Unraveling the immediate and long-term effects of the COVID-19 pandemic on socio economic development in sub-Saharan Africa

Abstract

The spread of COVID-19 has been devastating for the millions of people who have been infected by the disease and lost their lives, and the tens of millions of people who have lost their work and livelihoods. Governments and civil society have responded swiftly to the spread of the virus with policies that reduce human interaction and slow the spread of the virus. These policies have had the adverse effect of further reducing labor participation, productivity, and capital utilization, reducing household consumption and increasing poverty across various thresholds, both in absolute and relative terms (Dabalen and Paci 2020; IMF 2020b; OECD 2020a; Roberton et al. 2020; Verity et al. 2020; WTO 2020). Combined, the COVID-19 pandemic has significantly reduced economic growth and altered patterns of international economic interaction. While we are still in the midst of the crisis, there is real concern that the majority of macro-economic effects will not be temporary, and disproportionately shift long-term development pathways in low- and middle-income countries, offsetting some of the gains towards SDG achievement made in the last decades. However, so far little is known about the long-term implications of COVID-19 across individual countries over the next decades, their ability to recover from health and economic shocks, and the country characteristics that shape the post-COVID recovery patterns. In this report we study the long-term dynamics of COVID-19 at the country-level in Africa through a macro-economic lens. Specifically, we analyze how today’s effects on country-level mortality, GDP growth and international monetary flows of trade, aid, foreign direct investment (FDI) and remittances shape long-term patterns of mortality, economic growth and international trade by 2030 and 2050. In addition, we unravel how these macro-economic changes affect socio-economic indicators and human development by quantifying the outcomes for child mortality and poverty over the next decades. In this report we present a conceptual framework (see Figure 1, below) that conceptualizes the effects of COVID-19 on human development as cascading across three systems. First, COVID-19 directly effects human health systems, changing patterns of mortality and morbidity with differential distribution across countries. Second, these direct health effects are mitigated through government policy and civil society action that reduces human interaction, slowing the spread of the virus and saving lives while also reducing economic activity and changing patterns of production and consumption. Finally, these changing economic effects ripple through the international economic system, changing patterns of trade, FDI, foreign aid and remittances. Some countries may have fewer direct health effects from COVID-19 —a finding particularly relevant for many countries in Africa— but may experience more direct effects from changing patterns of international economic interdependence.