How Post Covid-19 Can Reshape Africa

Published on 5th May 2020

The on-going Covid-19 pandemic has had devastating effects worldwide with no sign of it abating anytime soon. In as much as some countries curve have been flattening, the impact on a global scale has had far reaching effect in terms of both business and social life. It’s commendable that most governments have put in place measures to contain the virus. Some of these measures include country lockdowns and implementation of wider testing to allow for early detection of the virus.

The continent of Africa has not been spared as nearly all the countries on the continent have recorded Covid-19 cases. However, recent developments in Senegal are refreshing and encouraging as the country has developed its own testing kits which will retail at an affordable price of US$1, this will allow for mass testing. In addition, Senegalese engineers are also using 3D printers to try and replicate ventilator parts and build their own machines at a cost of US$60 which is much cheaper than the average price of US$16,000. This gives a ray of hope and shows that with proper planning, even with limited resources, you can effectively and efficiently contain the virus. Though more work still needs to be done. It is also commendable that drone company Zipline is now flying Covid-19 test samples from rural areas to laboratories in major cities in Ghana to speed up the testing turnaround time.

Going forward it’s not going to be business as usual since traditional business and social norms will drastically change. Planning in advance for possible business opportunities that may present themselves in the future is required and Africa as a continent should not be caught napping.

Economic outlook

According to the African Development Bank (AfDB), Africa’s economic growth stabilized at 3.4 percent in 2019 and is expected to pick up to 3.9 percent in 2020, and 4.1 percent in 2021, but expected to remain below historical highs. However, it’s important to note that these estimates were done before the impact of Covid-19 on the continent which means the actual growth maybe lower.

One of the main challenges experienced in Africa is that growth on the continent is not inclusive with only a third of the countries achieving inclusive growth. Most African governments are always faced with the challenge to reduce both poverty and inequality. Moreso the Covid-19 pandemic has exacerbated this inequality and more will need to be done to support industries, protect & create jobs and the vulnerable through Government stimulus and recovery packages. Already the Government of South Africa has set aside R500 billion to support businesses and vulnerable people affected by COVID-19.

However, countries with large public debt will struggle to mobilize the resources to respond to the crisis with some economies on the continent already reliant on dwindled tax revenue and donor support. Quantitative easing (printing of money) maybe explored by some countries to stimulate local production, discipline will be required to avoid inflationary pressures.

Capital flows

Countries with conducive investment climate and less affected by the Covid-19 will most likely attract foreign direct investment in the future, an area that Africa could take advantage of if governments act efficiently to pull it. Governments must, therefore, put their energy in economic reforms to increase their foreign direct investments (FDIs) going forward.

Import Substitution

Countries will look inwardly and try to move towards self-sustenance, however, this will work for a country with an established value chain and manufacturing base of which they are already a few countries with this infrastructure on the African continent. For most countries on the continent, focus on agriculture is a good bet to achieve sustainable development.

Even in terms of job creation most countries will look within to provide more business and work opportunities to its citizens. Foreign nationals may face challenges to maintain and secure opportunities going forward especially for blue collar jobs and small to medium businesses such as spaza shops, etc. A case in point is the statement by the South African Finance Minister, “The government will have to put in place labour market policies which are supportive of the increase in employment of South African youth without discriminating against non- South Africans.”

Cost containment

Most companies will re-evaluate the way they do business, cost containment will be the main focus with companies working on right-sizing and being more frugal with costs. Where possible modalities of working from home will be explored.

Health care systems

Governments will invest more in the health sector in their countries and improve public health facilities and operational modalities of social security nets for the vulnerable in society. However, for those that will be caught napping, it will mean further depreciation of already dilapidated infrastructure.

Travel & Tourism

This sector has already taken a huge hit, jobs have been lost and less travel is expected in the near future, going forward domestic tourism will need to be encouraged to reduce the damage.

Project Implementation

The business case for potential projects may be re-evaluated with projects at implementation stage facing schedule delays. Focus will be more on renewable energy and sustainable development. This is because of the power deficit on the continent, more so energy transitions are already underway in many countries. These transitions have become increasingly affordable because of forward-looking policy frameworks, ongoing innovations and falling technology costs for renewables. Solar photovoltaic (PV) and wind power have become the cheapest sources of electricity in many markets and Africa has an abundance of sunlight and wind.

Individual spending patterns

Due to the uncertainty people will spend less, and priorities will change with health, safety and savings becoming the main focus. Financial markets are encouraged to come up with financial instruments that will tap into the savings of mainly the middle class.

Oil prices

Where possible governments should take advantage of current prices to build reserves, this will assist in the future for price spikes that will definitely be experienced.

Information Communication Technology (ICT)

ICT will become the new frontier for social-economic development in Africa with it contributing to agriculture, education, government services and health. In addition, it will promote innovation, job creation, and trade in particular the export potential of African companies. Governments should invest more in ICT infrastructure.

In conclusion, it is important to prepare for the future as those that realize it is no longer business as usual will re-strategise and be future ready. African has to awake the giant within and position itself strategically to take advantage of future opportunities.

By Tapiwanashe Vushe

[email protected]

This article has been read 1,508 times