International think-tanks at McKinsey & Company have warned that Africa’s economies could experience a loss of between $90 billion and $200 billion in 2020, as the COVID-19 pandemic spreads within the continent.
The researchers indicate that the global pandemic could account for about one third of the total loss, driven by supply-chain disruptions, a fall-off in demand for Africa’s non-oil exports, and delays or cancellation of investments from Africa’s FDI partners.
“Africa could account for just over half of this loss, driven by reduced household and business spending and travel bans,” said the researchers. McKinsey & Company said governments, the private sector, and development institutions need to double down on their already proven resolve and significantly expand existing efforts to safeguard economies and livelihoods across Africa.
“In many countries, there is an opportunity to take bolder, more creative steps to secure supply chains of essential products, contain the health crisis, maintain the stability of financial systems, help businesses survive the crisis, and support households’ economic welfare. They also need to consider an extensive stimulus package to reverse the economic damage of the crisis,” the researchers said.
The leaders have also been implored to direct more attention towards small and medium enterprises, which create 80 percent of the continent’s employment, compared to 50 percent in the European Union (EU) and 60 percent in the United States of America. “African small businesses have limited ability for their staff to work from home, compounded by issues such as power outages and high costs of data. During this crisis, governments will need to extend support to small and medium enterprises, given their role in the economy and the difficulties they face.” The researchers argued that efforts at economic revitalisation need to extend to informal parts of the economy, as they are a vital component of economies.
Southern African Development Community (SADC) Council of Ministers have adopted regional guidelines for the harmonisation and facilitation of movement of critical goods and services across SADC during the COVID-19 pandemic.
The guidelines are aimed at limiting the spread of COVID-19 through transport across borders; facilitating the implementation of transport related national COVID-19 measures in cross-border transportation; facilitating flow of essential goods such as fuel, food and medicines; limiting unnecessary and mass movement of passengers across borders; and harmonising and coordinating transport-related national COVID-19 policies, regulations and response measures.
The guidelines further call for the simplification and automation of trade and transport facilitation processes and documents, information sharing and provide guidance on the services to be provided by governments, transport operators and transport operators associations during the COVID-19 pandemic. Chairperson of the SADC Council of Ministers, Prof. Palamagamba John Kabudi, Minister of Foreign Affairs and East African Cooperation of Tanzania, hailed the adoption of the guidelines as an "important milestone" in coordinating regional response that addresses the health and socio-economic aspects of the COVID-19 pandemic.
Prof. Kabudi called on Member States to strengthen their solidarity to contain the spread of the virus while maintaining movement of essential goods and services across regional borders. Section 3.4 (xv) of the Guidelines requires Member States to establish or assign National Transport and Trade Facilitation Committee (NTTFC) or structures with similar mandates. The responsibility of the NTTTFC is to coordinate the implementation of these guidelines and, in particular, to facilitate the resolution of operational issues at borders or roadblocks during the COVID-19 pandemic.
The SADC Secretariat has also with immediate effect, operationalised a Regional COVID-19 Trade and Transport Facilitation Cell (RTTFC).
This will assist Member States with the coordination of cooperation in implementing trade and transport related measures during COVID-19 pandemic. The Council of Ministers also called on Member States to establish national Emergency Operations Centres to facilitate coordination of logistics and stockpiling for disasters at the national level; and to establish National Emergency Trust Funds and National Resource Mobilisation Strategies to facilitate mobilisation of financial resources for national disaster responses, including for responding to COVID-19.
The reserve bank – Bank of Botswana- is encouraging the nation to use digital and mobile transactions during this period when government is making efforts to minimise movements to contain the spread of COVID-19.
“This is broadly for purposes of financial and economic inclusion, but more especially in the current circumstances, in support of social distancing, reduction of movement of people and cash handling,” said Dr. Seamogano Mosanako, Head of Communications and Information Services at Bank of Botswana. Dr. Mosanako said commercial banks have committed to reducing the charges for digital transactions by at least 25 percent.
In response, the BoB has raised limitations on mobile transactions from P5 000 to P10 000 with the maximum daily transaction hiked from P10 000 to P15 000 and maximum monthly aggregate raised from P20 000 to P30 000. However, Dr. Mosanako said Mobile Money Operators (MMOs) should continue to be diligent and ensure compliance with existing frameworks on anti-money laundering and combating of inancing of terrorism (AML/CFT).
She also implored MMOs to reduce prices and promote the use of mobile money and other digital platforms for transactions. Meanwhile BoB said despite the COVID-19 pandemic, the bank is committed to acting decisively and timely to maintain price and financial stability in order to support economic activity. Although banks have remained open as part of essential services, not all individuals will access their facilities to use brick and mortar methods of banking, as law enforcement agencies implement strict regulations on lockdown.