- African governments were struggling to raise revenue pre-Covid-19. Tax revenues are now growing at even slower rates forcing them to bridge expenditure deficit through debts.
- Market disruption and job losses are largely to blame for the current hard times.
- There is concern that many mothers and children will die from otherwise preventable diseases that are unattended to due to Covid-19. These too are massive setbacks, endangering years of progress in improving human capital in the region.
An estimated 13 million Africans are expected to fall below the poverty line at the end of this year in the best case scenario with 50 million at the worst as a result of the Covid-19 pandemic, according to a World Bank research on the impact of the pandemic in the continent.
The region’s gross domestic product (GDP) per capita growth is now forecast at 3-5 per cent lower meaning the number of Africans living on less than $1.9 (Sh200) is likely to increase by 2 per centage points from the estimated 41.6 per cent at the end of 2018 to 43.9 per cent at the end of 2020.
According to the multilateral lender, this is enough to sink the continent into its first recession in 25 years.
The continent, which has made major gains in poverty reduction over the years by a slight improvement in policy decisions and governance, has seen poverty levels drop from 46.6 per cent in 2010 to 41.6 per cent in 2018. The World Bank outlook mean the gains are set to be reversed as pandemic continues to ravage the fragile and relatively poor economies.
“The swift and aggressive efforts taken by many African government to contain the disease, necessary as they are, have come at enormous economic cost,” said the World Bank in the release.
African governments were struggling to raise revenue pre-Covid-19. Tax revenues are now growing at even slower rates forcing them to bridge expenditure deficit through debts.
With the pandemic at play, measures to cushion their citizens such as cash transfers, food distribution programmes, tax reliefs and stimulus packages for sectoral supports have come at a big economic cost for governments.
Containment measures such as movement restrictions, work from home orders, lockdowns and curfews have led to income losses for many Africans.
And the pandemic is likely to change business models in the world. When the dust settles those who will be left standing will have to go back to the drawing board and reconfigure their models in order to survive. This includes hiring workers on contract basis, reducing non profitable ventures among other sustainable models.
“These shocks have fallen harder on urban areas where the initial impacts of the lockdowns have been more intensely felt. Income losses have been larger for low-income and informal workers who are in jobs that cannot be done from home,” added the World Bank.
Market disruption and job losses are largely to blame for the current hard times. In Ethiopia for instance the World Bank states that 45 per cent of urban households and 55 per cent of those in rural areas reported income losses due to Covid-19.
In Nigeria 79 per cent of respondents reported income losses with 42 per cent of those who were previously employed losing their jobs permanently.
In Kenya, it is estimated that over one million workers have been rendered jobless or have been sent on compulsory unpaid leave. A report on the socio-economic impact of the pandemic by Kenya National Bureau of Statistics reported that three in every five employees were absent from work in May.
A further 80 per cent of urban dwellers are now unable to send cash to their relatives as the tough economic times continued to wreak havoc, showing how the pandemic has led to a deepening in poverty levels.
More than half of the respondents interviewed between May 28 and June 2 by Infotrak said that their salaries had been reduced by companies struggling to remain afloat, making it difficult for them to meet basic expenditure needs like paying rent.
“Millions of children are out of school. It is unclear when schools will reopen, and some students may never return to school,” read the World Bank report.
Another report released by KNBS on the state of poverty in the country showed that one in every three Kenyans (36 per cent or 15.9 million Kenyans) Kenyans are monetary poor. This are adults living below Sh3,252 in rural areas and Sh5,995 for adults in urban areas monthly.
Further, the report showed that 53 per cent of Kenyans are multi dimensionally poor, in that they are deprived in realization of atleast 3 basic needs, services and rights.
There is concern that many mothers and children will die from otherwise preventable diseases that are unattended to due to Covid-19. These too are massive setbacks, endangering years of progress in improving human capital in the region.
The number of confirmed positive cases in the continent were 1.045 million with fatalities at 23,209 and recoveries at 730,719 as at August 8 with almost all countries in the region not at their peak yet.
Before the pandemic the Sub Saharan Africa region was growing at an average of 6 per cent, being among the highest growth rates in the world. Before the pandemic the continent’s population living on less than $1.9 a day was projected to drop below 40 per cent for the first time by the end of 2021.