Africa expects 20 million layoffs and GDP contraction
The African Union (AU) predicts a contraction in the economies of the continent and the loss of almost 20 million jobs this year amid the consequences of the coronavirus pandemic.
A report from the Continental Union, which includes 55 African countries, warns that both formal and informal jobs will be at risk. The informal economy is any economic activity that transcends the regulated economy and tax system, such as street trading, which accounts for a significant proportion of jobs across the continent..
Africa still accounts for a small percentage of confirmed coronavirus cases globally, with 10,663 cases now confirmed across the entire continent as of Wednesday morning against a global total of more than 1.4 million.
In the US, where more than 400,000 cases have been confirmed, the worst case scenario is to cut total employment by 47 million jobs, according to data from the Federal Reserve..
But as African economies have already weakened as a result of falling oil and commodity prices and a crumbling tourism sector, along with a growing burden of debt, the continent is gearing up for a significant economic hit..
African Development Bank forecasts that Africa's GDP (gross domestic product) growth was expected to be 3.4% before the outbreak in China, but in a report released on Monday, the African Union predicts contraction in all possible scenarios.
By «realistic scenario» African Union, the continent's GDP will decline by 0.8% in 2020, and «pessimistic scenario» reduction will be 1.1%.
Foreign direct investment could fall by up to 15% and governments are expected to lose up to 20-30% of their fiscal revenues in 2020 from the previous year.
African exports and imports are projected to decline by at least 35% from the level reached in 2019. Thus, the loss in value is estimated at about $ 270 billion. Fighting the spread of the virus will lead to an increase in government spending in Africa, which is estimated at at least $ 130 billion.
The report recommended that the African Union Commission, the AU secretariat, take the lead in negotiations on what is called «an ambitious plan to write off Africa's total external debt», which is $ 236 billion.
Over the past decade, sub-Saharan Africa's debt has increased to nearly 60% of GDP. This means that significant public resources that could otherwise have been used to combat the pandemic have been devoted to servicing debt..
«The first was an appeal by the Prime Minister of Ethiopia Abiya Ahmed on $ 150 Billion Aid Package for COVID-19 Emergency Funding in Africa», – stated in resolution.
The coronavirus crisis will lead to a paradigm shift in the way African countries trade with each other and with the rest of the world, especially China, the US and Europe, and a fundamental rethinking of their economies.
The bloc's report calls on the leaders of African countries «diversify and transform their economy by strengthening the productive capacity of the African private sector to process raw materials locally».
Countries report calls for increased agricultural production and collaboration to build and strengthen collective health systems.
Why we’re seeing mass layoffs in the US but not the UK
Friday the President of South Africa Cyril Ramaphosa convened a teleconference with the African Union Bureau, which includes the leaders of Egypt, Mali, Kenya and the Democratic Republic of the Congo, and the Chair of the African Union Bureau Moussa Faki Mahamat. Other participants in the summit included the leaders of Rwanda, Ethiopia, Senegal and Zimbabwe.
WHO Director-General Tedros Adhanom Jebrethus and Director of the African Center for Disease Control and Prevention John Nkengasong made presentations on the situations of the pandemic in Africa, which Ramaphosa later described as «extremely disturbing».
In a letter addressed to South Africans on Monday, Ramaphosa said the AU Bureau is exploring a fiscal stimulus package that could include canceling and deferring interest payments. He also suggested that in recent negotiations, international leaders have shown a willingness to support the continent during the crisis..
«This global pandemic has exposed the fragility of internal and closed political, economic and social systems. This prompts some to call for “new moral economy”, in the center of which are people and their well-being», – said Ramaphosa. “It opened up space for critical action on social spending and equal access to health care. This calls into question widespread preconceptions about the ability of developing countries to respond to national emergencies.».
SpaceX will receive $ 856 million from the US government for the development of satellite Internet