COVID-19: An Unprecedented Threat to Development in Sub-Saharan Africa

Sub-Saharan Africa, April 15, 2020

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Sub-Saharan Africa is facing an unprecedented health and economic crisis that threatens to reverse recent development progress and slow the region’s growth prospects in the years to come.
The COVID-19 pandemic has spread through almost all countries in the region and has precipitated an economic crisis reflecting three large shocks: disruption of production and a sharp reduction in demand; spillovers from a sharp deterioration in global growth and tighter financial conditions; and a severe decline in commodity prices.
As a result, the region’s economy is projected to contract by 1.6 percent this year—the worst reading on record.
The economic crisis will exacerbate social conditions and aggravate existing economic vulnerabilities; containment measures and social distancing will jeopardize livelihoods.
Policy priorities include ramping up health capacity and spending to save lives and contain the virus outbreak; mobilizing support from development partners, including debt relief for the most vulnerable countries; and deploying fiscal, monetary, and financial policies to protect vulnerable groups, mitigate economic losses, and support the recovery. Once the crisis subsides, fiscal positions should return to sustainable paths.
Publication: April 2020

Ramp up health capacity and spending to save lives and contain the virus outbreak.
Seek support from all development partners to address sizable financing needs, including debt relief for the most vulnerable countries.
Use fiscal, monetary, and financial policies to:
- Protect vulnerable groups.
- Mitigate economic losses.
- Support the recovery.
Restore fiscal positions to sustainable paths once the crisis subsides.

Sub-Saharan Africa is especially vulnerable to climate change due to heavy reliance on rain-fed agriculture and limited resilience and coping mechanisms.
On average, climate change could reduce GDP growth by at least 1 percentage point in the month a climate shock occurs.
Effective resilience measures include improving access to finance and insurance, education, health, telecommunications, and physical infrastructure.
Ensuring food security and raising agricultural productivity in the face of intensifying weather shocks will require targeted social assistance, crop diversification, and improved irrigation.
These measures involve large public spending but are more cost-effective than frequent disaster relief.
Limited fiscal space poses a challenge and means development partners’ support will be critical.

Sub-Saharan Africa is rapidly becoming digitally connected and closing gaps with the rest of the world; digital solutions have taken on added importance during the COVID-19 pandemic.
Analysis conducted before the pandemic found that a one percentage point increase in internet penetration in the region can raise per capita growth by 0.1–0.4 percentage points.
There does not appear to be an impact on overall employment, although the share of service sector jobs increases.
Evidence suggests digitalization can help reduce corruption, improve public sector accountability and efficiency, and support financial development.
Digitalization also brings new risks (e.g., cybersecurity, business continuity) and challenges to macro-policy making (e.g., monetary policy transmission, changes to the tax base).
Policies to enable and leverage greater connectivity include investing in complementary infrastructure and human capital; developing legislative and regulatory frameworks; and granting supervisory powers to ensure consumer protection and address risks.

IMF Regional Economic Outlook: Sub-Saharan Africa — "COVID-19: An Unprecedented Threat to Development in Sub-Saharan Africa" (April 2020).

Executive Summary (ch1)
- Executive Summary (ch1) (Markdown version)
- Executive Summary (ch1) (PDF)
Chapter 2
- Chapter 2 (Markdown version)
- Chapter 2 (PDF)
3. Digitalization in Sub-Saharan Africa
- 3. Digitalization in Sub-Saharan Africa (Markdown version)
- 3. Digitalization in Sub-Saharan Africa (PDF)
onlineannexch2 - Section 1
- onlineannexch2 - Section 1 (Markdown version)
- onlineannexch2 - Section 1 (PDF)
Annex 3.2 Internet Penetration and Macroeconomic Impacts
- Annex 3.2 Internet Penetration and Macroeconomic Impacts (Markdown version)
- Annex 3.2 Internet Penetration and Macroeconomic Impacts (PDF)