The economic crisis caused by the coronavirus pandemic could push as many as 39 million more people in Africa into extreme poverty this year, even as the continent’s economy is projected to rebound from its worst slump in half a century.
About 30 million Africans were pushed into extreme poverty in 2020 as a result of the pandemic and even more could follow this year if appropriate support is not provided, the African Development Bank said Friday in its 2021 economic outlook report.
This will increase inequality, reverse hard-won gains in poverty reduction and disproportionately affect women, the lender said.
It will push the total number of people living on less than $1.90 per day to 465.3 million, or 34.4% of the continent’s population.
The continent’s gross domestic product contracted 2.1% last year. While the region’s economy is forecast to rebound and grow by 3.4% in 2021, it could be hampered by a resurgence of Covid-19 infections, debt overhang, limited capital flows, potential low commodity prices, low tourism and remittances, extreme weather events and social tension, the Abidjan-based lender said.
The pandemic has caused a surge in government financing needs in Africa and some governments are struggling to service their debt.
Zambia last year became the first country on the continent to default since the onset of global health crisis. United Nations Economic Commission for Africa Executive Secretary Vera Songwe said last month more African nations will probably seek restructuring of their obligations.
The AfDB estimates that African governments needed additional gross financing of about $154 billion in 2020 to respond to the crisis.
The average ratio of debt to gross domestic product on the continent, which stabilized at about 60% between 2017 and 2019, is expected to increase by 10 to 15 percentage points by this year, the lender said.
The effective rollout of vaccines on the continent and the full implementation of the Africa Continental Free Trade Agreement could tilt risks to the upside, the according to the AfDB.
The report suggests policy recommendations to help the economic recovery, including continued support of the health sector, expanding social safety nets and strengthening regional and multinational solidarity.
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