AfDB projects a drop in Africa’s GDP

By BUUMBA CHIMBULU
THE African Development Bank (AfDB) estimates that Africa’s Gross Domestic Product (GDP) will decline by US$173 to US$236 billion due to Covid-19 related factors, among other reasons.
AfDB president, Akinwumi Adesina, regretted that the negative impact on economies had been massive with Africa’s economic growth rate expected to decline by 3.4 percent this year.
Dr Adesina said during the Virtual 2020 International Forum on African Leadership recently that the digital divide had worsened.
He said countries with poor energy access, electrification rates and limited broadband access could not stay open to transition businesses to the virtual new normal.
“Our greatest test and task is to build effective partnerships and reinforce leadership to navigate through the pandemic, save as many lives and possible, reverse the trend, and put the world and its economies back on more resilient recovery pathways,” he said.
The pandemic, Dr Adesina said, had further laid bare the divide in the labour market.
He explained that those with skills were able to keep their jobs, while low skilled workers, especially those employed in the informal sector lost jobs, worsened by the lockdowns.
Dr Adesina said it was estimated that up to 30 million jobs would be lost in Africa by the end of this year.
He said the speed and quality of the economic recovery process from the pandemic would depend on shared sense of collective responsibility.
Dr Adesina said the recovery would also depend on the financial capacity of developing countries to address immediate shocks, stabilise their economies, and invest in growing back.
He observed that the disparity in the financial capacity to tackle the pandemic was very stark.
“While developed countries have spent over US$10 trillion as fiscal stimulus for their economies, with spending by Western Europe being 30 times what was spent on the Marshall Plan, developing countries have minuscule fiscal space.
“These are stark inequalities which will affect the speed at which different economies recover from the effects of the pandemic. While social distancing is needed to prevent spread of the virus, fiscal distancing must be avoided,” he said.