African Development Bank forecasts economic turmoil for East Africa in 2020 amid COVID-19 pandemic with growth shrinking from 5 percent to 0.2 percent in worst-case scenario

The African Development Bank has forecast an economic turmoil for East Africa in 2020 amid COVID-19 pandemic, with projected growth tumbling from above 5 percent before the health emergency to 1.2 percent in the best case scenario and 0.2 percent if the pandemic persists until the end of 2020.

Although that contraction is still above Africa’s predicted average of -1.7 percent and -3.4 percent under the the best and worst scenarios, it is the biggest economic crash in Africa as a result of COVID-19.

“Prior to the COVID-19 pandemic, the region’s economic growth was projected at more than 5 percent, well above continent’s average of 3.3 percent and global average of 2.9 percent. However, COVID-19-induced shocks and a locust invasion have contributed to job losses, increased humanitarian needs and will aggravate poverty and income inequality,” AfDB said in its latest regional economic outlook update for 2020.

AfDB said growth in East Africa may rebound to 3.7 percent in 2021, provided the coronavirus is contained in the region and around the world, followed by strong fiscal and monetary policies to trigger growth.

The African Development Bank has been dishing out billions of dollars in loans to African countries to respond to the coronavirus pandemic. The bank often focuses on the benefits associated with the billions of dollars in loans and not on repayment and concerns around insolvency.

“The Regional Economic Outlook indicates that the COVID-19 pandemic will affect East African economies in many ways, such as falling commodity prices and trade, and restrictions on travel with a consequent negative impact on tourism. Waning financial flows have affected the region’s fiscal and current account balances, while disruptions in supply chains have hurt food production and distribution. With schools closed, an estimated 90 million learners have been excluded from the classroom,” the bank wrote.

Nnenna Nwabufo, the Director General of the Bank’s East Africa Regional Office, noted that the Bank had responded swiftly to provide urgently needed support to address the immediate impacts of the COVID-19 pandemic, including support of $212 million to Kenya, $165 million to Ethiopia, $4 million to South Sudan and $10 million to the Seychelles.

“Our ambition is to address the adverse effects of COVID-19 pandemic and ensure that social and economic development across the continent is accelerated, including through the creation of an African workforce of the future,” she said.

Nwabufo called for a collective effort to address the development challenges such as rising public debt and the locust invasion in order to re-direct the nations towards a sustainable development pathway. 

The report’s authors called for urgent policy measures to cushion the effects of the COVID-19 pandemic.“East African countries should accelerate a real structural transformation by transitioning from low value-added production to higher value-added activities that could mitigate vulnerabilities to domestic and external shocks,” said Dr Marcellin Ndong Ntah, a Bank Lead Economist.

Chief White House Correspondent for

Simon Ateba is Chief White House Correspondent for Today News Africa. Simon covers President Joe Biden, Vice President Kamala Harris, the U.S. government, the United Nations, the International Monetary Fund, the World Bank and other financial and international institutions in Washington D.C. and New York City.

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