ECA’s Economic Report on Africa addresses the continent’s vulnerability during COVID-19
The disruptions caused by the COVID-19 pandemic pushed an estimated 55 million Africans into extreme poverty in 2020 and reversed more than two decades of progress in poverty reduction on the continent.
So says the Economic Report on Africa 2021 (ERA2021) launched today on the sidelines of the annual Conference of Ministers of Finance, Economic Planning and Development (CoM2022) of the Economic Commission for Africa. Africa in Dakar, Senegal.
Entitled: “Addressing poverty and vulnerability in Africa during the COVID-19 pandemic”, the report shows that the pandemic has led to job losses, reduced incomes and even more limited the ability of households to manage risks. . An estimated 12.6% more people are likely to be pushed into poverty in a single year than the combined total of additional poor since 1999
Furthermore, poor households move in and out of poverty due to exogenous shocks like the COVID-19 pandemic and their inability to manage uninsured risks only increases their vulnerability. Thus, achieving sustainable poverty reduction requires a thorough understanding of the link between poverty, risk and vulnerability.
“According to current projections, the pandemic is likely to increase the number of people living in extreme poverty, in Africa and around the world,” the report said.
The report was produced by ECA’s Strategic Planning, Oversight and Results Division; the Gender, Poverty and Social Policy Division; and the Macroeconomics and Governance Division.
Hanan Morsy, Deputy Executive Secretary of ECA, said the report analyzes the implication of COVID-19 in terms of poverty, but brings a new dimension highlighting vulnerability in Africa. It brings the element of people-centered analysis of what happened during COVID-19 and what we need to do to ensure that the vulnerable population is protected in terms of social safety net and implementation. place good policies.
“This report is particularly relevant given what we have seen implications on the continent. The most critical implication of COVID-19 has been the undoing of the very hard-won gains the continent has managed to achieve in poverty reduction,” Ms. Morsy said.
While presenting the main findings of the report, Adrian Gauci, Head of Economic Affairs at ECA, said African countries have responded to the effects of the COVID-19 pandemic on poverty partly through fiscal and monetary policies. expansionary to maintain consumption and aggregate demand and prevent business closures. and job losses.
“A major contribution of the report is its emphasis on the centrality of risk and vulnerability to shocks in the design of poverty reduction strategies in Africa,” Mr. Gauci said.
“The report calls for an urgent need to explore innovative and affordable market-driven insurance schemes that can insure the poor against future shocks. The collaboration of governments with the private sector is essential.
According to the report, the African Continental Free Trade Area (AfCFTA) is an opportunity to build better Most African countries are still dependent on commodity exports and imports of essential goods such as food and pharmaceuticals.
“If the AfCFTA is effectively implemented, intra-African trade is expected to be about 35% higher than without the grouping by 2045,” the report states.
“The AfCFTA would help Africa industrialize and diversify, reducing trade dependence on external partners and increasing the share of intra-African trade from around 15% today to more than 26%.
Highlights of the report cover Africa’s economic trends, monetary policy performance, exchange rate, fiscal deficit and external debt and trade trends.
The COVID-19 pandemic has severely disrupted the movement of people, goods, services and capital, and its impacts have led Africa’s GDP to contract by around 3.2% in 2020. The pandemic is expected to further weigh on already slow economic growth.
Monetary policy performance
In 2018 and 2019, before the COVID-19 pandemic, most African countries had accommodative monetary policy as inflation remained stable or falling
Exchange rate performance
In 2019, many African countries experienced exchange rate volatility as their currencies depreciated, primarily due to trade-related uncertainties and capital outflows, as well as country-specific factors such as worsening budget deficits, lower foreign exchange reserves and lower capital inflows.
Increase in budget deficits and external debt
Africa’s fiscal deficit declined from 5.3% of GDP in 2017 to 3.0% in 2019, mainly due to government fiscal consolidation efforts.
Africa’s trade trends
The share of global exports decreased from 2010 to 2019 in Africa, but increased in other regions of the world. The continent’s share fell from 2.48% in 2019 to 2.14% in 2020, although Asia and Europe resisted, in part thanks to the continued supply of consumer goods and products medical services during the COVID-19 pandemic.
The report recommends that African governments adopt targeted social protection; provide short-term social assistance to the most vulnerable people; ensure the protection of health for all.
In the longer term, African countries need to build their resilience by investing in protecting health for all, which also offers great potential for job creation; Build a national and regional health emergency preparedness and response system for future pandemics; Strengthen national vaccine production capacities through initiatives such as the Africa Vaccine Manufacturing Partnerships; Leverage the African Continental Free Trade Area and other Africa-wide initiatives to create decent jobs and reduce poverty.
Distributed by APO Group on behalf of the United Nations Economic Commission for Africa (ECA).
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