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Monday, January 25, 2021

UNECA: COVID

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* Foresees 2.6% economic contraction in 2020

* Recommends $200bn for economic stimulus, social safety response

By Gboyega Akinsanmi

The United Nations Economic Commission for Africa (UNECA) has warned that the pandemic could claim between 300,000 and 3.3 million lives in Nigeria and other African countries if adequate protection measures are not taken.

UNECA, one of the regional commissions the UN created to promote the development of its member states, also warned that the impact of COVID-19 could, on aggregate, lead to a 2.6 per cent contraction of African economies in addition to the cost of human lives.

The commission gave the warning in a 48-page report THISDAY obtained from its Corporate Communications Office Thursday, recommending that Africa, as a whole, would need $100 billion as a health and social safety net response and another $100 billion as an emergency economic stimulus.

The report, which is titled ‘COVID-19: Protecting African Lives and Economies,’ will be unveiled in Addis Ababa Friday by UNECA’s Executive Secretary, Dr. Vera Songwe, and Director, Regional Integration and Trade Division, Dr. Stephen N. Karingi.

According to the report, anywhere between 300,000 and 3.3 million African people could lose their lives as a direct result of COVID-19, depending on the intervention measures taken to stop the spread.

It justified its forecast on the ground that Africa “is particularly susceptible because 56 per cent of the urban population is concentrated in overcrowded and poorly serviced slum dwellings (excluding North Africa) and only 34 per cent of the households have access to basic hand washing facilities”.

It also said 71 per cent of Africa’s workforce “is informally employed, and most of those cannot work from home. Close to 40 per cent of children under five years of age in Africa are undernourished”.

Of all the continents, the report observed that Africa “has the highest prevalence of certain underlying conditions, like tuberculosis and HIV/AIDS.

“With lower ratios of hospital beds and health professionals to its population than other regions, high dependency on imports for its medicinal and pharmaceutical products, weak legal identity systems for direct benefit transfers, and weak economies that are unable to sustain health and lockdown costs, the continent is vulnerable”.

The report also explained the outcome of this ugly trend on Africa’s shared prosperity, forecasting that the impact on African economies could be the slowing of growth to 1.8 per cent in the best-case scenario or a contraction of 2.6 per cent in the worst case.

Aside, the report warned that the pandemic “has the potential to push 27 million people into extreme poverty. Even if the spread of COVID-19 is suppressed in Africa, its economic damage will be unavoidable”.

“The price of oil, which accounts for 40 per cent of Africa’s exports, has halved, and major African exports such as textiles and fresh-cut flowers have crashed,” UNECA said in its report.

The UN body observed: “Tourism, which accounts for up to 38 per cent of the gross domestic product (GDP) of some African countries, has effectively halted, as has the airline industry that supports it. Collapsed businesses may never recover.

“Without rapid response, governments risk losing control and facing unrest. To protect and build towards our shared prosperity, at least $100 billion is needed to immediately resource a health and social safety net response.

“Another $100 billion is critical for economic emergency stimulus, including a debt standstill, the financing of a special purpose vehicle for commercial debt obligations, and provision of extra liquidity for the private sector.”

The report emphasised the interconnectivity of African economies, which it argued, should be effectively deployed to curtail the spread of COVID-19 and its associated consequences.

The report noted that African economies “are interconnected: our response must bring us together as one. The development finance institutions must at this time play an unprecedented counter-cyclical role to protect the private sector and save jobs”.

“We must keep trade flowing, particularly in essential medical supplies and staple foods, by fighting the urge to impose export bans. Intellectual property on medical supplies, novel testing kits and vaccines must be shared to help the continent’s private sector take its part in our response.

“The level of assistance that is required is unprecedented. Innovative financing facilities are needed, including a complete temporary debt standstill, enhanced access to emergency funding facilities, and the provision of liquidity lines to the private sector in Africa.

“We must build back better by ensuring that there is an abiding climate consciousness in the rebuilding and by leveraging the digital economy.

“We must be firm and clear on good governance to safeguard African health systems, ensure proper use of emergency funds, hold African businesses from collapse and reduce worker lay-offs,” the report recommended.

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