AfCFTA, Internet economy hope for pandemic-battered East Africa

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When the Covid-19 pandemic sent the global economy into a recession, the East Africa region was not spared.

According to UN Economic Commission for Africa’s Economic and Social Impacts of Covid-19 in Eastern Africa report, the region’s labour market has been the worst hit on the continent, with an estimated 38 million jobs lost.

Presenting the report during the 24th Meeting of the Intergovernmental Committee of Senior Officials and Experts, Mama Keita, head of ECA in Eastern Africa, said that the region will barely grow in 2020 with only four countries on track to experience positive growth in 2020.

Read: Internet economy Africa’s saving grace

South Sudan leads with 4.1 per cent GDP growth, followed by Ethiopia and Tanzania with close to 2 per cent and Kenya with 1 per cent.

Eastern Africa’s growth will slow down considerably to 0.6 per cent in 2020 from 6.6 per cent in 2019.

Keita has stressed that the Covid-19 pandemic amplified debt vulnerabilities in the region.

“Before the crisis, there were five countries with debt-to-GDP ratios exceeding 50 per cent in 2019 (Burundi, Eritrea, Ethiopia, Kenya and Seychelles). Now, the pandemic has increased the likelihood for this problem to worsen in the region and spread to more countries,” she said.

On the social side, Keita explained that even though Eastern Africa has a lower incidence of Covid-19 cases compared to the rest of Africa, most countries present critical gaps in their national health systems.

The report she presented notes that in terms of the financing of the health system, as well as its quality and adequacy, East Africa was unfortunately ill-prepared for a pandemic.

“Most of the Eastern African countries spend less than USD50 per capita on health, which is less than half of the African average which is of 114 USD per capita per year (2017 data).

The report highlights that the right balance and sequence between health and economic and social policy interventions continues to be critical.

It also stresses the impact of Covid-19 on education, leading to school closures that affected 96 million learners in Eastern Africa.

Keita said that while many governments have introduced remote teaching strategies, access to technologies such as the internet, television, and radio is limited in low-income countries, especially among poorest households.

The report urges policymakers in Africa to harness digitalisation and digital trade as the pandemic has highlighted the importance of the digital economy.

“Firms, employees and students with access to digital infrastructure have not been as economically affected by the pandemic as those with no access.”

A railway track. Africa should invest in infrastructure to tap into the growth potential offered by the internet economy and the AfCFTA.

Read also: Africa’s railways’ infrastructure key to AfCFTA success

While the region’s economic growth is generally dimmed by the effects of the pandemic, there is however a silver lining in the African Continental Free Trade Area (AfCFTA) and the Internet economy.

A recent report by the International Finance Corporation (IFC) and Google shows that Africa’s Internet economy has the potential to reach 5.2 per cent of the continent’s gross domestic product (GDP) by 2025.

This means that it can easily contribute nearly US$180 billion to the continent’s economy with projections showing its potential could reach US$712 billion by 2050.

The AfCFTA is opening up the continent offering African countries an opportunity to reach a market of close to 1.3 billion people. This makes AfCFTA the world’s largest single market.

For the Internet economy, the report by the IFC and Google titled e-Conomy Africa 2020, indicates that driving this growth is a combination of increased access to faster and better quality Internet connectivity, a rapidly expanding urban population, a growing tech talent pool, a vibrant start-up ecosystem.

The report notes that Africa is home to 700,000 developers with venture capital funding for start-ups increasing over the past five years. The digital economy can change Africa’s history since it is opportune for tech to offer the much-needed solutions to Africa’s challenges including in access to education, healthcare and financing.

An analysis by the report shows that the continent’s iGDP may be contributing an estimated US$115 billion to Africa’s US$2.554 trillion GDP. This is 4.5 per cent of the continent’s total GDP.

This figure is a notable growth from the US$99.7 billion contribution in 2019.

To reap the maximum benefits from the Internet economy, Africa should invest in infrastructure, consumption of digital services while embracing public and private investment.

New government policies and regulations will also play an important role in supporting or stymying Africa’s digital growth.

Read: Where to invest in Africa starting in 2021

I have 10 years of experience in multimedia journalism and I use the skills I have gained over this time to meet and ensure goal-surpassing editorial performance. Africa is my business and development on the continent is my heartbeat. Do you have a development story that has to be told? Reach me at njenga.h@theexchange.africa and we can showcase Africa together.

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