Corona Virus’s Economic Impacts in Africa
Corona Virus’s Economic Impacts in Africa
Since the outbreak of Coronavirus infections in Wuhan, China, the global economy has been damaged by the pandemic’s ramifications. The outbreak has expanded to a number of countries throughout the world, claiming lives and causing states to enact lockdowns in an attempt to stem the disease’s spread. Over 20 nations in Africa have reported incidences of the disease. The majority of African countries have enacted travel restrictions prohibiting outsiders from entering or exiting their country. Additionally, some states have imposed a moratorium on local travel and commercial activities, advising citizens to remain home. Each of these restraints has had a significant impact on the economic development of a number of African countries.
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The economy of the bulk of African countries is built on export and import. Exports make for more than half of Africa’s Gross Domestic Product, according to the Economic Commission for Africa (GDP). The countries trade in crude petroleum items such as crude oil and agricultural products such as coffee and tea. Numerous states have been reported to export an increased amount of minerals, including gold, copper, and diamond. Typically, exports to North America, Europe, Asia, and Australia occur. All of these commercial interactions between the particular and their clients on the global market are prohibited under the current COVID-19 regime. This is because governments have imposed limitations on the travel of businesses and their goods. According to the Economic Commission for Africa, oil-exporting countries such as Egypt, Tunisia, Morocco, Nigeria, and Libya will lose more than US $65 billion (ECA predicts billions in African losses as a result of COVID-19 impact | Africa Renewal) (n.d.). This is because current market conditions for oil goods are adverse in the world’s largest economies, including the European Union, China, and the United States of America.
Numerous African countries also import finished goods from developed countries such as China, the United Kingdom, France, Canada, Russia, and the United States of America. Electronics, machinery, refined petroleum products, and housewares are frequently the products (July slide of the month (SOTM)). Africa’s top imports in 2018 – africon GmbH. (n.d.). Due to the current restrictions on international travel, numerous products are unavailable in marketplaces due to a lack of imports by merchants and wholesalers. The majority of retail and wholesale businesses are currently closed due to various governments’ lockdowns. Without normal business operations, governments have received no revenue from firms charged with advising customers about customs charges and taxes levied on goods (Fernandes, 2020). As a result, the GDPs of these countries have fallen precipitously, impeding economic progress. Certain states are prepared themselves for economic catastrophe if the current COVID-19 outbreak continues.
Additionally, the majority of African countries remain underdeveloped, reliant on foreign assistance and debt to sustain their economies (Foreign aid’s influence in Sub-Saharan Africa (n.d.). Since the pandemic began in Africa, some states have used their little resources to enhance their underdeveloped healthcare systems in order to fight the COVID-19 pandemic. This results in an increase in debt for countries that are unable to repay on time. Increased foreign debt has stifled economic growth in a number of African countries, as a substantial amount of their earnings is spent to service their ever-growing foreign debts (ECA forecasts billions of dollars in losses in Africa due to COVID-19 impact | Africa Renewal) (n.d.).
Africa is a popular tourist location. Tourism is the continent’s second-largest industry, behind exports, according to the Economic Commission for Africa. Tourism is predicted to contribute 8.5 percent of Africa’s total GDP (An April 2019 assessment of Africa’s tourism market). (n.d.). Since the outbreak of the COVID-19 pandemic began, some governments have suspended international travel. Tourists are no longer in the droves as they once were. As a result, a large number of states are unable to generate revenue through tourism. This has had a significant impact on the overall economic development of a number of countries. If the situation does not stabilize sufficiently, the consequences will be severe, with some countries battling to restore their pre-crisis economic standing.
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ECA estimates the billions worth of losses in Africa due to COVID-19 impact | Africa Renewal. (n.d.). Retrieved from https://www.un.org/africarenewal/news/coronavirus/eca-estimates-billions-worth-losses-africa-due-covid-19-impact
Fernandes, N. (2020). Economic Effects of Coronavirus Outbreak (COVID-19) on the World Economy. Available at SSRN 3557504.
An analysis of Africa’s tourism market for April 2019. (n.d.). Retrieved from https://www.atta.travel/news/2019/04/an-analysis-of-africas-tourism-market-for-april-2019/
Slide of the month (SOTM) July. Africa’s top imports in 2018 – africon GmbH. (n.d.). Retrieved from https://www.africon.de/africas-top-imports-in-2018/
(PDF) The impact of foreign aids in Sub-Saharan Africa. (n.d.). Retrieved from https://www.researchgate.net/publication/330934586_The_impact_of_foreign_aids_in_Sub-Saharan_Africa
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