Belt tightening measures are inevitable for Nigeria and other oil-producing countries in Africa going by projections on the loss of $65 billion in revenues following the impact of coronavirus on crude oil sales.
Figures released by the Economic Commission for Africa, ECA, indicate that the ravaging coronavirus pandemic in Africa will reduce Nigeria’s total export of crude oil in 2020 by between $14 billion and $19 billion.
The ECA also warned that the unfolding coronavirus crisis could seriously dent Africa’s already stagnant growth.
The commission’s Executive Secretary, Vera Songwe, noted that having strongly hit Africa’s major trading partner, China, COVID-19 would inevitably impact Africa’s trade.
“Although a few COVID-19 cases have been reported in some African countries so far, the crisis is set to deal African economies a severe blow,” she said.
Songwe stated that “Africa may lose half of its GDP with growth falling from 3.2% to about 2 % due to a number of reasons which include the disruption of global supply chains.”
She lamented that “the continent’s interconnectedness to affected economies of the European Union, China and the United States was causing ripple effects.”
She said the continent would need up to $10.6 billion in unanticipated increases in health spending to curtail the virus from spreading, while on the other hand, revenue losses could lead to unsustainable debt.
Other knocks that the continent will suffer as a result of the COVID-19 scourge is that Africa’s export revenues from fuel will fall at around $101 billion.
Also, “remittances and tourism will be affected as the virus continues to spread worldwide, resulting in a decline in Foreign Direct Investment flows; capital flight; domestic financial market tightening; and a slow-down in investments – hence job losses,” the ECA said.
Pharmaceuticals, imported largely from Europe and other COVID-19 affected partners from outside the continent, could see their prices increasing and availability reduced for Africans.
The ECA, in a presentation on the economic effects of COVID-19 on Africa, urged African governments to review and revise their budgets to reprioritize spending towards mitigating expected negative impacts from COVID-19 on their economies.
As a safety net, the think tank is urging government to provide incentives for food importers to quickly forward purchases to ensure sufficient food reserves in key basic food items.