Photo taken on Sept. 18, 2019 shows U.S. dollar banknotes in Washington D.C., the United States. U.S. Federal Reserve on Wednesday lowered interest rates by 25 basis points amid growing risks and uncertainties stemming from trade tensions and a global economic slowdown, following a rate cut in July that was its first in more a decade. (Xinhua/Liu Jie)
Photo taken on Sept. 18, 2019 shows U.S. dollar banknotes in Washington D.C., the United States. U.S. Federal Reserve on Wednesday lowered interest rates by 25 basis points amid growing risks and uncertainties stemming from trade tensions and a global economic slowdown, following a rate cut in July that was its first in more a decade. (Xinhua/Liu Jie)

The United Nations Economic Commission for Africa (UNECA) has warned that the unfolding coronavirus crisis could seriously dent Africa’s already stagnant growth and result in billions of dollars’ worth of losses in export revenues.

UNECA Executive Secretary Vera Songwe told a news conference in Ethiopia’s capital Addis Ababa that COVID-19 was inevitably impacting Africa’s trade, according to an UNECA statement on Saturday.

She said that although a few COVID-19 cases have been reported in some 15 countries so far, the crisis is set to deal African economies a severe blow.

“Africa may lose half of its GDP (gross domestic product), with growth falling from 3.2 percent to about 2 percent due to a number of reasons, which include the disruption of global supply chains,” said Songwe, adding the continent’s interconnectedness to affected economies of the European Union, China and the United States was causing ripple effects.

The continent would need up to 10.6 billion dollars in unanticipated increases in health spending to curtail the virus from spreading, though revenue losses could lead to unsustainable debt, she said.

The UNECA estimates COVID-19 could lead to Africa’s export revenues from fuels falling by around 101 billion dollars in 2020.

Songwe pointed out that COVID-19 could also reduce Nigeria’s total exports of crude oil in 2020 by between 14 billion dollars and 19 billion dollars.

Remittances and tourism are also being affected, as the virus continues to spread worldwide, resulting in a decline in foreign direct investment flows, as well as capital flight, domestic financial market tightening, and a slow-down in investments — leading to job losses, she said.

Pharmaceuticals, imported largely from Europe and other COVID-19-affected partners outside the continent, could see their prices increasing and availability reduced for Africans, she said.

With nearly two-thirds of African countries being net importers of basic food, shortages are feared to severely impact food availability and food security, she added.

A decline in commodity prices could lead to fiscal pressures for Africa’s economic power houses such as South Africa, Nigeria, Algeria, Egypt and Angola, according to the UNECA, while negative consequences are expected to worsen if COVID-19 develops into an epidemic in Africa.

However, speaking at the press conference, Stephen Karingi, director of the UNECA’s Regional Integration and Trade Division, said there was an opportunity the continent could take advantage of, as trading within the African Continental Free Trade Area (AfCFTA) is set to commence this July.

“The intra-African market could help mitigate some of the negative effects of COVID-19 through limiting dependence on external partners, especially in pharmaceuticals and basic food,” said Karingi, adding that diversifying economies away from being fuel-driven was vital.

He emphasized the need for the continent to urgently implement the AfCFTA as he urged African countries which export drugs to prioritize selling on the African market.

The UNECA, in a presentation on the economic effects of COVID-19 on Africa, suggested that African governments could review and revise their budgets to re-prioritize spending towards mitigating expected negative impacts from COVID-19 on their economies.

The commission urged governments to provide incentives for food importers to quickly forward purchases to ensure sufficient food reserves in key basic food items.

Karingi said fiscal stimulus packages are also crucial if the continent is to weather the COVID-19 storm. Enditem

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