ReliefWeb

Impact of the Ebola Crisis

The Ebola pandemic has had a profound impact on Guinea’s economy and society, and damaged the social fabric and retarded the country’s growth prospects. Between March 2014, the date of the official declaration of the epidemic, and February 15, 2015, 3,108 people have died of the disease. Besides the effects on mortality, the disease has had a pronounced socio-economic impact and impacted households and investors alike. The disease has translated into lower investment, declining agricultural production, reduced visits to health care facilities, and lower tourism. Commerce and services have been hit by a sharp drop in international travel and regional trade; agricultural and manufacturing exports to neighboring countries have come to a standstill; and projects involving expatriate workers have slowed or stopped. Some mining companies have cut back on operations, and manufactured exports have declined, while cost and insurance for imports has increased significantly. The onset of the epidemic has reduced growth prospects in 2014 from a projected 4.5 percent to 1.3 percent by the end of the year. [1] The danger of Ebola is that it has threatened not only macroeconomic stability but also food security, human capital development, and private sector growth.

Overall Plan Objectives and Pillars

The Guinea Ebola Recovery Plan represents the Government of Guinea’s ambitious and wide-ranging attempt to end Ebola in the country and then relaunch the economy in the aftermath of Ebola. Prepared under the leadership of former Senegalese Prime Minister Loum, the plan has been forged in a participatory approach that involved ministries, private sector operatives, representatives of civil society, and the National Assembly. The plan reflects the government’s assessment of the key challenges emerging in the aftermath of the Ebola pandemic. Essentially, the plan represents a multi-pronged approach to dealing with the immediate aftermath of Ebola and then focusing on the medium-term recovery by jumpstarting the key sectors. It tries to address a range of sectors and areas that have all been directly and indirectly impacted by Ebola. The plan is congruent with the recent PRSP document (2013-2015). It is consistent with the recent discussions with the Bank and the Fund on macroeconomic stabilization, preservation of fiscal stability, and supporting the development of private sector-led growth. It also matches the vision to actively promote sub regional economic integration in the context of the Mano River Union.

Main Pillars of the Plan

The plan is based on four fundamental pillars – social sector support, economic recovery, infrastructure development, and governance support. On the social sectors, the authorities envisage the strengthening of the health system (systems, human resources, and medicines) to meet the immediate needs of population post-Ebola. Also, there are plans to improve access to water and sanitation, accelerate literacy, promote gender equality, and ensure child protection. Second, in relation to economic recovery, the Government envisages rehabilitation of the systems of production in all their components as well as recovery and acceleration of the diversification of economic activities. A third pillar of the plan is to improve the availability and quality of infrastructure necessary for economic growth and help promote the recovery of investment in economic infrastructure (roads, ICT, airports, ports etc.), which have been delayed by Ebola. Finally, the plan focuses on building infrastructure and strengthening governance through improved public administration and better service delivery. The plan is focused on both a shorter term interest in reaching 'zero Ebola' and a longer term strategy of full recovery. The timeline of the plan is to have a three year horizon, with an initial Ebola containment followed by a broader based recovery.

Risks

The Plan includes six major risks that could affect the implementation: political instability, lack of leadership, fiscal risks, regional spillover risks, climactic risks, and the resurgence of the disease that could jeopardize the recovery effort. The Plan includes risk mitigation strategies to address these factors. In relation to political risk, the Government intends to continue the democratic process and maintain dialogue with civil society. Fiscal risk can be managed through careful fiscal management and sensible revenue and expenditure policies, while regional issues will have to be addressed in collaboration with Liberia and Sierra Leone. Climactic risks can be addressed through investing in early warning systems and emergency preparedness, careful monitoring and adaptation strategies, and investment in education. Strict surveillance could address the epidemiological risk of resurgence. The Government remains optimistic regarding the management of risks.

Financing

In terms of financing, the total estimated cost of this plan over the 2015-2017 period amounts to $2.89 billion over the period 2015-2017, with $857 million for 2015, $1.174 billion for 2016, and $864 million for 2017. This includes $ 1.81 billion of additional investment to recover from the consequences of the crisis, revive the economic and social development and build resilience, $ 150 million for the Emergency Fund in support of the private sector, $50 million for auditing a portion of domestic debt, $75 million for an ambitious program of social transfers, $ 200 million to offset the loss of fiscal revenue in order to face unexpected expenses or for sectors not covered in the plan. It is important to note that the Plan will be financed from a combination of domestic and foreign resources. The Government has programmed $189 million as counterpart financing in the public investment budget for 2015-2017. The methodology of the costing was based on aggregating the ministry-specific resource needs to support the Ebola recovery and use the existing project portfolio as a base, using current Guinea prices as the base. The time horizon is for an immediate use (July – December 2015) and a medium-term use (2016 and 2017). The Government is envisioning an active resource mobilization strategy to identify and involve partners who share the vision of this plan, including the cancellation of the debt, an increase in aid projects, and budget support in the form of grants. The Government has set up a formal framework of consultation and coordination with development partners in February 2015, through a coordination council.

[1] Bank-Fund estimates project real GDP growth in 2014 even lower at 0.4 percent.