The African Development Bank (AfDB) has said that an additional 49 million people across Africa could be drawn into extreme poverty in 2021 as a result of the novel Coronavirus pandemic (COVID-19).
For 2020, however, Nigeria and the Democratic Republic of Congo are going to account for the largest number of extremely poor citizens, the Bank noted.
In the worst case scenario, an additional 11.5 million and 3.4 million Africans are predicted to become extremely poor in Nigeria and DR Congo respectively.
Africa’s poverty gap is expected to widen as a result of the effects of the novel Coronavirus pandemic (COVID-19) on her Gross Domestic Product (GDP).
AfDB stated this on Tuesday during a webinar to launch the 2020 African Economic Outlook (AEO) Supplement.
The AEO supplement, a follow-up to the 2020 African Economic Outlook report launched in January, contains revised projections from the continental bank.
Speaking during the launch, AfDB’s Acting Vice President and Chief Economist, Dr Charles Lekeya Lufumpa, noted that the projections are the results of the institution’s four-months of research study.
The new report takes into consideration the impact of the novel Coronavirus (COVID-19) which first entered Africa through Egypt in February, Lufumpa said.
Presenting the new projections, the Bank’s Director of the Macroeconomic Policy, Forecasting and Research Department, Dr Hanan Morsy, observed that COVID-19 has reversed the gains made by Africa in the area of poverty and employment towards meeting the United Nations’ Sustainable Development Goals.
Morsy, who also noted that about 30 million jobs could disappear in the coming year, added that most of the extremely poor will be from Western and Central Africa.
East Africa, on the other hand, is expected to be more resilient to the impacts of the pandemic.
The director, however, said that Africa having one of the world’s highest youth populations with 60% under 24 years, could help mitigate the effects of the pandemic.
The AEO supplement reads in part, “Although the number of people in extreme poverty in Africa (using the $1.90 international poverty line) was projected to reach 425.2 million in 2020 under the no-outbreak scenario, COVID–19 could increase it further to 453.4 million in the baseline scenario and 462.7 million under the worst-case scenario.
“In 2021, the number of extreme poor could increase by 34–49.2 million due to the pandemic as GDP growth continues to fall below population growth rates.
“Nigeria and Democratic Republic of Congo, two of Africa’s most populous countries, would record the largest increases—8.5 and 2.7 million respectively in the baseline scenario in 2020, and 11.5 and 3.4 million in the worst-case scenario.”
The new report also predicts that COVID-19 will push down Africa’s real Gross Domestic Product by 1.7 percent in 2020 under a baseline scenario.
Also, Africa’s recovery in 2020 is expected to be partial as not all sectors will fully recover this year, the report points out.
Fiscal deficits are also expected to at least double in 2020 while debt-to-GDP ratios are projected to increase further by up to 10 percentage points.
In addition, the AEO states that foreign direct investment (FDI) and remittances from African abroad will be disrupted by the pandemic.
AfDB, therefore, called on African leaders to open her economy in phases so as to reduce the impact of the pandemic.
The Bank also called on African countries to support vulnerable households with targeted cash transfers and social safety net programmes.
On his part, Prof. Njuguna Ugunju, former governor of the Central Bank of Kenya, called on African governments to protect their private sectors .
Ugunju stated that there was the need for African governments to diversify her economy towards agriculture, adding that the continent needed more agro-industries.
The ex-governor also called for regulatory and policy reforms to standardise informal sectors in the continent.
According to him, while lockdown is good, they will only be effective if Africa has more safety nets.
The professor, therefore, recommended the gradual reopening of Africa’s economy.