Africa’s GDP growth projected to drop below zero on Covid-19 effects

Tuesday June 23 2020

Workers at a flower farm in Kenya.

Workers at a flower farm in Kenya. The flower business has been greatly affected by the coronavirus lockdowns. PHOTO | FILE | NMG 

The EastAfrican
By The EastAfrican
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Africa's projected gross domestic product growth of 3.2 per cent for 2020 is now expected to fall further to -0.8 per cent due to prolonged partial and total lockdown of countries brought on by the Covid-19 pandemic.

With more than 41 countries still imposing curfews and stay-at-home guidelines, sectors that depend on social interactions such as aviation, hospitality, tourism and entertainment will have little revenue.

A new report by Deloitte analysing the impact of Covid-19 indicates that the economies of Kenya, Uganda and Tanzania are expected to fall below four per cent this year.

Kenya’s projected GDP growth in 2020 will fall to one per cent from 5.7 per cent, due to a decline in tourism, export revenues and disruption in the supply chain.

REVENUE COLLECTION

The pandemic has slowed revenue base collections as reductions in household and business spending drop to about 50 per cent due to liquidity constraints.

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Disruption in the supply chain for key inputs in machinery and chemicals is about 30 per cent, decline in imports from affected countries is down to an estimated 3.1 per cent, and the tourism sector has recorded a 20 per cent decline as a result of a standstill in the global aviation industry in the past three months.

In Tanzania, the economic growth projection has been revised downwards, mostly because of a waning demand for mineral exports due to global supply chain interruptions.

Tanzania’s real GDP was initially projected to increase by 5.3 per cent in 2020, down from 6.3 per cent in 2019. However, following the impact of the Covid-19 pandemic, the country’s economic growth is expected to decline to two per cent this year.

Uganda had projected its growth at 5.3 per cent this year from 5.9 per cent in 2019 amid steady agricultural increase in production, expansion in gold-processing and delays in oil projects.

However, the pandemic has seen the country revise its economic growth to 3.5 per cent.

Uganda’s economy has been faced with disrupted supply chains and weakened global demand for goods due to slowdown in agricultural production from the localised impact of a regional locust outbreak in northeast Uganda.

The disruption of supply chains and weakened global demand has affected the inflow of raw materials and finished products for manufacturing and trading.

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