Analysing Long-Term Socio-Economic Impacts of COVID-19 across Diverse African Contexts

Abstract

The spread of COVID-19 has been devastating for the millions of people who have been infected by the virus and lost their lives and the tens of millions of people who have lost their work and livelihoods. Governments and civil society have responded swiftly to the virus with policies that reduce human interaction and slow its spread. These policies have had the adverse effect of further reducing labour participation, productivity and capital utilization, reducing household consumption and increasing poverty across various thresholds, both in absolute and relative terms (Dabalen and Paci, 2020; International Monetary Fund [IMF], 2020b; Organisation for Economic Co-operation and Development [OECD], 2020a; Roberton et al., 2020; Verity et al., 2020; World Trade Organization [WTO], 2020). The COVID-19 pandemic has significantly reduced economic growth and altered patterns of international economic interaction. While we are still in the midst of the crisis, there is real concern that the majority of macroeconomic effects will not be temporary, but will disproportionately shift long-term development pathways in low- and middle-income countries, offsetting some of the gains made towards achieving the Sustainable Development Goals (SDGs) in recent decades. In this report, we study the long-term dynamics of COVID-19 at the country level in Africa through a macroeconomic lens. Specifically, we analyse how today’s effects on country-level mortality, gross domestic product (GDP) growth and international monetary flows of trade, aid, foreign direct investment (FDI) and remittances will shape long-term patterns of mortality, economic growth and international trade by 2030 and 2050. In addition, we unravel how these macroeconomic changes will affect socio-economic indicators and human development by quantifying the outcomes for child mortality and poverty over the coming decades. This report presents a conceptual framework (see Figure 1) that conceptualizes the effects of COVID-19 on human development as cascading across three systems. First, COVID-19 directly effects human health systems, changing patterns of mortality and morbidity with differential distribution across countries. Second, these direct health effects are mitigated through government policy and civil society actions that reduce human interaction, slowing the spread of the virus and saving lives while also reducing economic activity and changing patterns of production and consumption. Finally, these changing economic effects ripple through the international economic system, changing patterns of trade, FDI, foreign aid and remittances. Some countries may have fewer direct health effects from COVID-19 – a finding particularly relevant for many countries in Africa – but may experience more direct effects from changing patterns of international economic interdependence.We model these dynamics across 10 countries in sub-Saharan Africa: Angola, Cabo Verde, Chad, Democratic Republic of the Congo, Ethiopia, Kenya, Mali, Mauritius, Nigeria and South Africa (referred to as the Africa-10). The countries were selected based on regional spread, differences in their domestic economic structure, and their dependency and interconnectedness with the global economic system. We use the International Futures (IFs) model to assess the immediate and long-term consequences of COVID-19 across these first-, second- and third-order effects. We built scenarios with diverging assumptions around the COVID-19 effect on mortality in 2020 and GDP growth and international trade in 2020 and 2021. We compare these scenarios with a No-COVID scenario, representing a world in which COVID-19 did not occur.