The Economist UK - 28.03.2020

The EconomistMarch 28th 2020 Middle East & Africa 51

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1

bert Zeufack, the chief economist for Africa

at the World Bank.

In some countries such as Malawi,

where most people subsist by growing

their own food, the economic impact of co-

vid-19 may be relatively small. But in many

others, the clampdowns on economic life

are adding to the pain. Restrictions on

movement and commerce will be especial-

ly harmful to workers in the informal econ-

omy—that is, most of the African labour

force. Roughly 85% of workers do not re-

ceive a regular reported wage.

On March 21st Rwanda closed its border

with Congo. The livelihoods of petty trad-

ers who buy food in one country and sell it

in the other are in peril. In Goma, on the

Congolese side, Naomi Sifa sits with a pile

of bananas a few metres from the desolate

frontier. By selling them in Rwanda she

would normally make 3,000 francs ($1.77)

each day, just enough to feed her family. No

longer. “If they keep the border closed, they

will kill people with hunger,” she says.

The economic consequences of co-

vid-19 have not escaped African epidemiol-

ogists. For John Nkengasong, director of

Africa cdc, a public-health body, the virus

could be a “national-security crisis first, an

economic crisis second, and a health crisis

third”, if the responses are not calibrated

appropriately. That does not mean letting

the disease rip, but it does mean “commu-

nity engagement” and careful monitoring

of knock-on effects on poverty and the

treatment of other diseases.

African authorities will probably strug-

gle to shut down cities to the extent seen in

Europe, never mind China. For the mo-

ment, though, they are trying to combine

restrictions on movement with some steps

to ease the economic pain. The Seychelles,

for example, has pledged salary guarantees

for private-sector employees for three

months. South Africa has announced a tax

holiday for businesses to encourage them

to keep paying workers, and its central

bank is extending credit lines to keep firms

afloat. Senegal aims to spend about 6% of

gdpfeeding people and helping firms, but

it must appeal for funds to do so.

No country is able to match the sums

being spent in the West. Social safety nets,

where they exist, tend to support old peo-

ple and mothers, not the jobless. Cash

transfers would be the quickest and most

efficient response to avert mass poverty. So

far, in response to the covid-19 crisis, 69

countries globally have introduced, adapt-

ed or expanded social-protection schemes.

Yet in sub-Saharan Africa only South Africa

and Kenya have done so.

The lack of action is in large part be-

cause African countries do not have

enough money to do more. Between 2010

and 2018 average public debt in sub-Saha-

ran Africa rose from 40% to 59% of gdp, the

fastest increase of any developing region.

More than half of African countries are

above the imf’s recommended limit for

public debt. The World Bank says that 29

out of 47 African countries need to tax

more than they spend just to keep their

debt constant as a share of the economy.

But their tax revenues are about to plum-

met and the cost of borrowing is soaring as

investors flee to safety.

A fiscal response on the scale seen in

the rich world would require outside help.

Abiy Ahmed, Ethiopia’s prime minister,

has asked the g20 for an emergency pack-

age worth $150bn to boost health spending,

shore up foreign reserves and patch up so-

cial safety nets. He wants the World Bank’s

investment arm to tide over African com-

panies hit by disruptions to global supply

chains, for the imfto increase its lending

to poor countries and for existing debt to be

rolled over or forgiven.

The West’s response may determine its

relationships with African countries for

decades. If the rich world declines to help

more, China will probably dominate the re-

sponse. Mr Ma’s gift may soon be followed

by economic assistance, which could ce-

ment China’s position as the main partner

for many African countries.

Other political consequences of co-

vid-19 will soon become clear. One may be a

rise in xenophobia. Ethiopia and Camer-

oon, among others, have seen attacks on

foreigners or their property. Autocrats such

as Uganda’s Yoweri Museveni or Mr Magu-

fuli may take advantage of a distracted

world, and find covid-19 a convenient rea-

son to delay elections or arrest dissidents.

What will ultimately determine the fate

of leaders on the continent, though, is how

they combine their direct response to the

virus with mitigating its vast indirect costs.

Mr Ramaphosa has largely been open, deci-

sive and bold. But even he will struggle to

maintain public support as he tries to en-

force a long lockdown. African countries

face an unenviable task, which they cannot

address alone. In trying to “flatten the

curve” of the number of infected, they risk

crushing their people. 7

Down, down, down

December 1st 2019=100

Sources: Bloomberg; S&P; Datastream from Refinitiv

Kenyan shilling per $( inverted scale)

S. African rand per $( inverted scale)

Bloomberg Commodity Index

S&P Africa share index

110

100

90

80

70

60

50

2019 2020

Dec Jan Feb Mar

I

f you believethe official numbers, co-

vid-19 has not yet hit the Middle East and

north Africa as hard as the rest of the world.

Excluding Iran, where an outbreak is rag-

ing, the virus has killed around 100 people

in the region, compared with thousands in

Europe (which has more people). Never-

theless, Arab leaders are taking drastic

steps to curb its spread, imposing curfews,

closing businesses and quarantining cit-

ies. This is wise: countries such as Italy and

Iran delayed action and were over-

whelmed. It is also troubling. The region’s

regimes have long played on people’s fears

to justify their authoritarian rule.

Many governments have declared states

of emergency, allowing leaders to rule by

decree (as many do anyway) and deploy the

armed forces. In Egypt, for example, the

army has been sent out to disinfect areas.

In Jordan it now guards public squares and

helps enforce a ban on people leaving their

homes. With the civilian authorities in Iran

unable to cope, the Revolutionary Guards

have sought more power and pushed for vi-

rus-related restrictions. In some Western

countries, too, the army is out in the

streets. But regimes in the Middle East and

north Africa are less likely to loosen their

grip on society once the crisis recedes.

They are also clamping down in ways

not seen in the West. Morocco has detained

people for rumour-mongering. “Those

spreading fake news will be pursued,” says

States are clamping down. Will they

loosen up when the crisis is over?

The virus in the Arab world

An even tighter

grip