Ebola epidemic recedes, leaving deep economic scars
Falling commodity prices hindering recovery
Infrastructure investment needed to help increase growth
Finance ministers from three fragile states in sub-Saharan Africa said their economies were struggling to get back on track
The ministers from Liberia, Central African Republic, and Madagascar told a news conference during the IMF-World Bank Spring meetings in Washington that the slow global economy is making recovery more difficult.
Abdalla Kadre Assane, of the Central African Republic, said after almost three years of massive insecurity, the country lacks the resources required to stabilize its institutions ahead of general elections scheduled for August. And Gervais Rokotoarimanana said Madagascar will be asking the IMF for funds under the Extended Credit Facility to help the country recover from the effects of a political crisis that ended in January 2014.
But the overriding issue was Ebola. “The disease ravaged our economy beyond imagination”, said Amara Konneh, Liberia’s finance minister.
Konneh said Liberia had survived the crisis, and the authorities hoped to declare the country Ebola-free by May 15, but added the devastation left by the disease is overwhelming.
“Our health care system collapsed, we need to rebuild for resilience. We need to get the kids back in school; we have more orphans, widows and widowers today than we ever had. So we’re redirecting spending and making hard decisions—but the demand is too high, and our resources too little.”
Konneh said the Ebola crisis has isolated Liberia from the rest of the world. The pandemic has limited imports, exports, and travel to the point where the government had to increase spending on goods and services “so the country would not collapse.”
“It scared everybody away from us. So we’ve had to take some fiscal and monetary measures to maintain macro-economic stability.”
Meanwhile, growth projections for the three countries most affected by the Ebola epidemic have been significantly marked down, and Konneh says the current state of the global economy— notably China’s slow down— isn’t helping get growth back to pre-crisis levels.
“We want to go back from 1 to 6 percent growth in the shortest period of time, so we’ll need to invest in activities that will diversify the economy. Because with the declining commodity prices driven by slow global growth, our major commodities like iron ore and rubber have suffered a lot.”
Knock-on effects of Chinese slowdown
Assane and Rokotoarimanana said they too were worried about the impact of China’s slowing economy not only because of the effect on commodity prices, but because China has been involved in infrastructure improvement projects in both their countries. Rokotoarimanana said they were looking forward to more Chinese investment in Madagascar, but those projects are now on hold.
“China has built hospitals, and some cultural infrastructure, and we were hoping they would help us rebuild our road infrastructure”
The three finance ministers agreed that infrastructure investment is key to increasing economic growth. Konneh said the single most important hindrance to the region’s economic development is the lack of reliable and cheap electricity. They wouldn’t be so dependent on China buying raw materials, he said, if only they could start manufacturing products themselves.
“We have commodities, but we cannot add value to the commodities because we don’t have electricity.”