While the African Developmental bank [AFDB] celebrated another milestone as it successfully conducted its election which saw to the re-election of its incumbent President, Mr Akinwunmi Adesina, and the African developmental bank as part of its various programs and initiative to combat the harsh effect of the novel virus, covid-19 on the economy of the African countries under its structure.
The onslaught of covid-19 not only led to the death of thousands across nations of the world, it also rendered near dead the financial stability of most nations of the world as the lockdown rule and other regulations made to curtail the spread of the virus ensured that economic activities came to an abrupt end as most nations struggled not only with its healthcare but also in sustaining and holding what’s is left of its economy and fiscal power.
While most developed nations of the world have been able to relatively managed the situation as they prepare for a post covid-19 realities by putting up several economic policies and reforms that will see to the revitalization of their respective economy, the World Bank has recently stated that the African continent should be prepare to take drastic economy decision that will help it navigate the tough times, taking the Nigerian economy for instance, the World Bank has stated that the Nigerian Federal government must be prepared to take adequate fiscal measures that will help it prevent the nation from plunging into another recession, one that might be the biggest recession to ever hit the country Nigeria in the last 40 years adding that failure to do anything might see its economic lot crash down.
The nation Nigeria recently recorded in its Gross Domestic Product [GDP] a decline by 6.10% (year-on-year) in its second quarter. This was revealed in a statement released by the National Bureau of Statistics.
According to the details enclosed in the Gross Domestic Product [GDP] report, the performance recorded in second quarter of the year 2020 represents a drop of 8.22% points when compared to second quarter of the year 2019 (2.12%), and 7.97% points decline when compared to first quarter of 2020 (1.87%) .
Using the Nigerian case, this is a testament of the danger that is due to fall on the African continent and its economy if drastic measures are not employed to curtail the brewing economic shortfall.
The African Development Bank (AFDB) Group at the weekend projected that Nigeria and other African countries will require additional cash in excess of $150billion that will be needed by Nigerian and other African states to cushion the effects of corona virus (COVID-19) pandemic on their economies.
The African Developmental bank stated that the following the economic fallout caused by the outbreak of the virus, it is important for the group to rebuild and strengthen the Nigerian economy as well of that of the other African communities. Adding that there is a need for a strong policy response, coupled with a strong support from development associates.
This was made known by its acting Chief Economist and Vice President for Economic Governance and Knowledge Management, Charles Leyeka Lufumpa during a chat the Nation at the weekend, he also stated that directed cash transfers and subsidies for vulnerable households as well as subsidies and tax relief for business should be a topmost on their agenda.
The African Developmental Bank predicted that the African continent will fall in 2020 into a recession with economic growth shrinking by at least 1.7 per cent. And if worse than this, it might fall as high as 3.4 per cent. It also explained that the Aggregate losses in Gross Domestic Product (GDP) across the African Continent might be between $173.1 billion and $236.7 billion in 2020 and 2021.
Covid-19 outbreak impends to raise the debt of African nations from 60 per cent to 70 per cent of the Gross Domestic Product, increasing the chances or the probability of the likelihood of a sovereign nation debt situation. According to him, the additional fund which will be needed to reduce the effect of the crisis could be in excess of $150 billion.
He also said Nigeria and other African countries should, in the short term, prioritize healthcare spending for the provision of essential Personal Protective Equipment (PPE) and materials, and accelerate the local production of medical supplies including PPE, vaccine and drug discovery.
Lulumpa also stated the Central Bank of Nigeria and other central banks of other African nations must infuse liquidity into their respective economy and by also engaging alternative policy tools as qualitative easing if necessary.
In extensive terms, African countries must employ the need of raising resilience to future crises. As normalcy is restored and economics get back on track, it must become a topmost factor for them to build a domestic and external buffer against any future shocks.
Plenty funds should be side aside for scientific, economic and social research. African countries must endeavor that they chase after intercontinental synergy to prepare it for unforeseen contingencies. Revamping the growth of its private sector and labor market is the key for the future he explained.
The African Developmental Bank Group Chief Economist explained that the good thing for the African continent is that it entered the covid-19 realities in a very good shape and condition despite it years of digression in education, health care and other sector.
According to him, African must work towards preventing its economy to drop back and further digression, as inflation is falling and the continent is making a good growth towards achieving the united nations sustainable development goals.
However, he stated that the work to restoring Africa to stability will not be an easy journey as regardless of the efforts adopted some nations will still find it hard to adjust economically.
The Furthermore, he explained that in nations of the world where a larger percentage of its population earn their living in the respective informal sector which is caused by unemployment which was facilitated by the outbreak of covid-19 there could be an additional 28 to 49 million people on the African continent in extreme poverty.
“Moreover, if we fail to take adequate action, the impact of the crisis on food insecurity and malnutrition may be even worse than anticipated,” he warned, noting, however, that there are reasons to be optimistic.
In his words, the African continent has to its advantage a youthful population and an innovative one, adding to this its abundant natural resources which it must harness coupled with its ever improving system of governance to see that it collectively overcome its present predicament and ensure that its economy is re-stabilized and placed in a position for sustainable growth.
He concluded by stating that there is a need for cooperation among the consisting African states to help one another rebuild as they plan to prepare for the future.
By Marcus Amudipe