The first global pandemic in a century, the spread of Covid-19 reveals the limits of societies and economies around the world. For economics scholars, this health crisis will provoke the most brutal and severe recession in living memory. The latest coronavirus has already killed hundreds of thousands of people since its appearance in China last December. It has forced many governments to confine their populations to an unthinkable level until recently. The global economy has literally been shut down. Sub-Saharan Africa is not to be outdone.
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An unprecedented health crisis in the world… but not in Africa
Although there is still much uncertainty about the health impact of Covid-19 in sub-Saharan Africa, a body of data already indicates that the spread of the virus appears to be contained, in part thanks to the precocity of confinement and youthfulness of the population.
If Covid-19 reveals unprecedented violence all over the world, health crises with devastating consequences are legion in sub-Saharan Africa. The region is no stranger to dramatic epidemics like Ebola or to extremely lethal and recurrent pathologies such as malaria which, according to the World Health Organization, caused around 380,000 deaths in sub-Saharan Africa in 2018.
The current pandemic has above all exposed the fragility and even the bankruptcy of health systems in this region more than elsewhere. The spotlight on health systems thus reveals the crying under-equipment of countries in resuscitation beds, respirators and other medical equipment. Similarly, for the most part, the equipment available is concentrated in large urban centers, plunging a good part of the population into an absolute sanitary desert.
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Towards a severe economic and social crisis …
The pandemic will plunge sub-Saharan Africa into its first recession in twenty-five years according to the World Bank. The strong economic growth recorded for several years and widely applauded seems to be an elephant with feet of clay.
The economic impact of Covid-19 in sub-Saharan Africa is twofold. Internally, containment measures will slow economic activity. Externally, countries will suffer from the collapse of commodity prices, the uncertainty around official development assistance and diaspora remittances due to the recession announced in the developed countries. States dependent on world tourism will experience a drastic decline in the production of services and public revenues. On the financial side, the uncertainty in the markets will have the effect of making access to global capital more difficult.
On the social level, the inadequacy of protection systems and public transfers as well as the economic fragility of the populations, aggravated by confinement, could annihilate the gains of several decades of poverty reduction. A good part of the population living on informal activity and in the absence of substantial public transfers, the maintenance of containment measures over time seems untenable. It could even prove counterproductive if the social precariousness it induces translates into outrage and popular revolt.
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Public finances will also suffer from this crisis. The fall in trade and the slowdown in economic activity will generate significant revenue losses. Likewise, health, economic and social response measures will strain already strained budgets. As a result, budget deficits will emerge sealed and the sustainability of sovereign debts undermined.
… But not exceptional
In sub-Saharan Africa, the crisis will have disastrous consequences, but it is not an exceptional one. A review of World Bank data shows that over the past sixty years, the continent has experienced no less than 8 recessions if we stick to the level of global wealth. Worse still, 26 of the 60 years were marked by a decline in the level of wealth created per capita. In reality, the region has already been experiencing a recession since 2016 when its economic growth has outstripped its demographic growth.
The Covid-19 therefore only accentuates an already bad economic situation. More than that: it exposes the failure of current development models. The inadequacy of human capital, the failure of institutions, the unbridled dependence on aid and raw materials, the inadequacy of infrastructure continue to make growth in Africa a tragedy.
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The African drama
The African drama is its economic model, which has remained almost unchanging since independence, in which raw materials are conceived as finished products when they are used as inputs in the rest of the world. Clearly, for more than 60 years, most countries have organized themselves around a rent model, favorable to poor governance and without the capacity to create added value.
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The average standard of living has only increased by 50% in sub-Saharan Africa since 1960, which is half the world average. Result: the region has not been able to create quality, sustainable and inclusive growth. This failing economic model is fueled by corruption. It jeopardizes the emergence of a strong and economically resilient middle class.
As a result, Africa will suffer as many times as the ups and downs of the global economy will plump demand and commodity prices, whether due to a health crisis like the Covid-19 or any other crisis. Should we, however, stop the narrative of the Covid-19 pandemic to this state of affairs? No way. This crisis is also an opportunity to seize to effect a profound change in the economic model.
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The need to change development software
Faced with the Covid-19 crisis, most countries are planning to rethink their economic model. Some developed countries intend to relocate all or part of their strategic productive fabric in order to reduce their dependence on China. To break its addiction to crises of all kinds, sub-Saharan Africa must also break with its current economic model. Without being exhaustive, the following points must be at the heart of this paradigm shift:
Build real sovereign states. States must ensure the provision of basic infrastructure (water, health, education) and structuring infrastructure (transport, energy) throughout their territory and guarantee the security of populations. Zero tolerance for corruption and effective management of public resources must be at the heart of this construction. This is the necessary condition both for the development of the private sector and the emergence of responsible and conciliatory citizens with regard to taxation.
Build endogenous development models. Although there are as many development models as countries, it is a question of ensuring the adequacy of development plans with the natural endowments, the history and the culture of African States. Africa must resume planning for its major challenges of structural transformation while avoiding the shortcomings of the governance of the past.
Train an adapted human capital. The provision of the education system must be consistent with the revealed and latent comparative advantages as well as with the challenges of globalization. Productivity challenges in agriculture and agro-industry, self-entrepreneurship and science must be at the heart of training offers to build a development model around a strong and economically resilient middle class. In addition, there is an urgent need to invest massively in health infrastructure in order to overcome the structural fragility of health systems and guarantee quality human capital.
Industrialize Africa. It is urgent to break the vicious circle of unbridled dependence on raw materials. Economies must therefore industrialize to create wealth by capitalizing on their natural resources and their human capital. Industrial strategies must also be based on strategic partnerships and the development of sectors with high technological content. Rigorous and transparent management of debt and resources linked to the export of raw materials is essential in the transition phase.
Formalize the informal. The construction of real sovereign states as well as an adapted human capital contributes a lot. But beyond that, it is imperative to ensure the abolition of all restrictive and unnecessary administrative procedures, the transparency and the force of the rules and the strengthening of financial inclusiveness, especially for women.
Accelerate the digital transition. The digital jump has the advantage of gaining efficiency. The creation of a mobile money account, a specificity of sub-Saharan Africa, has made it possible to drastically loosen certain financing constraints at the microeconomic level. States must continue to invest massively in the digitization of their economies, at all levels, to defeat many other scourges including poor governance. Digital is a key ally for a formalization of the underground economy and greater mobilization of internal resources.
In summary, much more than a limited response to Covid-19, sub-Saharan Africa must operate a paradigm shift to break the tragedy of its growth.
* Blaise Gnimassoun is a lecturer in economic sciences at the University of Lorraine.
** Sampawende Jules Tapsoba is an associate researcher at the Foundation for Studies and Research on International Development (Ferdi), at Clermont-Auvergne University.