This article was first published on BusinessLIVE on 27 July 2021.
The economic uncertainty in the wake of the Covid-19 pandemic places a heavy burden on economists to formulate effective recovery and resilience strategies — the more so in Sub-Saharan Africa. According to the World Bank’s recent biannual Pulse report, the pandemic has exacted a heavy toll on economic activity in the region, putting a decade of hard-won economic progress at risk. Depending on the success of measures taken to mitigate the pandemic’s effects, it is estimated that economic activity will shrink by between -2.1% and -5.1% in 2020 from growth of 2.4% in 2019.
The dip could be attributable to an approximate 6.9% contraction in African economies, which are heavily reliant on exports of commodities — whose prices are dropping. This could claw back some of the major strides Africa has made in its participation in trade and value chains, as well as result in a reduction of foreign financing inflows.
Africa’s international trade has surged in the past two decades. According to a recent Unctad report, in the period 2015-2017, total trade from Africa to the rest of the world averaged $760bn at current prices. Similarly, the share of exports from Africa to the rest of the world represented 80%-90% of the continent’s total trade transactions between 2000 and 2017.
"AfCFTA is key to intra-African trade but the road remains bumpy, for now. Its litmus test will be how quickly members can fast-track export diversification and product sophistication. Domestic policymakers will need to demonstrate their commitment to industrialisation and manufacturing."