The International Monetary Fund (IMF) has predicted that Nigeria and other Sub-Saharan African (SSA) countries will lose over $200bn in income at the close of 2020 fiscal year due to the COVID-19 pandemic.
The Head of Research in the IMF’s African Department that publishes the Sub-Saharan Economic Outlook report, Mr. Papa N’Diaye, made this forecast in a podcast on Sunday.
N’Diaye said by the end of 2020, the region will face income losses of about $200 billion “relative to what they were expecting 6 months ago.”
He noted that in 2019, the income lost was about $100bn, stressing that failure to contain the virus will have catastrophic consequences on the SSA’s health care systems and the economies.
According to the researcher, Sub-Saharan Africa “is facing an unprecedented health and economic crisis that threatens to reverse much of the development progress it’s made in recent years.”
The latest Regional Economic Outlook by IMF projected the economies would contract by -1.6 percent this year; the worst reading on record.
N’Diaye explained that -1.6 percent negative growth is based on the hope that the pandemic will be contained the first half of this year and might begin to see some sort of improvements in Q3 and Q4.
He, however, pointed out that there is a lot of uncertainty around it because of the low commodities prices, especially for oil producing countries.
The finance expert recalled that “the region was making significant progress towards achieving its sustainable development goals. There was progress in improvement of education, reduction in poverty from 60 percent in early 2000 to 40 percent, which is still high but some improvements there.”
On the solutions to the income challenge for SSA countries, N’Diaye said that “the immediate priority is for countries to do whatever it takes to ramp up health spending to contain the outbreak.”
He further advised after containing the pandemic, SSA countries can turn their attention to softening the impact on businesses and households by taking measures to support the economy through cash transfers to vulnerable households including to the informal workers because the informal workers are large in Africa.
In addition, he said the next stage for the countries would be to introduce policies that will ensure debt sustainability.