The World Bank has predicted a recession in sub-Saharan Africa this year, the first in 25 years as the regional economy is expected to shrink 5.1 percent on the backdrop of the coronavirus pandemic while already fragile economies like Zimbabwe are anticipated to plunge even deeper.
In the latest Africa’s Pulse report, the World Bank’s twice-yearly economic update for the region, oil and mineral exporting economies such as Nigeria, South Africa and Angola have been the worst hit so far as prices have drastically fallen on international markets.
“Africa alone will not be able to contain the disease and its impacts on its own,” Albert Zeufack, the bank’s chief economist for Africa, said.
And yet for a raw mineral export country like Zimbabwe the global standstill will be disastrous as it compounds problems for an already dire economic situation.
Zimbabwe is already grappling with effects of consecutive droughts and a complex economic and financial crisis.
The World Bank estimates sub-Saharan Africa could need an economic stimulus of as much as US$100 billion to get back on its feet.
Zimbabwe had earlier anticipated a 2.7 percent growth for the year, which was already hanging on the balance following an erratic rainfall-fed farming season.
The effects of the unforeseen coronavirus is hence expected to shrink the economy even worse although Zimbabwe’s fiscal and monetary authorities are yet to announce revised figures for the year.
“Sub-Saharan economies, including Zimbabwe have structural challenges. We depend largely on primary commodities so our performances are largely influenced by global economic and financial developments. We are price takers of our commodities so we have limited ability to dictate prices,” economic analyst, Persistence Gwanyanya said.
Already, Zimbabwe stands to lose the much needed foreign currency when one of its largest foreign currency earners, tobacco hits the auction floors this month.
With economies and global travel at standstill due to lockdown restrictions across the globe, tobacco price will be hard hit.
“Depressed revenue in mineral commodities and an anticipated low uptake of tobacco in following weeks since China who are the major off takers are on lockdown, Zimbabwe will surely feel the pinch,” Gwanyanya added.
Market watchers have also underscored the effects of a recession in the region also having an undesirable effect on Zimbabwe’s trade with its regional partners.
South Africa, the country’s biggest trading partner whose economy was already sliding towards recession beginning of the year is likely to slow down trade between the two neighbors particularly in the commodities sector as prices continue to fall.
South Africa is already a major off taker of Zimbabwe’s gold which is processed at the Rand Refinery.
The recession is hence expected to result in massive job losses and company closures.
Already companies have started to streamline operational costs in various ways including workers lay off, putting employees on unpaid leave, terminating contract workers agreements and cutting wages by 20-50 percent.
Most governments in the region have however found themselves with the dilemma of either saving jobs or lives given the limited resources at hand and all resources have since been directed to improve healthcare systems in the fight against Covid-19.
