By Felix Dela Klutse
Africa’s relationship with China has brought the continent and its people many advantages, including a vast market for its natural resources and billions of dollars worth of much-needed infrastructure and development expenditure.
But as the deadly Covid-19 coronavirus sweeps out of China, having already infected over 75,000 and killed over 2,200 in the country, Africa’s ever-closer relations with China risk plunging the continent into a major health and economic crisis.
Africa seems to have so far been spared the worst human impact of the coronavirus pandemic, but was already beginning to suffer the destructive economic impact of a potential global slide to recession.
Of immediate concern is the direct risk to the health of millions of Africans. People-to-people ties between the regions are unavoidable. Some one million Chinese live and work in Africa while China is home to an estimated 80,000 African students. The World Health Organisation lists 12 African countries as particularly vulnerable given their close links to China.
The outbreak of the coronavirus in the far-off Chinese province of Wuhan in December 2019 has the tendency of worsening Africa’s economic prospects, according to the International Monetary Fund (IMF) Report.
The outbreak of the coronavirus disease named COVID-19 has led to mass fear and panic worldwide. Although the infection is yet to hit Africa, concern is mounting that its arrival on a bigger scale is imminent, and that the continent won’t be adequately prepared for the fallout.
As at January 2020, fear of a COVID-19 pandemic is growing among African nations including Ghana. The economy is also in turmoil: no one knows how big the economic damage caused by the little-researched coronavirus will be. Small African companies that import food, technology or clothing from China — the country of origin of the COVID-19 pandemic — are already feeling the effects of the crisis since December 2019.
If companies in the Far -East remain closed or restrictions are imposed on Africans travelling to China, customers in Africa will be left out in the cold and sales will fall dramatically. Should the virus spread further, market watchers are predicting that many governments may be compelled to suspend schools and universities, whiles social gathering might be banned and visas cancelled for persons coming from high-risk countries. Most land and sea borders might be closed, they added.
The fate of African students in China
Around 4,600 African students are currently trapped in the Chinese province which sparked the fast-spreading Coronavirus, according to data gathered by Beijing-based consultancy, Development Reimagined.
China’s central province of Hubei, a popular university destination for African students, is the epicentre of the virus and where the vast majority of deaths have occurred since the outbreak. Wuhan, the provincial capital of around 11 million people, is in a state of complete lockdown.
African students trapped in the region are required to follow the guidelines put in place by the Chinese government which bans them from venturing outside or any form of travel. Should the students wish to return home, the Chinese government is seeking assurances they will be safely quarantined for a period of 14-days on arrival.
“For these students the situation is much more severe due to the strict quarantine procedures and transport bans across the province,” says Hannah Ryder, CEO of Development Reimagined which provided the data.
The UK, US, France, Japan and Australia have already evacuated some of their citizens who will be transferred to secure units for two weeks in order to help curb the pandemic.
As the World Health Organization announces a global emergency, African governments are scrambling to put together a response. Morocco and Algeria have publicly announced their intention to evacuate citizens, with a few other African countries expected to follow.
However, due to Africa’s relatively poor healthcare systems China is reluctant to allow governments to repatriate citizens trapped in Hubei. Many African countries lack the technology needed to diagnose the virus or properly quarantine those affected.
There were 81,562 African students studying throughout the whole of China in 2018, according to government statistics. As the number of cases in China spirals to 9,809, fears are growing over how long these students will remain protected from the virus.
Yet the window to leave the country may fast be shrinking as airlines across the world are beginning to cancel flights to China in a bid to halt the spread of the virus. In East Africa, Kenya and Rwanda have encouraged their national carriers to suspend all flights to and from China until further notice.
Unlike Ebola, which continues to blight parts of the African continent, the mildness of the Coronavirus is precisely what makes it as dangerous as it allows it to spread.
Economic challenges
…Africa’s oil sector to be the hardest hit….
Of equal significance is the economic challenge. Africa’s reliance on the Chinese economy – in particular its voracious appetite for African oil, gas and mining products – could prove debilitating.
Twenty-one African countries are resource intensive, while countries such as South Sudan, Angola and DRC are particularly reliant on exports to China. Oil prices had fallen by some 13% since the beginning of this year, as economic activity in Chinese cities and factories ground to a halt.
The United Nations Economic Commission for Africa (UNECA) has recently revised Africa’s growth downwards by more than a third, from 3.2% to 1.8%, and the Organisation for Economic Co-operation and Development (OECD) has also revised global growth figures down from 2.9% to 1.5%.
The COVID-19 pandemic, exacerbated by a Saudi-Russian oil war, looks set to slash oil prices to about $30 per barrel in the next few months ahead, according to the OECD. Stock markets had already shed trillions of dollars in anticipation of a global recession, with the US stock market recording its worst since 1987.
Oil-dependent Angola and Nigeria will be severely hit, with the hopes of an East African oil bonanza in Uganda and Kenya dashed should the disease hit the continent.
UNECA predicted that total losses for oil exporters will be around $65 billion by March 2020, adding that, oil companies operating in Africa would be particularly hard hit. It predicted that Tullow Oil might lose 31% or £1.7 billion ($2.1 billion) of its share price in the first quarter of the year.
Angola is already suffering
Angola is already suffering indirectly from the corona epidemic since the beginning of the year. The economy and finances of the country depend almost entirely on oil. The slowdown in trade with China due to the epidemic is affecting oil exports and jeopardizing the recovery of the country’s struggling economy.
“Since China is Angola’s largest oil importer, further spread of corona has a direct impact on the price of oil. Angola’s revenues are falling dramatically,” said Angolan economist, Precioso Domingos in a statement issued recently and copied Business Day Ghana.
While rising oil prices would be an incentive to increase production and make new investments in the Angolan oil sector, falling prices, on the other hand, are “poison to a fragile economy like that of Angola,” the economist warned.
Market Watchers are of the view that if the virus cause oil prices to slash down, it shall be good news for oil importing countries, and despite the global aviation slowdown, cash-strapped airlines like South African Airways may enjoy relief due to lower fuel and jet leasing prices.
Despite the aforementioned good news, the aviation sector will also face its worst crisis since the 9/11 attacks in 2001. Not all would be so fortunate. Ethiopian Airlines, CEO Tewolde Gebremariam, said since the beginning of January 2020, demand for air travel had slowed by over 20%.
Ethiopian Airlines runs six flights a day to five destinations in China including Beijing, Shanghai, Guangzhou, Chengdu and Hong Kong. The busy airport in Ethiopia’s capital Addis Ababa serves as Africa’s gateway to its largest Asian trading partner.
What will happen to South Africa’s economy?
The spread of the coronavirus will dealt another body blow to the South African economy which is already in recession and reeling from power shortages, according to the auditing firm Price Waterhouse Coopers.
“Growth is expected to contract by 1.5 percent in the first three months, if the virus spread to the country and threatens two of its main sources of income: mining and tourism,” the report disclosed.
The report said every year South Africa exports the equivalent of 450 million euros worth of iron, manganese and chromium ores to China, adding that, the announced one per cent decline in Chinese growth could result in a reduction in demand for South African raw materials.
Already beleaguered tourism companies and exporters are among those whose survival is on the line. Economists including BNP Baribas’s Jeffrey Schultz are forecasting a contraction in gross domestic product this year, a far cry from the government’s forecast of 0.9% growth.
“South Africa’s growth woes look set to worsen in the next few quarters,” Schultz and strategist Burak Baskurt, has said in emailed comments
The Situation in Nigeria:
No other country in Africa consumes more Chinese products than Nigeria, said Alhaji Muhammad Dan Auta, spokesman for the Traders’ Association in the Northern Nigerian City of Kaduna.
“Chinese products are usually found in all parts of Nigeria,” he said, adding that, people are no longer coming to the exchange office to buy foreign currency because nobody wants to travel to China. They are all afraid to come into contact with the virus, so many avoid touching bank notes.”
Uganda, Mozambique, Niger and Zimbabwe in trouble
The situation in Uganda is similar: about a fourth of Ugandan imports come from China. Should the disease spread to Uganda, supply chains would be interrupted because many Chinese factories had shut down production. Small traders selling textiles, electronics or household goods would also be in trouble.
Businessman Omar Kayiira from Kampala told Business Day in an interview that that many goods from China no longer arrive in Uganda since January 2020. Alternative suppliers, he noted, are very limited.
“There are Indian importers, but they don’t have the products I sell. At the moment it is very difficult to replace the Chinese,” Kayiira said.
Chinese goods are also dominating the Mozambican markets. Many traders are worried that products from China will soon be in short supply should the disease spread beyond February 2020.
“I might be able to buy textiles in other countries, for example in Brazil or Portugal. But there are certain products that cannot be found at reasonable prices in either Brazil or Portugal,” Alzira Simbe, a businesswoman from Maputo told Business Day in an interview.
In Niger, stocks of certain goods, including groceries, from China have already been significantly decimated, leading to higher prices, said Moussa Sidi Mohamed, who is the President of the Nigerian Chamber of Commerce and Industry.
“Electronic products in particular are getting scarce. Many importers who normally fly to China regularly are currently unable to buy the goods they need due to entry restrictions,” he stated.
Zimbabwe also appears to be experiencing considerable supply shortages since December 2019
“Before the coronavirus outbreak, I ordered some goods from China. But they never arrived in Harare. Our customers are angry,” said businessman Clifford Tsache, an electronics retailer from Zimbabwe, adding that, nobody here knows when this nightmare will end.
Zimbabwe’s struggling economy is not only heavily depending on cheap imports from China, said the importer. Zimbabwe mainly exports ores and other raw materials worth almost €900 million ($1,000 million) to China which is thus by far Zimbabwe’s largest sales market. South Africa, Great Britain, India and Zambia follow far behind. Zimbabwe is one of 21 African countries that are dependent on the sale of raw materials to China.
Can Africa rise to the challenge?
Africa is particularly vulnerable to the infection, in view of its close links to China, the weak state of most national healthcare systems and a lack of capacity for screening, testing and quarantining suspected cases, the Economist Intelligence Unit (EIU) has stated.
The 2014-16 West African Ebola outbreak showed Africa’s vulnerability to deadly epidemics, and outbreaks such as the H1N1 influenza pandemic of 2009, which disproportionately affected populations living in extreme poverty, according to the Bill and Melinda Gates Foundation.
The Foundation recently announced a commitment of $5 million to help African nations scale up preparedness for a potential spread of COVID-19. This includes funding for technical support to implement the screening and treatment of suspected cases, laboratory confirmation of COVID-19 diagnoses and the safe isolation and care of identified cases.
According to EIU, countries such as South Africa and Senegal have dedicated testing facilities. Furthermore, Ghana, Côte d’Ivoire and Nigeria have also increased surveillance of their land borders in response to the potential case.
Governments across the continents are also distributing messaging on platforms such as social media around the symptoms of the virus and precautionary measures that citizens can take to avoid its spread, such as washing hands and avoiding contact with people who are sick.
The Director of AMI Pharmacy in Ghana, Mr. Elorm Dzokoto, proposed that until a vaccine is found, the continent must continue to boost screening and quarantining measures with the support of international organisations.
“The impact and efficacy of cancelling flights to China in the coming months should the virus spread, will have to be one of the measures,” he added.
He further stated that the crisis brings home the urgency of diversifying the continent’s economic relationships away from a resource-export model vulnerable to global and Chinese shocks.
Contributing, the Director of Jack Medical Services in Accra, Ghana, Dr. Jackson Jaynell, said: “at the moment, there are so many unknowns about the transmission of this virus, so there is the need to be on a high level of alertness and readiness.”
