August 2020 / Focus Africa
Ghana-based healthtech startup, mPharma has been listed among CB Insights’ 150 most Promising Digital Health Startups 2020 rankings
Dangote Cement will this month do test runs for the $90 million gas-fired power plant in Mtwara, southern Tanzania
Source: African Business
After demonstrating its resilience during the Ebola outbreak and the global financial crisis, Africa is once again facing a severe test of its strength and agility because of the coronavirus pandemic. The good news is that the continent has entered this crisis in reasonably good shape following decades of progression in health, education and economic outcomes.
As of early 2020, macroeconomic fundamentals in Africa were improving, with investments, rather than consumption, accounting for more than half of the region’s growth. Inflation was falling and the continent was making impressive strides towards accomplishing the United Nations Sustainable Development Goals (SDGs). Africa must build on the momentum and strive to prevent the coronavirus pandemic from reversing the gains of the past 20 years.
Admittedly, that’s easier said than done: despite their best efforts, many countries still struggle with fragile health systems, high debt levels, weak external balances, as well as high rates of poverty and unemployment. The African Development Bank now projects that Africa will fall into a recession in 2020 with economic growth contracting by at least 1.7%. In a worst-case-scenario, this figure could turn out as high as 3.4%.
Cumulative losses in gross domestic product (GDP) across the continent could range between $173.1bn and $236.7bn in 2020 and 2021. The coronavirus pandemic threatens to increase the debt burden of African countries from 60% to 70% of GDP, heightening the likelihood of a sovereign debt crisis. The additional financing required to cushion the consequences of the crisis could be in excess of $150bn.
In a part of the world where 85% of the population earn their living in the informal sector, unemployment as a direct result of the coronavirus pandemic could push an additional 28 to 49m people into 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.
What can be done to support African economies?
To counter the fallout of the coronavirus pandemic, Africa needs robust policy responses from every country on the continent, paired with strong support from Africa’s development partners. In the short term, African countries should prioritise healthcare spending for the provision of essential personal protective equipment (PPE) and materials, acceleration of local production of medical supplies including PPE and vaccine and drug discovery.
Targeted cash transfers and subsidies for vulnerable households as well as subsidies and tax relief for businesses should be high on the agenda. Central banks must inject liquidity into the economy, turning to unconventional policy tools such as quantitative easing if necessary. In the longer term, countries should seize the imperative of building resilience to future crises. As good times return and economies get back on track, it should become a priority to build domestic and external buffers against any potential exogenous shocks.
More money should be earmarked for scientific, economic and social research. Countries should pursue global and continental partnerships to prepare for eventualities. Private sector growth and revamping education and labour markets for the future of work are also key.
The role of development partners
At the onset of the coronavirus pandemic, multilateral development institutions took immediate action to help Africa’s poorest countries navigate the crisis and help them on the road to recovery. The African Development Bank is playing its part through its $10bn Covid-19 Rapid Response Facility (CRF). The CRF offers immediate relief to African countries to address the crisis by providing additional resources for public health interventions, social protection programs and liquidity and budget support to affected sectors of their economies.
Civil society and think tanks have a useful role to play by helping to build trust, solidarity and uptake of Covid-19 prevention and containment measures. They can also help to ensure that Covid-19 interventions are carried out equitably and that governments are held accountable for their policies and actions.
The African Development Bank stands ready to work with other multilateral financial institutions and wealthier nations to alleviate the impact of the pandemic on African countries. For example, we welcome partnerships to establish dedicated donor-financed Covid-19 trust funds. We also urge G20 nations to consider debt forgiveness for low-income countries.
Reasons to remain optimistic
The continent’s youthful and innovative population, its growing middle class, its value addition to the abundant natural resources and its ever-improving governance systems give us plenty of reason to be confident that Africa will overcome the ravages of the coronavirus pandemic.
This year marks the first time the continent has entered a recession in more than half a century. Over the past two decades, Africa has boasted some of the highest growth rates in the world, setting the region up as the next investment frontier in a post-Covid-19 world.
The level of cooperation in Africa has been encouraging. But beyond the crisis, we need to continue working together to help rebuild our economies and prepare them for the future. Africa will emerge from this episode stronger and more resilient than ever before.
Charles Leyeka Lufumpa is Acting Chief Economist and Vice President for Economic Governance and Knowledge Management at the African Development Bank Group
Ethiopia is finishing plans to launch its second satellite into orbit next month, just eight months after the launch of its ETRSS-1 Satellite last December.
The country’s space ambitions, backed by China’s funds and its satellite launch sites, has seen Ethiopian engineers design the satellites in an initiative co-funded by both countries. The ET-SMART-RSS earth observation nano satellite is expected to take off from the Wenchang Spacecraft Launch Site, in Wenchang, Hainan province.
“We will benefit from this satellite’s data collecting abilities for up to a year,” says Dr. Yeshurun Alemayu, of Ethiopia’s Space Science and Technology Institute (ESSTI) via the institution’s website.
Ethiopia’s ETRSS-1 satellite, which is manned by a team of engineers at the Entoto Observatory and Research Center on the outskirts of the capital Addis Ababa, analyzes weather patterns to extract data and enhance the country’s preparedness in the case of drought. The country’s collaboration on space projects with China was signed into agreement in 2016, by Ethiopia’s then minister of Science and Technology, the current prime minister Abiy Ahmed.
Due to the heavy capital investment required, space programs were once considered beyond the reach of most developing countries. But the willingness of China, Japan, and Russia to collaborate with budding space programs, as well as the emergence of smaller, cheaper satellites, has more African states contemplating satellite launches. Ethiopia’s ETRSS-1 satellite launch sent the continent’s 41st satellite into orbit. Months earlier, Sudan’s successful debut launch made headlines, as had Rwanda’s in February of 2019. Egypt leads Africa with nine successful satellite launches since 1998, four of them coming last year.
In 2017, the African Union introduced an African space policy, which calls for the development of a continental outer-space program and the adoption of a framework to use satellite communication for economic progress. And even as criticisms abound over the anomalous use of resources in the face of more immediate day-to-day concerns related to poverty, health, and education, the demand for satellite capacity is expected to double in the next five years in sub-Saharan Africa as climate change concerns grow and governments try to get ahead of the challenge.
The ESSTI’s director general Dr. Solomon Belay indicated last week in an interview with the state run, Ethiopian Broadcasting Corporation that Ethiopia is aiming to reach 10 satellites launched by the end of the decade. “We have learned a lot and gained enriching experience from the launch of our first satellite,” Dr. Solomon said. “This second satellite will cover ground and collect data in areas we are yet to reach.”
The country’s second remote sensing satellite will weigh 8.9 kilograms and be of improved resolution for its handlers on the ground at its Ethiopian command center. Costs amounting to $1.5 million are being covered by the ESSTI’s partner on the project, the Beijing Smart Satellite Space Technology.