financing.
Recently, however, the Program Infrastructure Development for Africa (PIDA) launched by the African Union offers a good chance to make difference.
PIDA allows African countries to work as a whole to promote the construction of regional infrastructure which can benefit member states more.
