Investors urged to ‘stay with Africa’ to relieve economic impact of Ebola

Out-Law News | 02 Sep 2014 | 5:25 pm | 3 min. read

The head of the African Development Bank has urged the international community not to impose “additional unnecessary measures” on countries in West Africa that would add to the economic impact of the Ebola outbreak.

Donald Kaberuka said: “Revenues are down, foreign exchange levels are down, markets are not functioning, airlines are not coming in, projects are being cancelled, business people have left – that is very, very damaging.”

Kaberuka said: “Ebola is causing enormous damage to West African economies, draining budgetary resources and slashing economic growth by up to 4% as foreign businessmen leave and projects are cancelled.”

In addition to tackling the spread of Ebola, “we must also consider the economic impact it has had on affected nations”, Kaberuka said. “The crisis is a risk for the continent's image, in terms of reductions in the flow of investments and the formation of a new stigma, just when Africa is taking off.”

Liberia’s government has already said it will have to lower its 2014 growth forecast. Liberia’s finance minister Amara Konneh said: “My message is ‘don’t leave the country... stay with us, let’s fight this together.”

In an interview with Front Page Africa Konneh said Liberia’s government has been working with the International Monetary Fund (IMF) on a new economic growth projection. Figures released by the country’s finance and development planning ministry for the last seven days of July “showed a significant drop averaging $433,000 on a daily basis compared to an average daily collection of $1.5 million prior to the intensity of the fear of Ebola”, Konneh said.

Konneh said: “Comparatively, last fiscal year July shows a performance of 10% above target in terms of revenue collection for the month while the current year fiscal year underperformed by 6% compared to target. In the previous year, the last seven days in July contributed 11% of the total revenue collected for the month, while the current year shows just 8% contribution during the same period. The slow pace in revenue collection has since continued mainly due to the fear of Ebola.”

Current indications, while being too early to be definitive, indicate that up to $12m in government revenue has been lost since the emergency began and the country could still lose more, Konneh said. “This may be small money by international standards, but it’s big for Liberia. It represents about 2% of our budget. If Ebola is not contained, it will have serious socioeconomic consequences for our economy and people.”

An initial assessment by the World Bank and the IMF for Guinea projects a “full percentage point fall in gross domestic product growth from 4.5% to 3.5%” for that country. The World Bank said: “Cross-border commerce has slowed considerably with land crossings closed to neighbouring countries and more recently cancellation of flights. There have been noticeably fewer international flights to these countries, leading to lower revenues and financial inflows, and many projects involving expatriate workers or business travellers have been scaled down. In the mining sector, if the evacuation of skilled expatriate staff continues, there will be a sizeable decline in production.”

IMF spokesman Gerry Rice said: “The Ebola outbreak is having an acute macroeconomic and social impact on three already fragile countries in West Africa. That’s Guinea, Liberia, and Sierra Leone. Our staff is actively working with the governments of those three countries to prepare an economic assessment of the impact, of the outbreak. What is already clear at this stage is that growth is likely to slow sharply in all three cases, and significant financing needs are likely to rise.”

Rice said all three countries “have an on-track extended credit facility programme with the IMF”. He said the IMF is “actively working with all three countries to prepare a preliminary economic assessment of the impact of the Ebola crisis and additional financing support that may be required.”

Mead Over, a senior fellow at the Center for Global Development in Washington DC told Voice of America: “What worries me is there seems to be an inability by the international economic community and international business to discriminate between Ghana and Burkina Faso, that have never reported a case of Ebola, and Guinea, Liberia and Sierra Leone.”

Over said: “I’ve heard about cancellations of trips to and business with other countries, including Nigeria. Putting major industrial plans on hold because of the Ebola crisis is not logical, it’s a fear response that’s not justified.”