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Africa could lose 20 million jobs due to pandemic - AU study

About 20 million jobs are at risk in Africa as the continent's economies are projected to shrink this year due to the impact of the coronavirus pandemic, according an African Union (AU) study.* Africa's economy could shrink up to 1.1% this year

Reuters – Johannesburg /Addis Ababa

So far, Africa accounts for just a fraction of total cases of the disease which has infected more than one million people worldwide, according to a Reuters tally. But African economies are already facing an impending global economic downturn, plummeting oil and commodity prices and an imploding tourism sector.

Economies projected to shrink

Before the onset of the pandemic, continent-wide gross domestic product (GDP) growth had been projected by the African Development Bank to reach 3.4% this year. However, in both scenarios modelled by the AU study - seen by Reuters and entitled "Impact of the coronavirus on the Africa economy" - GDP will now shrink.

Under what the AU researchers deemed their realistic scenario, Africa's economy will shrink 0.8%, while the pessimistic scenario said there would be a 1.1% dip. Up to 15% for foreign direct investment could disappear.

If situation continues 20 million jobs could be lost

The impact on employment will be dramatic.

"Nearly 20 million jobs, both in the formal and informal sectors, are threatened with destruction on the continent if the situation continues," the analysis said.

African governments could lose up to 20 to 30% of their fiscal revenue, estimated at 500 billion in 2019, it found.

Africa's oil producers, which have seen the value of their crude exports plunge in past weeks, will be among the worst hit.

Sub-Saharan Africa's biggest oil producers Nigeria and Angola alone could lose $65 billion in income. African oil exporters are expected to see their budget deficits double this year while their economies shrink 3% on average.

African tourist destinations will also suffer.

Africa has in recent years been among the fastest growing regions in the world for tourism. But with borders now closed to prevent the disease' spread and entire airlines grounded, the sector has been almost entirely shut down.

Countries where tourism constitutes a large part of GDP will see their economies contract by an average of 3.3% this year. However, Africa's major tourism spots Seychelles, Cape Verde, Mauritius and Gambia will shrink at least 7%.

Decline of remittances from the diaspora

Remittances from Africans living abroad - the continent's largest financial inflow over the past decade - are unlikely to cushion the blow.

"With economic activity in the doldrums in many advanced and emerging market countries, remittances to Africa could experience significant declines," the analysis found.

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05 April 2020, 17:10