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Revising estimates
Making estimates is always a difficult task. This is especially true when it comes to economic forecasts for African countries. One of many reasons is large portions of the economies are in the informal sector and by definition offer fewer reliable data sources with which to make estimates.
But when it comes to the global economic crisis in the wake of the Covid-19 pandemic, even a reliably conservative institution like the IMF has been forced to revise its estimates just two months after its first prognosis.
On the top line, it now estimates the Sub-Saharan Africa region’s economy will shrink by -3.2% this year, that’s 1.6 percentage points more than it said in April. Growth is now expected to collapse in many countries especially those dependent on tourism and resources, such as oil and mineral exporters. Growth in more diversified non-resource based economies is expected to come to a “near standstill.”
Some of this might have seemed likely in April when IMF forecast 1.6% shrinkage, World Bank estimated a -2.1% to -5.1% recession. But as IMF Africa director Abebe Aemro Selassie tells me this update better reflects the realities of the fast-changing events on the ground in Africa and elsewhere in the world. “We realized the global economic environment was much weaker than we were expecting and that the periods of lockdowns in some African countries were even longer than we were envisaging.”
Indeed, IMF now forecasts the global economy to shrink by -4.9%, revised down from -3%.
While Sub Saharan Africa’s growth projection looks bad, a key longer-term concern is how real per capita GDP in the region is expected to contract by as much as -5.4% this year. The IMF says this will take the per capita GDP 7 percentage points below the level projected last October. In fact, it could effectively wipe out nearly ten years of progress made in reducing poverty in the region.
Growth in Sub Saharan Africa is expected to gradually recover if the pandemic slows down in the second half of 2020 with the IMF forecasting a return to 3.4% growth next year (it previously projected 4% growth). The problem is it’s very difficult to say with any degree of confidence the pandemic will be under control anytime soon. A common feature across several countries is even as they’ve ended lockdowns or opened up, the Covid-19 case load numbers have accelerated. The numbers in Africa are still relatively low—lower on a “per million” basis than Europe and Latin America (though higher than Asia).
But while it’s often said, as we have here, that Africa’s economic crisis could be worse than the pandemic health crisis, IMF’s Abebe Selassie calls this a “false dichotomy”. “If you don’t have the disease under control you’re not going to have an economic recovery, it’s not going to be durable.”
— Yinka Adegoke, Quartz Africa editor
Five stories from this week
How a “roots tourism” visit to Ghana was an awakening for social justice in the United States. Ghana’s Year of Return tourism campaign to commemorate the 400th anniversary of the first slave ship landing in America went down as a success on many fronts. As one study finds, a yet under-reported success could also come in form of the impact it has on racial reconciliation and understanding among travelers who made the trip.
Ethiopia is in uproar and its internet blocked over the shooting of a popular Oromo singer. The shooting of Hachalu Hundesa, an iconic Oromo singer, triggered waves of protests demanding justice over the past week in Africa’s second most populous country. As Zecharias Zelalem explains, the intensity of the demonstrations, which have seen internet services shut down nationwide, is rooted in Hachalu being a symbol of defiance and resistance for Ethiopia’s Oromo people.
Andela is shutting down all its offices but expanding across Africa by going remote. Developer outsourcing firm Andela is shutting down all its offices across Africa and the United States. Its business model previously saw it training and hiring developers in six African countries, but now Andela will take applications from interested developers across all of Africa as it morphs into a fully online developer marketplace.
The unlikely story of a former US Marine who became the darling of Nigerian radio for two decades. Back in 2000 when there were only three private radio stations in Lagos, a 41 year-old American took a chance on an ad for a radio presenter in Africa’s largest city and “he never left.” In the wake of his passing due to Covid-19, Yomi Kazeem reflects on how Dan Foster redefined broadcasting for a generation of Nigerians.
African countries are having to come to terms with a growing diaspora’s dual citizenship. Countries like Cameroon and Ethiopia are now realizing the importance of liberalizing their nationality laws. But it is not just for giving their diaspora citizens dual nationality options. As Amindeh Blaise Atabong writes, many African businessmen and professionals want to hold a passport with which they can move around the world without the unpredictability of visa applications.
Dealmaker
MFS Africa has acquired B2B digital payments player, Beyonic. Mobile money gateway giant MFS Africa, which connects wallets across different mobile money platforms, has acquired Beyonic, a digital payments services provider for enterprises. MFS Africa will absorb Beyonic’s entire team and offer its enterprise-focused service as a rebranded product.
• UK’s CDC Group and Finnfund have jointly committed $70 million to AfricInvest Fund IV, a pan-African fund which backs growth-oriented fintech agribusiness, logistics, manufacturing, healthcare and education companies. The fund is managed by AfricInvest, a prolific African private equity investor with over 160 investments in 25 African countries.
Chart of the Week
South Africa’s largest city is redoubling its reliance on data to counter a surge of Covid-19. As the national epicenter of the pandemic shifts to Johannesburg from Cape Town, officials there are teaming with scientists at the University of Witwatersrand and IBM to focus the public-health response on people who are most at risk, finds Brian Browdie in Durban.
Other things we liked
How a controversial American mining billionaire avoided US sanctions in DR Congo. In 2017, US billionaire mining magnate Dan Gertler was sanctioned by US authorities for “corrupt mining deals” in DR Congo. But a new investigation, led by Global Witness, has found he appears to have evaded sanctions by using a suspected money laundering network which runs from DR Congo to Europe and Israel while continuing to operate in the mineral-wealthy African country.
Africa’s biggest investment is taking shape under Islamist threat. In Mozambique you’ll find Africa’s biggest investment, a $23 billion project to export natural gas, under intense military guard. That’s because it’s based in an area increasingly besieged by an Islamist insurgency, write Borges Nhamire and Matthew Hill for Bloomberg. The project which is led by French oil giant Total is about to close on $16 billion in financing but there are huge logistical obstacles to overcome.
How France extorted Haiti for one of the greatest heists in geopolitical history. After the enslaved Africans of Haiti rebelled against French colonial rule and eventually won hard-fought independence, France still retained economic leverage over the new country. Marlene Daut, a historian at University of Virginia explains the roots of an onerous tax indemnity which set Haiti back for two centuries.
ICYMI
Radcliffe Fellowship Program at Harvard University. The program is taking applications from individuals or groups of two to three people pursuing research projects. (Sept. 10)
Miles Morland Foundation Writing Scholarship. The £18,000 writing grant is open to intending book authors who write in English and were born in Africa or both of whose parents were born in Africa. (Sept. 18)
*This brief was produced while listening to Jerusalema Remix by Master KG feat. Burna Boy and Nomcebo Zikode (South Africa/Nigeria).
Our best wishes for a productive and ideas-filled year ahead. Please send any news, comments, suggestions, ideas, keys for unused Andela office space and pathways to dual African citizenship to africa@qz.com. You can follow us on Twitter at @qzafrica for updates throughout the day.
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