As the effect of the COVID-19 pandemic is felt throughout the world, Nigeria and the rest of Africa are likely to feel it more with decreasing oil income and remittances from abroad, which are major sources of income for the governments and the people.
According to the African Union (AU), study, Nigeria and Angola, Sub-Saharan biggest producers of oil alone could lose $65 billion in income this year due to the impact of the COVID-19 pandemic.
“With economic activity in the doldrums in many advanced and emerging market countries, remittances to Africa could experience significant declines,” the report stated.
The study states that African oil exporters will experience their budget deficits double this year while their economies shrink three per cent on average, with over 20 million jobs at risk. Projections are that African governments could lose up to 20 to 30 per cent of their fiscal revenue, estimated at $500 billion in 2019.
The Gross Domestic Product, GDP, of African countries will expectedly contract, with oil and commodity prices tumbling.
AU envisions that Africa’s economy will shrink 0.8 per cent, while the pessimistic scenario said there would be a 1.1 per cent dip. Foreign Direct Investment will reduce drastically and employment will be heavily impacted.
Exports and imports are meanwhile projected to drop at least 35 per cent from 2019 levels, incurring a loss in the value of trade of around $270 billion.
The report said the fight against the virus’ spread will lead to an increase in public spending of at least $130 billion.
Africa’s oil producers, which have seen the value of their crude exports plunge in past weeks, will be among the worst hit.
Africa has in recent years been among the fastest growing regions in the world for tourism. But with borders now closed to prevent the disease’s spread and entire airlines grounded, the sector has been almost entirely shut down.
Countries where tourism constitutes a large part of GDP will see their economies contract by an average of 3.3 per cent this year. However, Africa’s major tourism spots Seychelles, Cape Verde, Mauritius and Gambia will shrink at least seven per cent.
“Under the average scenario, the tourism and travel sector in Africa could lose at least $50 billion due to the COVID-19 pandemic and at least 2 million direct and indirect jobs,” the AU study said.