Ebola – Outbreak and Outcome
A new study by the IMF published in October highlights the economic concerns in sub-Saharan Africa over the effects of the Ebola crisis.
The Regional Economic Outlook for sub-Saharan Africa projects growth in the region to be 5% this year (rising to 5.75% in 2015). This forecast for 2014 is below the 5.5% predicted in the April report, with the Ebola outbreak cited as one of the causes.
The report continues to press for policies promoting high growth in the whole region. But it singles out Guinea, Liberia and Sierra Leone as countries of particular concern given their Ebola outbreaks.
In those countries, the IMF report says, ‘the Ebola outbreak is exacting a heavy human and economic toll’. With the crisis at this stage impossible to contain or to accurately gauge, the report ponders on possible policies that may help these beleaguered countries.
The IMF acknowledges that some sub-Saharan countries’ fiscal accounts are coming under considerable pressure due to the Ebola crisis. Its recommendation is that ‘when grants are not immediately available [from the donor community], and provided that public debt is manageable, fiscal deficits should be allowed to widen, subject to the availability of financing’.
Playing their part in the financial intervention, the IMF in September approved a package of financial assistance to Guinea, Liberia and Sierra Leone totalling $130 million. The three countries are facing substantial revenue shortfalls – estimated at $300 million – as well as increased spending to combat the outbreak.
However, the three countries most affected are also planning on a programme of mutual support. Earlier in October the Finance Minister of Sierra Leone, Kaifala Marah, said that he had met with his counterparts in both Guinea and Liberia to explore a post-Ebola strategy.
Minister Marah said: ‘We have decided that we will come up with a holistic strategy that we will share with our partners, both bilateral and multilateral.’
He said that the crisis had given him a fresh perspective on his country and the region. ‘Ebola has made me appreciate and begin to understand that fragility is self-reinforcing, because if we had had the right infrastructure, the right institutions, and the right human capacity to be able to confront Ebola, we would not have suffered as we have.’
And Then Came Ebola
The irony is that Sierra Leone and several countries in the region have been stable and growing economies over the last few years. As Minister Marah says: ‘And then came Ebola’.
Within Sierra Leone much of the agriculture that underpins exports, like coffee and cocoa, have dramatically declined as the farmers have fled the land. Construction has slowed as the workers have also fled, fearing contracting the disease.
The world is still working out how best to respond to the Ebola threat both in Africa and, in still isolated cases, on other continents. But the effect on the three most affected countries is what the Sierra Leone Finance Minister calls ‘an economic embargo’.
He spells out the consequences: ‘Tourism is down 50-60 percent. Air travel is about to stagnate and strangle the whole subregion. We have been isolated. Whether that is a global best practice or strategy, someone has to advise us. But it really is killing our economies.’
The statement about Ebola and the response to it affecting the whole subregion is echoed as far afield as Kenya. There, tourists have cancelled due to Ebola fears and, as a regional hub, Kenya is seeing transportation declining as another consequence.
The country’s Treasury Secretary, Henry Rotich, is further concerned that sub-Saharan Africa, a major export market for Kenya, could also weaken as a result of the Ebola outbreak. His concerns seem to be backed up by the latest IMF report.
With the crisis still developing, the report sounds a note of caution for future developments: ‘A more protracted Ebola outbreak or a wider extension of the epidemic could have severe consequences for the economy of the region, as it would undermine trade, transport activities, and investment.’
The Ebola crisis has shown the fragility of some of the burgeoning economies in sub-Saharan Africa. Whatever the eventual outcome, it has shown that investment in infrastructure and systems, however it is funded, can have unforeseen benefits. When the crisis is over, those investment programmes will need to continue to be built, or rebuilt, as the IMF’s Managing Director, Christine Lagarde says:
‘The IMF is working hard with the authorities of the affected countries and their development partners to ensure that the outbreak is quickly brought under control and to assist the economic rebuilding effort that must follow.
‘The Ebola outbreak in Guinea, Liberia and Sierra Leone has already cost too many lives.’