Impact Assessment of Covid-19...Eastern Africa one of the fastest growing regions in the world 3.8...
Transcript of Impact Assessment of Covid-19...Eastern Africa one of the fastest growing regions in the world 3.8...
Impact Assessment of Covid-19The Case of Eastern Africa
UNECA Sub-Regional Office for Eastern Africa
Eastern Africa one of the fastest growing regions in the world
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2014 2015 2016 2017 2018 2019* 2020*
Eastern Africa-12
Africa
World
Source: National sources, UNDESA, ECA calculationsNote: Eastern Africa average excludes Somalia and South Sudan; *Estimate/forecast
Average Growth Rates (%), 2014 - 2020
In 2019, the fastest growing economies were:
Slow paced structural change
Demographic pressuresLack of job opportunities
Reduced trade performance in recent years
Despite high levels of growth, Severe economic vulnerabilities still remain in Eastern Africa as a whole…
Source: UNdata & ILO
Working Age Population (millions) Annual Increase between 2015 and 2030
Each year, these economies need to create an aggregate of 7 new jobsmillion
Demographic pressures are real…
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Djibouti
Eritrea
EthiopiaKenya
Madag
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Rwanda
Seych
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Somali
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South Su
dan
Tanzania
Uganda
AfricaBurundi
Comoros D.R. Congo
DjiboutiEritrea
EthiopiaKenyaMadagascar
Rwanda
Seychelles
Somalia
TanzaniaUganda
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Source: UNdata & ILO
GDP vs. Employment Growth RatesAverage between 2006 and 2016
GDP Growth Rate
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6% growth required simply to absorb new entrants to job market
Yet job creation has not kept pace with economic expansion
Job creation rate well below rate of economic expansion
Intra-regional trade has stopped growing and stagnated over the past decade in Eastern Africa
Intra-Regional Trade (USD m)
Source: ECA; UNCTADstat
EAC IGAD
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Covid-19 brings a whole new level of vulnerabilities…
In Africa as a whole and Eastern africa in particular, someeconomic effects are expected in the Service sector:
• Slow-down in economic activity due to preventive and restrictive measures• Will result in
• Losses to regional Airlines• Loss of public revenues and houselholds income through tourism-related
activities;
Regional exports heavily dependent on services, so if economic activity slows down and services are hit, effects could be substantial
Source: UNCTADStat
Transport Services14%
Travel Services5%
Other Services20%Merchandise Trade
61%
African services trade generate more than 150 Bn USD per year
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African Services Exports, USD Billions
imports exports Trade balance
Trade deficits are less present in services than in Merchandises
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D.R. Congo
Burundi
Djibouti
Somalia
Rwanda
Seychelles
Madagascar
Uganda
Tanzania
Kenya
Ethiopia
Merchandise trade balance
Service trade balance
USD million
Source: UNCTADStat
The Contribution of Tourism sector in some Top Tourism destinations in Africa amount to 140 bn USD in 2019. In a scenario where the sector looses 20% of revenues, that will correspond to a 28 bn USD loss from COVID.
GDP (USD bn) % share ofGDP
Visitorexports
% share ofexports
Internationalarrivals (mn)
South Africa 32.1 9 9.7 9 10.5Egypt 29.6 12 12.2 27 11.3Morocco 22.7 19 9.6 20 12.3Nigeria 18.6 5 1.6 3 -Kenya 8 9 1.7 15 1.5Ethiopia 7.4 9 2.5 38 0.9Tanzania 6.7 12 2.5 28 -Tunisia 6.5 16 2.2 11 8.3Cote d’Ivoire 4.6 10 0.5 4 1.8Mauritius 3.5 24 2.2 37 1.4
Air transports provide substantial revenues to several economies (about 9 bn USD in total for countries listed below). With flights suspended because of COVID 19, important losses ahead.Top African Air transport exports, USD Millions, 2017
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Cabo Verde
Namibia
Ghana
Côte d'Ivoire
Togo
United Republic of Tanzania
Seychelles
Rwanda
Algeria
Mauritius
Madagascar
Tunisia
Kenya
Egypt
Morocco
Ethiopia
Some African economies dependent heavily on tourism: Among the top 10 in this category, 3 are from Eastern Africa (Toursim share of GDP, %)
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Seychelles
Cape Verde
Sao Tome and Principe
Mauritius
Gambia
Morocco
Tunisia
Madagascar
Rwanda
Botswana
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In Eastern Africa the contribution of tourism to the economies varies across countries, and so COVID 19 will have different effects via this sector
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Burundi
Comoros
Ethiopia
Kenya
Madagascar
Rwanda
Seychelles
Tanzania
Uganda
Democratic Republic of Congo
EA Tourism Percentage Share of GDP
For the continent, the number of tourists coming from African countries is growing, but that might not be enough to protect the sector from experiencing important losses as travel bans are in the rise
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Africa Arrivals Total arivals
Indeed, the origin of Toursists is well diversified for several countries, but still COVID is likely to affect substantially the revenuesDistribution of Tourists by region of origin (in %)
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Egypt
Seychelles
Morocco
South Africa
Cote d'Ivoire
Tanzania
Kenya, 2019
Tourists from Africa Tourists from Asia-Pacifc Tourists from Americas Tourists from Europe Not specified
the region is a net commodity importer…
Congo (DRC)
Madagascar
Uganda
Somalia
Tanzania
Kenya
EthiopiaSouth Sudan
© GeoNames, HERE, MicrosoftPowered by Bing
Net ExporterNet Importer
...and so the overall impact of CODIV is likely to be more ambiguous as prices of oil and other commoditiesare goind down
Conclusions
1. Regional growth likely to be very negatively impacted by Coronavirus
2. Measures to prevent spread of disease will slow down economic activity and hit severely the Service sector, across the board.
3. Commodity Price shock will hit hard the net commodity exporters in the region– but will be more ambiguous on other countries.
4. Disruption to trade likely to be severe – but will require creative responses byregional governments to scarcities in some sectors.
5. Over the mid-to long-term, disruption in supply chains (particularly with China) could lead to filling the gap by regional producers – need to implement theAfCFTA!
UNECA Sub-Regional Office for Eastern AfricaKigali, Rwanda
www.uneca.org
Andrew MoldChief, Regional Integration and AfCFTA Cluster