Business

Ebola batters West Africa's economy

Lynley Donnelley

The deadly virus is affecting productivity, trade and air traffic in already very poor countries.

Passengers take precautions at Murtala Muhammed Airport in Lagos. (AFP)

Since December last year, when a two-year-old child died in a small village in Guinea, Ebola has steadily ravaged one of the poorest, most vulnerable corners of West Africa.

Spreading through Guinea, Ebola then stalked into Liberia, reaching Sierra Leone by May this year. For months, the virus did not catch the globe’s eye, save for the desperate efforts of those at its epicentre – a handful of aid organisations such as Médicins Sans Frontières (MSF), local authorities and health workers, who were among those most vulnerable to contracting the virus.

It was the infection of two Americans in July, followed by the transport of Ebola into Nigeria, that honed international attention on the spread of the disease.

On July 20, a US-Liberian citizen, Patrick Sawyer, took the virus into heavily populated Lagos – and into the continent’s largest economy – on a flight from Monrovia.

Besides the devastating health consequences, there is growing concern over the economic impact the epidemic could have on the region, as cross-border trade routes are closed, international travel evaporates and the cost of treatment weighs on governments.

As of Wednesday this week, the World Health Organisation (WHO) put the number of confirmed cases in Nigeria at 12, with another three suspected and four people dead. In total, 2?473 confirmed, probable and suspected cases have been reported, alongside 1?350 deaths, according to the WHO data.

The disease has no cure and is spread by contact with bodily fluids such as blood, sweat and vomit.

Economic impact
Phil Hay, the communications manager for Africa of the World Bank Group, said that although it was too early to begin forecasting the economic impact of Ebola, the countries were among the poorest in Africa, with already overstretched health systems, before the epidemic struck. “It’s clear that the epidemic has created a development crisis as well as a health emergency,” he said.

An initial World Bank and Inter­national Monetary Fund assessment for Guinea has projected a decline in gross domestic product growth from 4.5% to 3.5%. Agriculture has been hit in Guinea, Liberia and Sierra Leone as rural workers flee affected areas, the bank says, and cross-border commerce has slowed.

Intra-regional trade among the Economic Community of West African States has traditionally been low however, according to Idris Ademuyiwa, a research associate at the Nigerian-based Centre for the Study of the Economies of Africa. Apart from Nigeria, the three countries where Ebola is prevalent collectively account for less than 10% of intra-regional trade.

“Nigeria remains the backbone of trade within the region. Given that the spread of the epidemic is currently controlled and is unlikely to get worse, we do not expect drastic reduction of trade within the region,” Ademuyiwa said.

Nevertheless, Guinea, Sierra Leone and Liberia are highly dependent on imports, which generate a large part of their revenues from tariffs and customs duties, Ademuyiwa said. Given their reliance on them, the expected adverse effect of Ebola on trade will reduce government revenue, he said.

Although the outbreak in Nigeria is controlled for now, if it worsened it would pose a risk to the country’s aviation sector, with the flow of people through its airports declining, Ademuyiwa said. Its hospitality, recreation and tourism sectors would face a similar fate.

Closed borders
The WHO declared Ebola an international health emergency in early August while several border closures and travel bans to, and from the stricken countries have been imposed. Cameroon recently closed its borders with Nigeria and Kenyan Airways halted flights to Liberia and Sierra Leone, and shut its borders to travellers from these countries and Guinea.

It followed in the wake of bans on flights to these countries by British Airways and Emirates, as well as regional carriers Asky Airlines and Arik Air.

The bans come despite pleas from the WHO not to impose restrictions that hinder international travel or trade, which could worsen the fall-out from the disease.

The impact on people and communities eking out a subsistence living, especially in the three smaller countries, has yet to be tallied. But the MSF has warned that, despite greater mobilisation from international aid organisations and Western donors, the response remains “dangerously inadequate”.

Many of the patients who have died were between 30 and 45 years old, according to the organisation. Some villages in the Kailahun district of Sierra Leone have lost the majority of their adults, leaving many orphaned children and elderly people without support, while in others, there is hardly anybody left to cultivate the fields or provide for families, it said.

Relative to the other three countries, Nigeria has more financial resources and technical expertise to mitigate the effects of the outbreak, Ademuyiwa said. Its federal government and philanthropists have committed about $120-million to fight the epidemic.

“However, it will be incorrect to translate this to mean that Nigeria can cope well if the outbreak becomes an epidemic,” Ademuyiwa said.

Most vulnerable
Francois Conradie, a political analyst at NKC Independent Economists, said the industries most vulnerable to Ebola were those that depended to a large degree on expatriate labour, as multinationals were repatriating expert and executive staff from affected countries. In Nigeria’s case, this largely affects the oil and gas sector.

“This will affect all aspects of their business to a certain degree and definitely place strategic decisions on hold, even though they will have contingency plans in place to ensure that day-to-day operations continue,” Conradie said.

The impact on trade and the countries’ fiscal profiles are likely to be severe. Ratings agency Moody’s recently warned that Sierra Leone’s economic growth would decelerate from the 16% growth rate recorded in 2013 if mining sector production is affected by Ebola.

But Conradie stressed that much depended on how far Ebola spread geographically. There was “no reason to be alarmist” as other diseases and healthcare issues still had a greater effect on the region than the spread of the virus.

“At the moment, we do not expect major impacts on regional growth, and certainly not on a continental scale,” he said.

Topics In This Section

Comments

blog comments powered by Disqus