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African Union Predicts Continental Recession Due to COVID-19

Simon Marks

   ADDIS ABABA - With the African Union now predicting the continent's
   economy will contract by 0.8 percent this year, African finance
   ministers are scheduled to meet via video conference on Thursday to
   discuss ways countries can mitigate a looming economic disaster.

   Researchers at the AU now believe the continent will slip into a
   recession this year due to the impact the coronavirus is currently
   having on trade, remittances, tourism and a huge fall in global oil
   prices.

   An AU report seen by VOA estimates governments will lose around $270
   billion from lost trade. The report, first published by Reuters, also
   says governments will need at least $130 billion in additional public
   spending to fight the virus.

   François Conradie, senior political economist at NKC African
   Economics, a research firm in South Africa, said via a messaging app
   that African governments do not have much firepower to fight the
   impacts of COVID-19.

   "The only thing we can do really -- and that's what these negotiations
   [on Thursday] are about -- is to try and boost state spending capacity
   by organizing low interest loans from multilateral and maybe private
   lenders and then inject that money into the economy in the form of some
   sort of help," he said.

   "We're doing that in Africa by giving tax holidays to employees of
   minimum wage people to try and save those jobs. There is some other
   initiatives to make financing available at low interest to SMEs to try
   and get them on their feet. It's the kind of thing that will help
   companies that are still viable but it won't do anything for the
   companies that have seen their markets disappear," said Conradie.

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