Africa’s Changing Resilience Picture

Khaled Sherif, African Development Bank Vice President for Regional Development, Integration and Business Development, highlighted earlier this month that COVID 19 infection rates across the 54 nations in the continent do not yet present a large-scale public health crisis[1]. Sherif’s view is backed up by the latest World Health Organisation African region report.[2]

The WHO report states that COVID 19 cases in the WHO African region have continued to decrease in the past 7 weeks, with a total of 34,564 new cases, and 1,173 deaths reported from 45 countries between 2nd and 8th September 2020. This is a 17% decrease in cases, and a 14% decrease in deaths compared to the previous reporting period (26th Aug – 1 Sep 2020).

The World Economic Forum attributes the comparatively low infection rates to several factors; early and decisive Government action (South Africa declared a national state of emergency and a nationwide lockdown before reporting its first COVID-19 death, and Uganda suspended all public gatherings before its first documented case), and the relative youth of the African population (in sub-Saharan Africa only 3% are older than 64 and 43% are under 15)[3].

However, none of this is cause for complacency or celebration. Public healthcare systems in many African countries are poorly prepared for spiralling infection rates if they do occur, with little capacity to provide critical care for the severely ill. Prolonged lockdown and quarantine will lead quickly to food insecurity, which in turn will erode fragile public support for public health and social measures.

Therefore, the effect of COVID-19 on African economies deserves close scrutiny. Khaled Sherif notes that foreign investment in the region is drying up at the same time as many commodity prices hit record lows. Africa is highly dependent on commodity exports such as coffee beans, cocoa beans and metals, and the Big 5 oil producers (Nigeria 2mbpd, Angola 1.4mbpd, Algeria 1.3mbpd, Libya 1.2mbpd and Egypt 630K mbpd)[4] rely on oil revenues for 70% of their foreign currency revenues.

So in a continent where the population of 32 out of 54 nations already lives on an average of less than $5 per person per day, COVID is near certain to cause a severe economic downturn for some years to come.[5] Africa are of course not alone in that, but their collective ability to recover lags some distance behind other continents.

So What?

Firstly, any business which routinely trades in Africa should understand that the resilience picture has changed. Both supply chains and markets will demonstrate increased vulnerability and fragility over the coming year, and that is without a dramatically increasing COVID infection rate (which could still happen).

Therefore it is very reasonable to seek refreshed assurances on how your partner organisations in Africa (both customers and suppliers) are managing the effects of the pandemic, for example by checking their resilience plans, or your Business Continuity consultant can do it for you. If those plans look too fragile, it is advisable to either assist your supplier to improve (again, your BC consultant can help, click here to see how), or identify an alternative supplier, or both, before any problems come to a head.

Secondly, we might see a chain of events along the lines of; economic depression – higher unemployment – no social support system – increased social unrest – heavy impact on an already squeezed tourist industry. Such a scenario could further reduce external investment into Africa and the problems could become self-perpetuating.

Thirdly, organisations would be well-advised to seek out ways that they can actively help African businesses to stay afloat. Re-negotiated business terms, new orders and pivoting opportunities will all meet with a very positive response.

Sherif’s African Development Bank focuses on capacity building in SMEs and their aggregators, and against the backdrop of reducing foreign investment, initiatives such as the African Regional Integration Agenda and the African Continental Free Trade Agreement are increasing in importance for the resilience of the continent. Although it will undoubtedly be a long haul, genuine internally driven and internally focused building block programmes which link the national and local economic levels may be one of the routes out of the pandemic.

Is your organisation able to provide or support any such building block programmes, to help one of our most vulnerable continents navigate its way out of the pandemic?

Further Reading: Our blog from Inverroy MD, Matthew Wardner, about preparing for the second wave of COVID may also be of interest. Click here to read it.

References:

[1] https://www.cnbcafrica.com/videos/2020/08/24/how-covid-19-is-impacting-africas-development-regional-integration-agenda

[2] https://www.afro.who.int/health-topics/coronavirus-covid-19

[3] https://www.weforum.org/agenda/2020/05/africa-covid-19-coronavirus-pandemic-food-water-perc/

[4] https://www.investopedia.com/articles/investing/101515/biggest-oil-producers-africa.asp

[5] https://www.cnbcafrica.com/videos/2020/08/24/how-covid-19-is-impacting-africas-development-regional-integration-agenda