1.INTRODUCTION:
The emergence of the COVID-19 pandemic shocked the world, paralyzing both social and economic activities in virtually every economy. The unprecedented economic challenges orchestrated by lockdowns and other restrictions have severely affected all aspects of economic activities.
The novel corona-virus was first reported in Wuhan, an emerging business hub of China. The COVID-19 disease is a highly transmittable and pathogenic viral infection caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) and is deadly (Cui, Li, & Shi, 2019). Globally, a total of 164,867,544 cases and 3,412,032 deaths have been reported. This dismaying figures are expected to continue to rise given that the pandemic is yet to peak in some countries (for example, Brazil); other countries are experiencing a second or third wave of the pandemic; and some countries are just entering their first wave (for example, India).
Globally, the COVID-19 pandemic has had its toll on economic and social activities and has also recessionary trends. Through loss of human capital through lost schooling and work, lowered investment, and fragmentation of global trade and supply linkages, the pandemic has affected both developing and developed economies.
It was estimated that South Asia will contract by 2.7 per cent; Sub-Saharan Africa by 2.8 per cent; Middle East and North Africa by 4.2 per cent; East Asia and the Pacific by 0.5 per cent (World Bank, 2020). Business activities around the globe are expected to be severely affected by the recessions triggered by the COVID-19 pandemic.
It is also that emerging and developing countries will be at a more disadvantageous position given that such economies will be buffeted by economic spikes from several sources. With an unprecedented collapse in oil demand and a slump in global oil prices, such economies will further be stretched in the light of existing dwindling remittances and capital flows, huge debt burdens, weak foreign trade, and inefficient monetary and fiscal administration. These will likely truncate governmental efforts in curtailing the ravaging effects of the devastating effects of the pandemic, this fueling further crisis.
Although the COVID-19 pandemic has not impacted Africa severely when compared to countries in Europe, America and Asia, the continent has experienced a fair share of the effects of the Covid-19 pandemic. A susceptible region which has been severely affected is West Africa. West Africa consists of 15 countries (Benin, Burkina Faso, Cape Verde, Cote d’Ivoire, The Gambia, Ghana, Guinea, Guinea Bissau, Liberia, Mali, Niger, Sierra Leone, Senegal and Togo).
The socioeconomic activities of these countries are coordinated by the Economic Community of West African States (ECOWAS). The ECOWAS economy has been severely hit by the Covid-19 pandemic. A total of 465,964 confirmed cases as well as 6,166 deaths have been recorded in the region (West African Health Organization, 2021). The Covid-19 pandemic is rapidly evolving in the ECOWAS region since the first case was reported from Lagos, Nigeria on 27 February 2020.
In spite of the fact that economies in the ECOWAS are gradually easing lockdowns and restrictions, the ECOWAS economy is still facing huge constraints in restoring economic viability and stability. This is especially true in the face of staggering macroeconomic indicators in the region prior to the outbreak of the pandemic. It should be noted that the region is yet to fully recover from the ravaging effects of the 2016 economic recession. For two consecutive quarters, the countries in the ECOWAS experienced negative growth rates. Economic activities were severely paralyzed and huge debt burdens were acquired to meet financial obligations. Countries resorted to adopting indigenous economic policies to curtail the ravaging effects of the recession.
Thus, the emergence of the Covid-19 pandemic has further destabilized the recovery process. As in previous epidemics and pandemics, it is expected that the process will exhibit an inverted U-shape, with the devastating effects on the ECOWAS region peaking at a maximum, and thereafter, the ravaging effects taking a nose-dive towards equilibrium. This paper thus seeks to proffer viable economic proposals that will hasten the recovery process. In other words, it will appraise policies that will alleviate the negative effects of the Covid-19 pandemic in the ECOWAS economy, as well as provide the way forward. Following this brief introduction, section 2 presents background information on the ECOWAS economy prior to the outbreak of the pandemic; section 3 presents a model of the Covid-19 pandemic in the region. However, due to paucity of data, the model is not estimated but provides a framework for discussing the subject matter. Section 4 suggests policies to ameliorate the ravaging effects of the pandemic on the ECOWAS economy. It is expected that the policy thrusts of this paper will provide a base for economic inferences and policy formulation.
The COVID-19 coupled with the collapse of global oil prices has prompted ECOWAS countries to conceptualize, formulate and implement policies, programmes and strategies on how best to manage their economies.
2.THE ECOWAS ECONOMY AND COVID-19:
The countries in the ECOWAS can be classified generally into four groups. This classification depends on the growth rate and effect of a pandemic on the country (African Development Bank, 2021). Group I countries (Benin, Burkina Faso, Côte d’Ivoire, Ghana, Guinea, Niger and Senegal) has a consistent annual average growth rate of 5 per cent or higher from 2017-2019. These countries contribute to about 26 per cent of GDP in the ECOWAS economy. Group II countries (Liberia and Nigeria) has a sluggish growth rate with a depressed economy. These countries have a slower recovery ability and will likely remain depressed after an economic shock as was the case of the 2016 economic recession. The fragility of these countries will further be stretched by the ravaging COVID-19 pandemic.
Group III countries (Cabo Verde, The Gambia and Togo) have a consistent annual average growth rate of less than 5 per cent or a little higher from 2017-2019. These countries contribute about 0.2 per cent to the region’s GDP in 2019 (AfDB, 2021). Group IV countries (Guinea Bissau, Mali and Sierra Leone) contributed less than 0.2 per cent to the region’s growth. These countries have fluctuating growth rates. A possible reason for this the incessant insurgency in northern Mali, political impasse in Guinea Bissau and the political transition in Sierra Leone. These conditions have dampened growth in these countries. The emerging corona-virus will further worsen the prevailing situation.
The effect of the pandemic will even be more severe in the ECOWAS region given that the service sector is the main driver of growth on the supply side. This sector is found to perform more than the manufacturing and agriculture sectors, contributing immensely to real GDP growth in the region (AfDB, 2021). Through the years, share of the manufacturing and agriculture sectors to GDP even within countries in the region continues to deteriorate or in some cases stagnant. This structural transformation in terms of service sector dominance will aggravate the devastating effects of COVID-19 on the ECOWAS economy. This is caused by lockdowns and restrictions which has crippled tourism, trade, and other services in the region. In other words, the COVID-19 pandemic has resulted in reduced trade and investment flows into the region; price crash in commodity; as well as dampened tourism flows.
In order to capture the potential devastating effects of the Covid-19 pandemic on the ECOWAS economy, it is imperative to examine some background facts prior to the pandemic. It is imperative to note that the region was emerging slowly from the shackles of the 2016 economic recession. Real GDP growth stood at 3.6 per cent in 2019 before the outbreak of the pandemic. Due to the pandemic, the ECOWAS economy contracted by 1.5 per cent (African Development Bank, 2021). This was a relatively favourable situation when compared to the initial projection in June 2020. It was projected that the economy will contract by 4.3 per cent. A possible reason of the economy reality in 2020 is the relatively slow spread of the corona-virus in ECOWAS countries. Thus, while some countries in the region were in recession in 2020 (Cabo Verde, -8.9 per cent; Liberia, –3.1 per cent; and Nigeria, –3 percent); others experienced positive growth (Benin, 2.3 per cent; Côte d’Ivoire, 1.8 percent; and Niger, 1.2 percent). A country-specific appraisal of selected economic indicators using 2019 data is presented below;
Real GDP Growth
Real GDP growth in the ECOWAS is relatively low in 2019. Benin has the highest at 6.9 per cent, while Liberia has a negative real GDP growth (-1.4). Liberia’s negative real GDP growth rate is possibly caused by the civil unrest existing in the country. The real GDP growth rate in other countries in the region are: Burkina Faso (5.7 per cent), Cabo Verde (5.7 per cent), Cote d’Ivoire (6.4 per cent), Gambia (6.2 per cent), Ghana (6.5 per cent), Guinea (5.6 per cent), Guinea-Bissau (4.5 per cent), Mali (5.1 per cent), Niger (5.9 per cent), Nigeria (2.2 per cent), Senegal (5.3 per cent), Sierra Leone (5.4 per cent) and Togo (5.5 per cent). This is depicted in Figure 1. With the emerging COVID-19 pandemic, it is expected that the ability of these economies to growth will be greatly crippled.
EXCERPT FROM THE KEYNOTE ADDRESS BY
PROFESSOR AKPAN HOGAN EKPO (AKPAN H. EKPO2)
PROFESSOR OF ECONOMICS AND PUBLIC POLICY
UNIVERSITY OF UYO, AKWA-IBOM STATE
UNIVERSITY OF UYO AT THE 6TH NATIONAL LEADERSHIP DEVELOPMENT CONFERENCE
HELD ON SUNDAY JUNE 13, 2021
LAGOS, NIGERIA