…says 30m jobs may be lost
The Coronavirus (Covid-19) pandemic could push as many as 49.2million more people on the African continent into extreme poverty in 2021 and as many as 30 million jobs may be lost to the crisis, the African Development Bank (AfDB) has said. The bank made the prediction in its latest economic outlook on the continent released yesterday. According to the AfDB, the worsening poverty level on the continent is because its Gross Domestic Product (GDP) growth continued to fall below population growth rate. Under a scenario in which the pandemic continues into the second half of this year, the AfDB forecasts a 3.4 per cent contraction in GDP in 2020 – compared with a pre-pandemic projection by the Abidjan-based bank of growth of 3.9 per cent.
It said a partial V-shaped recovery should see growth rebound to between 2.4 and three per cent next year. The lender, however, said: “The projected recovery in 2021 would not make up for an estimated cumulative loss to Africa’s GDP of $173.1–$236.7 billion for 2020 and 2021 due to the pandemic.” It said Nigeria and Democratic Republic of Congo, two of Africa’s most populous countries, would record the largest increase in their poverty rates, adding that it could be between 8.5 and 2.7 million respectively in the baseline scenario in 2020, and 11.5 and 3.4 million in the worst-case scenario.
The bank noted in the report that about 773.4 million Africans were employed in 2019 and projected under the pre-COVID –19 assumptions to grow to 792.7 million in 2020. According to the AfDB, under the baseline scenario of a 1.7 per cent GDP contraction, employment is projected to decline by 24.6 million jobs in 2020. It further stated that under the worst-case scenario of a 3.4 per cent GDP contraction, up to 30 million jobs could be lost. “Between 28.2 and 49.2 million more Africans could be pushed into extreme poverty. “Although the number of people in extreme poverty in Africa (using the 1.90 dollars international poverty line) was projected to reach 425.2 million in 2020 under the no-outbreak scenario, COVID –19 could increase it further to 453.4 million in the baseline.
“The brunt will be mostly felt by the working poor, who account for almost half of the employed. “And the crisis would also affect the nature of surviving jobs, since wages and working hours for those in the formal sector could be downgraded.
“The number of workers switching to informal sector jobs could increase as a survival strategy to maintain incomes in the face of lockdowns and restrictions,” it stated To tackle the crisis, the AfDB said central banks on the continent should act quickly by cutting interest rates to inject liquidity. It also said that targeted interventions should be implemented for affected firms and sectors and use macroprudential and unconventional monetary policy to support the economy.