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African countries facing down economic catastrophe

African countries facing down economic catastrophe
With its population youngest among all continents, Africa may survive by investing in human capital in the post-COVID-19 world

By Felix Tih

ANKARA (AA) - Africa -- the world's second-largest and second-most-populous continent -- is estimated to lose $90 billion to $200 billion in 2020, due to the novel coronavirus outbreak, according to a study released by the global auditing firm McKinsey & Company's experts.

For 1.2 billion population, spread in 54 countries, the informal sector is major employment absorbing segment in the continent, rich in resources, but poor in their sourcing and management.

In Sub-Saharan Africa, the informal sector contributes 66% of total employment, which is classified as a set of economic activities, enterprises, and jobs, that are unregulated or not protected by the state.

People are struggling with little or no help from governments, as most businesses have closed down affecting employments and livelihoods.

The number of coronavirus cases in Africa has crossed 10,000, with death toll also surpassing 500.

World Health Organization (WHO) Regional Director for Africa Matshidiso Moeti has said that the COVID-19 has potential not only to cause thousands of deaths, but to unleash economic and social devastation in the continent.

Although African governments have introduced numerous measures to stem the spread of the virus, including closing schools, imposing travel restrictions, and banning large gatherings, closing markets, there is no still letup in reporting of fresh cases.

“I can no longer move from place to place, there is the cessation of movement in Nairobi, even before this, offices were closed because everyone was told to work from home. I used to make around 4000 Kenya shillings ($37) every day. Now I cannot make even one single shilling,'' Mercy Warui, a food hawker in Nairobi told Anadolu Agency.

Warui, 30, single mother of two children said she was now living with her brother as she has no money. ''He is a teacher but even for him he always says he will run out of savings soon because teachers are also not working," she said.

''Informal sector players earn livelihoods by bringing agriculture goods from farms to urban settlements and are part of a food chain,” Richard Munang a UN Environment Program expert told Anadolu Agency.

-Closing down food market hit the economic chain

He said closing down of food markets have affected a large number of people in the informal sector, who trade less than $150 daily and rely on for a daily wage. The lockdown has also spoiled perishable stocks.

''They closed markets as a measure to stop the spread of the virus. That means no customers. No customers mean no money to take care of my son who is only four months old,'' Fabien Chenyi, a small shop manager in Yaounde, Cameroon told Anadolu Agency on phone.

Like Waruli, many daily wage earners are hoping the lockdown period will end soon. She hoped that a cure for the pandemic will become as soon as possible, otherwise she expects chaos in Nairobi.

“If I can't feed my children and myself. I would do anything to get money or food and options are doing terrible things that I do not like to say,” she said.

-Need to invest in human capital

Munang said that governments in African countries must come up with creative solutions to ensure the sustainability of the informal sector. He said Africa must invest purposefully towards unlocking credit opportunities in the informal sector. Africa’s informal sector represents an over $300 billion worth credit market.

But this remains untapped because formal credit structures led by the commercial banks remain reluctant to finance the informal economy, according to Munang.

He said that unlike the West, Africa has the advantage of youth bulge. Therefore, there is a need to invest in human capital and produce a skilled population.

“In the post-COVID-19 world, those economies will recover fast, who have productive human capital," said the UN official. He said that governments must prioritize helping those trading in perishable commodities.

He said that a stimulus package to small trades and regulating them through cooperatives could help the revival of economies in the continent.

*Andrew Wasike contributed to this story from Nairobi, Kenya.

source: News Feed
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