Africa: $100 Billion Needed. A Fraction Promised

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Governments across sub-Saharan Africa have closed borders, canceled flights and told citizens to stay indoors to defeat the coronavirus. They’ve done little to protect their economies.

Nigeria has said it will pay $2.7 billion in stimulus packages, while South Africa is expected to allocate$1.7 billion for business support from its Unemployment Insurance Fund. Other countries around the continent have come up with similar initiatives on a smaller scale.

Yet it’s far short of what’s needed, according to the United Nations Economic Commission for Africa. Stimulus of $100 billion is required for the whole continent to avoid a recession, the organization said this week, adding that creditors should help by waiving $44 billion in debt-interest payments.

Sub-Saharan African finance ministries can’t do it on their own. Years of graft under former President Jacob Zuma have left South Africa with indebted state companies and inadequate tax collection, while Nigeria has been slammed by the collapse in the oil price. Those two countries account for almost half of the region’s gross domestic product.

Central banks have taken action. Ghana and South Africa have slashed interest rates and the South African Reserve Bank has also embarked on a bond-buying spree.

But while Europe and North America report ever-increasing fatalities from the virus, in Africa the outbreak may also bring an economic catastrophe.

Coronavirus Roundup

Lockdown Starts: South Africans will only be allowed to leave their homes to go shopping for food, collect welfare grants and seek medical care for the next three weeks — unless they provide an essential service. The measures have been imposed by the government to prevent the spread of the coronavirus, which has infected more than 1,000 people in the country — the majority in the commercial hub of Gauteng province.

The impact on companies has been almost immediate. The country’s second-biggest clothing retailer said it may not be able to reopen following the lockdown after a slump in revenue. Edcon CEO Grant Pattison told suppliers the company only has cash for salaries at this time.

Locust Fight: The coronavirus pandemic is hampering the fight against locusts in East Africa as the cost of shipping pesticides rises and equipment is delayed. Kenya has experienced the worst swarms in 70 years, threatening food supply.

WhatsApp Service: The World Health Organization plans to roll out a WhatsApp coronavirus information service to at least 50 million people after it proved successful in South Africa. The free product employs artificial intelligence to offer information on topics ranging from symptoms of the disease and where to get tested to debunking myths.

Other News

Mozambique Attacks: Islamic State claimed responsibility for an attack in the northern part of the country near an area where natural-gas projects worth tens of billions of dollars are under development. The assault was the boldest yet in a series that started in October 2017 and have left hundreds of people dead.

Past & Prologue

Data Watch: Nigeria will probably need to weaken the naira further following its devaluation last week as the plunging oil price heaps pressure on the monetary policy of Africa’s biggest crude producer. The central bank bucked global trends this week by holding interest rates, yet that’s unlikely to be enough to support the currency, economists say.

Coming Up

  • March 30 South Africa money supply and private credit, South Africa monthly budget balance.
  • March 31 South Africa trade balance, South Africa non-farm payroll, Uganda inflation, Kenya inflation, Kenya GDP, Botswana GDP
  • April 1 South Africa manufacturing PMI, South Africa vehicle sales
  • April 3 Uganda, Mozambique, South Africa, Kenya, Zambia, Nigeria and Ghana PMI

Last Word

Botswana’s controversial plan to resume elephant hunting has been temporarily thwarted by the global coronavirus pandemic, winning a reprieve for many of the 277 animals due to be shot this year. The country, which has the world’s biggest population of the animals, last year enraged conservationists by lifting a hunting ban, arguing that the elephants were destroying crops and trampling villagers.

– Bloomberg

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