An estimated 13 million Africans are expected to fall below the poverty line at the end of this year in the best case scenario with 50 million at the worst as a result of the Covid-19 pandemic, according to a World Bank research on the impact of the pandemic in the continent.
The region’s gross domestic product (GDP) per capita growth is now forecast at 3-5 per cent lower meaning the number of Africans living on less than $1.9 (Sh200) is likely to increase by 2 per centage points from the estimated 41.6 per cent at the end of 2018 to 43.9 per cent at the end of 2020.
According to the multilateral lender, this is enough to sink the continent into its first recession in 25 years.
The continent, which has made major gains in poverty reduction over the years by a slight improvement in policy decisions and governance, has seen poverty levels drop from 46.6 per cent in 2010 to 41.6 per cent in 2018. The World Bank outlook mean the gains are set to be reversed as pandemic continues to ravage the fragile and relatively poor economies.
“The swift and aggressive efforts taken by many African government to contain the disease, necessary as they are, have come at enormous economic cost,” said the World Bank in the release.
African governments were struggling to raise revenue pre-Covid-19. Tax revenues are now growing at even slower rates forcing them to bridge expenditure deficit through debts.
With the pandemic at play, measures to cushion their citizens such as cash transfers, food distribution programmes, tax reliefs and stimulus packages for sectoral supports have come at a big economic cost for governments.
And the pandemic is likely to change business models in the world. When the dust settles those who will be left standing will have to go back to the drawing board and reconfigure their models in order to survive. This includes hiring workers on contract basis, reducing non profitable ventures among other sustainable models.
-BusinessDaily