The more optimistic scenario one projects a 2020 GDP growth of -08% while the pessimistic scenario two will result in -1.1% growth. Given that the continent’s 2020 GDP growth had been projected at 3.4%, even the optimistic scenario is a significant decline of 4.18% while the pessimistic scenario projects a decline of 4.51%.
The negative growth would be due to a “disruption of the world economy through global value chains, the abrupt fall in commodity prices and fiscal revenues and the enforcement of travel and social restrictions.”
Furthermore, a 35% dip in exports and imports would be worth $270 billion. Yet, Africa will require $130 billion to “fight against the spread of the virus and medical treatment,” stated the African Union.
Drop in oil prices
Africa will lose between 20% and 30% of its fiscal revenue, which was 500 billion in 2019, forcing governments to resort to borrowing to meet the shortfall. Commodity-dependent countries such as Algeria, Angola, Cameroon, Gabon, Ghana, Nigeria, and the Republic of the Congo will be most affected.
The slump in oil price to below $30 a barrel, and a nosedive of the tourism and air transport sectors, will upend countries’ development agendas.
The tourism and oil sectors represent 25% of the GDPs of Africa’s top five economies—Nigeria, South Africa, Egypt, Algeria and Morocco. The study emphasized that, “The level of the impact of COVID-19 on these five economies will be representative for the whole of the African economy.”
Oil constitutes 90% of Nigeria’s exports and 70% of its national budget, meaning that any dip in price will have an impact on earnings. Both Nigeria and Angola, Africa’s top two oil producers, could lose up to $65 billion in income.