Long before the COVID-19 crisis, the global order was in turmoil (Bremmer,2020). The continent beyond this pandemic is unlikely to be the same as it was before. The effect of the epidemic is hastening several processes already underway in the global economy. The transition to digital engagement such as working from home and schooling, telemedicine, and delivery services, is especially true in the digital economy. Other structural shifts, such as regionalization of supply chains and an increase in cross-border data flows, might accelerate, according to James Manyika, chairman, and director of the McKinsey Global Institute.
The future of work has arrived quicker, bringing with it a slew of new concerns, including income polarization, worker fragility, the rise of gig labor, and the need for employees to adjust to career changes. This acceleration is due to a combination of technological advancements and increased health and safety issues, and economies and market mechanisms will take time to recuperate and will most certainly emerge transformed. (2020, Manyika).
With the acceleration of these tendencies, the practicalities of the crisis have prompted a rethinking of various assumptions, potentially affecting long-term economic and societal decisions. From mindsets towards efficiency versus resilience to the future of capitalism, compaction of economic activity and living, industrial policy, and our methodology to problems that affect us all and require global and collectivism, such as pandemics and climate change, to the role of government and institutions, these effects are numerous.
Responsibility has migrated from institutions to people in sophisticated economies during the last two decades. Health-care systems, on the other hand, are being scrutinized and frequently found deficient, while benefits ranging from paid sick leave to universal basic income are being scrutinized. Through welfare systems and a more integrated and comprehensive compact, there is the possibility of a long-term transformation in how institutions assist individuals. (2020, Manyika).
Tourism, for example, has a catalytic effect on the economy. Dr. Peter M. Mathuki, the East African Community’s Secretary-General, suggested that the turmoil has tilted the scales for the region’s tourist sector, which contributed considerably to the bloc’s economic development before the epidemic. The African Union projected in July 2020 that in the first three months of the epidemic, Africa lost approximately $55 billion in travel and tourist income and two million jobs. According to the International Monetary Fund, Africa’s tourism-dependent countries’ real GDP shrank by 12%.
Due to travel restrictions imposed to combat the virus, EAC member nations lost 92 % of their tourism earnings. The number of visitors declined from almost 7 million in 2019 to 2.25 million in 2020. With the current version of the coronavirus, Omicron, causing further border closures, it’s past time to evaluate the efficacy of travel bans by evaluating their detrimental social and economic consequences. Recent research shows that decreasing community transmission rates may be more successful than border restrictions in preventing the spread of the virus.
Investing in focused and successful tourist promotion programs for the African market might help the region. The EAC’s “Tembea Nyumbani” campaign, which was just launched, is a critical step in catalyzing intra-regional tourism. As has happened in Europe over the years, where intra-regional visitors account for 80% of overall tourism arrivals, a comparable approach across all regional economic groups might radically reshape the continent’s tourism and lessen our dependency on foreign arrivals.
According to the Africa Visa Openness Report 2020, African individuals still require visas to travel to 46% of other African nations, with only 28% receiving visas on arrival. These onerous visa requirements discourage visitors from traveling and, as a result, impede the provision of key services. The continent’s continuous efforts to improve visa openness should be prioritized. The deregulation of African skies to boost intra-continental connectivity is another essential pillar to address. Beyond major cities, which are now typically well provided with hotels and other amenities, there is also a need for additional and better infrastructure, according to Olivier Baric, Africa Aviation Director at Egis, a French multinational business involved in infrastructure and transportation.
While the entire scope of the pandemic’s consequences is still being determined, the implications on agricultural and food systems are being recognized in many ways. Thankfully, primary production has shown to be very robust, with most farmers and livestock keepers able to continue producing. Importantly, the recovery offers an opportunity to rebuild better and encourage coordinated efforts at the intersection of human, animal, and environmental health, the three interconnected axes of One Health.
UNIDO Director General LI Yong stated, “The urgency of accelerating efforts to fulfill the 2030 Agenda for Sustainable Development has never been more critical.” Industrial production keeps economies viable and propels them ahead by ensuring access to critical items like food, medicines, and vaccinations. The industrial sector has important role in developing socio-economic resilience. Industrialization with strong ties to local economies can assist African nations in achieving high growth rates, diversifying their economies, and reducing their vulnerability to external shocks. This will significantly help reduce poverty eradication by creating jobs and wealth. Manufacturing sector expanded by 17.8% in the second quarter of 2020, according to growth forecasts based on limited data for African nations.
In contrast, output fell by 17.1 % a year earlier when COVID-19 pushed several nations to implement containment measures. Most African countries saw an increase in industrial production in the current quarter.
Economic diversification, targeted value chain development, and developing local markets motivated by efficiency and sufficiency rather than profit maximization are current priorities for Africa. However, a poor industrial foundation caused by a lack of basic infrastructure, especially power, poses a significant problem. One strategy to overcome this obstacle is to improve MSME knowledge of creative marketing, corporate identity (unique addresses), and insurance support. Furthermore, governments must increase internal demand capacity, recognizing that markets are essential for inclusivity.
Africa must eliminate wasteful and counterproductive fossil fuel subsidies in favor of concentrated renewable energy investment that positions a country for more robust and autonomous energy sources. Subsidy reduction and elimination are unpopular among public officials due to the difficult political economics of subsidies and vested interest groups, which explains the lack of political will to execute. The COVID-19 pandemic-induced decline in demand and supply-side elements in the oil business (resulting in a record negative oil price) allows the elimination of fuel subsidies with minimal political cost to politicians and policymakers. Such political costs might be further minimized by a coordinated public relations campaign emphasizing the greater benefits of government investments in renewable energy sources.
African nations intend incorporate more resources for research and development into their annual budgets. Limited budgetary headroom and a lack of local absorptive ability in activities and industries that may accelerate the adoption of 4IR technologies are genuine obstacles. Mandating private sector payments to the R&D budget is one option. Create appealing incentives for business sector entities to engage in CSR and R&D finance. Countries may also want to try issuing Innovation Bonds, which are designed to raise cash for specific initiatives. To address acute capacity shortfalls in the health sector, public financial management, and public service delivery, a renewed focus on capacity building and training is required. Donor dependency obscures the analytical emphasis on policy issues that concern African countries.
Africa’s healthcare investments must be re-prioritized. Adjustments to sectoral expenditure priorities may be necessary to move the resources toward the healthcare sector. This may demand a temporary change in capital expenditures as well as education budgets. This policy move would need a rethinking of the Abuja Declaration’s requirement that the health sector gets 15% of the yearly budget allocation. Countries may consider establishing a Facilities Investment Fund to help finance healthcare infrastructure faster. This source, as well as other creative domestic resources, may be used to mobilize significant resources for healthcare investment.
Rethink African nations’ foreign exchange systems. However, it is well recognized that the economies’ tiny size, which makes them price takers and leads to a large reliance on imports, restricts exchange rate management options. A more flexible exchange rate would complicate macroeconomic management, even more, posing new challenges in controlling inflation, export competitiveness, the balance of payments issues, strained fiscal and foreign reserve situations, and welfare losses to citizens as a result of pass-through inflation. One policy lever available to policymakers is to unify the present various exchange rate windows. They can make a gradual adjustment by investigating the traditional peg system first. They should also encourage the coordination of trade balance with other micro and macroeconomic policies, especially monetary and fiscal policies.
The continent must strive for global collaboration to combat future shared external shocks. As part of such a program, each country would explore building early warning systems with the aid of global health institutions through technical guidance and finance. This would need to emphasize cooperation with international institutions and responding quickly and thoroughly.
There is a resounding call to concentrate on long-term growth. Massive groups of people in extreme poverty and high levels of income disparity; accelerated population and urbanization growth rates; wide inconsistencies in social progress, relevant information, governance, and structured finance; pervasive corruption and connectivity shortfalls; and vulnerability are just a few of the challenges that such a policy focus would entail. To address these issues, it will be necessary to develop ambitious, action-oriented, and collaborative sustainable development strategies that are tailored to local needs and levels of development; implement structural transformation strategies to change consumption and production patterns; implement sustainable development initiatives such as public-private partnerships, and strengthen and support African institutions.
Debt should be addressed in the post-COVID period through a relief procedure centered on the United Nations Sustainable Development Goals and long-term economic growth for all countries. After the global financial crisis, hasty fiscal consolidation hampered debt management and reduction, and it would leave us even less prepared to deal with future health and economic emergencies. Economic growth and primary surpluses are the two most powerful variables for decreasing public debt-to-GDP ratios, according to the experience of major emerging nations. The implied goals are self-evident: improved investment and trade conditions, as well as careful fiscal policy.
Choices taken during crises may alter the globe for decades, as history has proven. The need for a concerted effort to establish economies that bring inclusive economic growth, wealth, and safety for everyone will remain vital. Full employment and a new social accord should be our recovery goals. Public spending on the care economy, education, and low-carbon infrastructure may constitute the backbone of an anti-inequality stimulus package. Compensation policy, union representation, and jobs market legislation can all help to boost demand and revenue while also putting a stop to a business framework that enables employers to shirk responsibility for their employees’ problems. The International Trade Union Confederation’s general secretary is Sharan Burrow.
Despite the numerous obstacles ahead, Bally of Azalai sees the crisis as an opportunity, but one that can only be realized by hard effort and innovative thinking: “I am not concerned,” he continued, “but I am well aware that we must reconfigure ourselves to deal with the current scenario.” “Those who can redefine themselves are the ones who will survive.”
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