Economic disruption caused by the Covid-19 pandemic has pushed East Africa’s growth projection for 2020 down to 1,2%, a rate that outstrips other African regions and is forecast to rebound to 3,7% in 2021, according to the African Development Bank’s East Africa Regional Economic Outlook 2020.
The projection is under the baseline scenario that assumes the virus is contained by the third quarter of this year.
Prior to the Covid-19 pandemic, the region’s economic growth was projected at more than 5%, well above continent’s average of 3,3%and global average of 2,9%. However, Covid-19-induced shocks and a locust invasion have contributed to job losses, increased humanitarian needs and will aggravate poverty and income inequality.
In the worse-case scenario, in which the pandemic persists until the end of 2020, growth is projected at 0,2%, still above Africa’s predicted average of -1,7% and -3,4% under the two scenarios.
Simon Kiprono Chelugui, cabinet secretary of Kenya’s Ministry of Labour, says East African countries could overcome the effects of Covid-19 and turn their economies around by mitigating the external and domestic risks.
“We need to implement a decisive and coordinated response to contain the spread of Covid-19; mitigate its health and socio-economic effects; accelerate structural transformation; improve the investment climate, and maintain the peace and security of our region,” he says.
The Regional Economic Outlook indicates that the Covid-19 pandemic will affect East African economies in many ways, such as falling commodity prices and trade, and restrictions on travel with a consequent negative impact on tourism.
Waning financial flows have affected the region’s fiscal and current account balances, while disruptions in supply chains have hurt food production and distribution. With schools closed, an estimated 90-million learners have been excluded from the classroom.
Nnenna Nwabufo, director-general of the eank’s East Africa Regional Office, pledged bank support to steer the region out of the crisis.
“Our ambition is to address the adverse effects of Covid-19 pandemic and ensure that social and economic development across the continent is accelerated, including through the creation of an African workforce of the future,” she says.
Nwabufo calls for a collective effort to address the development challenges such as Covid-19, rising public debt, and the locust invasion, in order to re-direct the nations towards a sustainable development pathway.
The report’s authors call for urgent policy measures to cushion the effects of the Covid-19 pandemic.
“East African countries should accelerate a real structural transformation by transitioning from low value-added production to higher value-added activities that could mitigate vulnerabilities to domestic and external shocks,” says Dr Marcellin Ndong Ntah, a bank lead economist.