Africa’s path to economic recovery from the global COVID-19 pandemic is uncertain and fragile, investment experts and seasoned professionals said at the debut Africa Investment Roundtable (AiR) conference.
Speaking at the conference which took place on Monday, Arunma Oteh, an academic scholar at the University of Oxford and co-founder, AiR, noted that the 2021 outlook of the continent’s economy appears fragile and uncertain despite the progress in the production and distribution of vaccines.
“Something that policy makers need to watch is financial stress and other issues that could compromise financial stability. One of the most challenging issues is restoring confidence across the world. We need to restore consumption, trade and investment to come back because those are the things that fuel recoveries,” Oteh said.
African states have mostly escaped the death toll that COVID-19 has exacted on the Western nations. But the economic impact of the pandemic has been especially severe, plunging Africa into its first continental recession in two decades.
According to the Atlantic Council, an American think tank in the field of international affairs, the impact is a lost $115 billion in output and 40 million more people pushed into poverty.
“The path to recovery is not clear yet. Unless we can scale up the appropriate responses both in the monetary policy and fiscal responses and have both the public and private sector to play their part to ensure that there is containment on the economic impact of COVID and do this with a sense of urgency, the outlook will be certain,” Toyin Sanni, Group CEO, Emerging Africa Capital Group and co-founder of AiR said.
According to World Bank data, Sub-Saharan Africa (SSA) regional GDP is projected to grow modestly by 2.1 percent in 2021, below its level in 2019, before rising to 3.2 percent in 2022 – fuelled by a robust recovery of investment and domestic consumption. But many SSA countries will not return to 2019 levels of output until 2022–24, according to the International Monetary Fund.
On the opportunities that Africa, policy makers, domestic and foreign investors can take advantage of in the pandemic, the experts proffered African Continental Free Trade Area (AfCFTA) Agreement, renewable energy and strengthened financial services.
Sanni said, the major game changer for Africa at this time is the implementation of AfCFTA which has been described as Africa’s recovery plan.
“We think that this will be a critical part of resolution of the economic downturn we are experiencing across the region and also help us with improving value addition and diversification which is critical to many African economies who are dependent on raw commodities with minimal value addition,” Sanni added.
She also added that we have an opportunity to strengthen the entire ecosystem for financial services through technology be it in retail, commercial, capital markets, insurance etc., ensure we must bank the unbanked and make credit to be available to African businesses both large and small.
“The new climate economies estimate that the climate economy is a $26 trillion economy that could create 65 million jobs by 2030. My view is that Africa is uniquely positioned to benefit from global green energy because it is blessed with abundant clean energy whether it is solar, hydro or wind,” Oteh said.
On the key lessons learnt from the COVID, Oteh noted that she learnt how humans genuinely respond to crisis and the value of good leadership. While for Sanni, it was the importance of collaboration.
AiR is a research-based thought leadership platform providing in-depth examination of the African investment landscape.
