SPE­CIAL COV­ER­AGE ON EBOLA: How peo­ple’s lives are chang­ing

For­eign work­ers re­turn home, cit­ing con­ta­gion fears

Africa Renewal - - Front Page - By Kings­ley Igho­bor

The eco­nomic im­pact of the Ebola virus out­break in the most af­fected coun­tries — Guinea, Liberia and Sierra Leone — is still un­rav­el­ling. Fig­ures are be­ing col­lected and it is still un­clear when the deadly virus will be con­tained. Even the most op­ti­mistic pro­jec­tions paint an un­cer­tain eco­nomic fu­ture for those coun­tries.

Even be­fore the Ebola out­break, th­ese three West African coun­tries were among the world’s poor­est. The 2014 UN De­vel­op­ment Pro­gramme’s Hu­man De­vel­op­ment In­dex, which ranks coun­tries based on in­come, life ex­pectancy, ed­u­ca­tion and qual­ity of life, placed Sierra Leone 183 out of 187 coun­tries, Guinea at 179 and Liberia at 175. The fear is that Ebola could eat away at the slim im­prove­ments that new in­vest­ments have pro­duced.

A World Bank study on the eco­nomic im­pact of the Ebola epi­demic in 2014 iden­ti­fied two pos­si­ble sce­nar­ios. The first sce­nario is “Low Ebola” — when the dis­ease is con­tained by early 2015, cases stay around 20,000 and eco­nomic ac­tiv­ity grad­u­ally in­creases; the sec­ond sce­nario is “High Ebola” — when the dis­ease is con­tained more slowly, cases reach up to 200,000 peo­ple and the out­break wors­ens sig­nif­i­cantly into 2015. The bank ob­serves that in the “High Ebola” sce­nario, West Africa’s gross do­mes­tic prod­uct (GDP) could suf­fer a $32 bil­lion loss by 2015; in the “Low Ebola” sce­nario, GDP loss for the re­gion could be about $4 bil­lion.

In a “Low Ebola,” Guinea’s GDP would con­tract to 2.4% from 4.5%; Liberia to 2.5% from 5.9%; and Sierra Leone to 8% from 11.3%. Clearly, the wheels are com­ing off th­ese economies. “The Sierra Leonean econ­omy has been de­flated by 30% be­cause of Ebola,” Joseph Se­say, the coun­try’s agri­cul­ture min­is­ter, told the BBC.

A UNDP re­port, “The Eco­nomic and So­cial Im­pact of Ebola Virus Dis­ease in Sierra Leone”, warns that Ebola could wipe out post-war eco­nomic gains in the coun­try. Cur­rently, there are food short­ages even as the lo­cal cur­rency, the leone, is de­pre­ci­at­ing at a fast pace.

In Liberia, the price for a bag of rice, the sta­ple food, in­creased from $28 to $35 since the epi­demic be­gan. The price of fish also in­creased fol­low­ing the gov­ern­ment’s warn­ing against eat­ing “bush meat”, a lo­cal favourite. San­i­tary prod­ucts such as plas­tic buck­ets and chlo­rine are now more ex­pen­sive than be­fore the Ebola out­break.

For­eign in­vestors are with­draw­ing in droves from worst-hit coun­tries. ArcelorMit­tal, the world’s lead­ing steel­maker, re­cently moved its ex­pa­tri­ate staff out of Liberia. London Min­ing, a Bri­tish company, also re­moved staff from Sierra Leone. With­out iron ore, Sierra Leone’s growth out­put, which was 20% in 2013, will fall to 5.5%, ac­cord­ing to the In­ter­na­tional Mon­e­tary Fund ( IMF), stress­ing how crit­i­cal the iron ore sec­tor is to the coun­try’s

econ­omy. Fear­ing for staff safety, a num­ber of in­ter­na­tional non-gov­ern­men­tal or­ga­ni­za­tions in Liberia have also closed their op­er­a­tions.

There is no con­firmed Ebola case in Ghana but that hasn’t stopped min­ing firms from evac­u­at­ing for­eign staff and slow­ing down their op­er­a­tions. Business Day, a Ghana­ian pub­li­ca­tion, re­ports that top ho­tels in Ac­cra, the cap­i­tal city, which are usu­ally almost full, now have just a 30% oc­cu­pancy rate. Ghana and Côte d’Ivoire pro­duce 60% of the world’s co­coa, a sec­tor also threat­ened by Ebola. There are fears that Ebola could spread into th­ese coun­tries. “Any threat of that virus dis­rupt­ing the flow of har­vested co­coa beans out of the pro­duc­ing re­gions could threaten to in­crease co­coa prices once again,” says re­search an­a­lyst Nitesh Shah of ETF Se­cu­ri­ties, a London-based in­vest­ment firm. By mid-Oc­to­ber 2014, due to a drop in pro­duc­tion caused by Ebola, in­ter­na­tional co­coa prices had surged by 18.5%.

The Ebola virus has also af­fected in­fra­struc­ture projects. For ex­am­ple, a highly an­tic­i­pated World Bank-funded road project link­ing Liberia and Guinea was sus­pended and the con­trac­tor, China He­nan In­ter­na­tional Co­op­er­a­tion Group, pulled out its work­ers.

In ad­di­tion, with bor­der clo­sures and travel bans around the re­gion, in­tra-subre­gional trade, al­ready at an abysmal 12%, is likely to get worse. “We used to im­port goods from Nige­ria to sell here [Sierra Leone], now we can­not do that be­cause there are no flights,” says Chris Eyen, a Free­town-based busi­ness­man. In ad­di­tion to flight can­cel­la­tions, most shipping lines are no longer berthing in Liberia.

Other coun­tries in the re­gion are ex­pe­ri­enc­ing a rip­ple ef­fect. The Gam­bia, which de­rives 16% of its GDP from tourism, is see­ing up to a 65% de­cline in tourism re­ceipts, ac­cord­ing to Ben­jamin Thomas, the coun­try’s tourism min­is­ter. And in Sene­gal, with fewer tourists, its GDP could con­tract by 1%, notes the World Bank.

Econ­o­mists may be ring­ing the alarm bells, but many de­vel­op­ment ex­perts say there’s no need to press the panic but­ton. The World Bank is call­ing for a swift na­tional and in­ter­na­tional re­sponse to mit­i­gate Ebola’s eco­nomic im­pact. Al­ready, the IMF is pro­vid­ing $130 mil­lion emer­gency re­lief to Ebola-hit coun­tries even as the US wants the fund to aug­ment that amount with a $100 mil­lion debt re­lief.

At the last G20 meet­ing in Bris­bane, Aus­tralia, held in mid-Novem­ber 2014, lead­ers of the world’s lead­ing economies backed the IMF re­lief fund. Donors are scal­ing up their support, says World Bank Pres­i­dent Jim Yong Kim. The UN ini­tially ap­pealed for one bil­lion dol­lars to fight Ebola of which $800 mil­lion had been re­ceived by mid-Novem­ber, ac­cord­ing to David Nabarro, the UN sys­tem co­or­di­na­tor for Ebola virus dis­ease (See page 18). Dr. Nabarro said that up to $1.5 bil­lion was now needed. There is a sense of ur­gency in global ef­forts to con­tain the virus, but there is also an un­der­stand­ing that re­vamp­ing economies dev­as­tated by Ebola could prove chal­leng­ing.

UNDP/ Mor­gana Win­gard

Ven­dors strug­gle with plum­met­ing sales and ris­ing cost of trans­port­ing goods to the mar­ket in West Point in Mon­rovia, Liberia, after the Ebola out­break and quar­an­tine took ef­fect in the coun­try.

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