COVID 19 Economic and Health Impacts on Regional Food and Nutrition Security

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1. Macro-Economic Context – Fragile Financial Systems, Food Deficits and Commodity Exports

On the 28th Jan 2020, the World health Organisation (WHO) declared a public health emergency related to the Novel Corona Virus (COVID 19). Following a rapid increase in cases around the world,
WHO declared a pandemic on 11th March 2020. Economic growth and developmental pathways are subject to a range of shocks that affect economies in varying ways with direct impacts on the food security and nutritional status of the most vulnerable populations. A health crisis such as COVID 19 intersects with food security and food systems as an external shock with impacts on well-being and generates losses in employment, livelihoods, income, and remittances.

Economic Vulnerability

Increased reprioritisation of national expenditure towards control of COVID19 will affect allocations to other sectors such as agriculture which would have long-term effects on food production and supply. The economic fallout for the continent has the potential to be severe and long-lasting. While some global economic impacts of COVID 19 are already emerging, there is less discussion on the effects on individual economies and even less on the impact this will have on food security within the region. It is widely projected that a pandemic would disproportionately affect Africa given its relatively underdeveloped healthcare sector, limited infrastructure and population movement across borders.
Tourism will be impacted heavily in the region as a result of border and travel restrictions and, according to research by Price Waterhouse Coopers, the impact of COVID 19 on tourism revenue for South Africa alone represents a potential loss of at least ZAR 200m in Chinese tourism spending. This figure is likely to increase significantly in the months ahead.
National economies in Southern Africa, such as Zimbabwe, Lesotho, Mozambique and Malawi, receive high levels of remittances that are critical for both the monetary system and household consumption. Increased unemployment will reduce the inflows of hard currencies and the ability of households to purchase essential commodities.

Many of the countries in the southern Africa region have a high dependence on commodity exports to China, relatively weak sovereign balance sheets, high debt burdens and volatile currencies, and exposure to a number of economic externalities. Chinese demand underpins the economies of various resource-rich countries on the continent, with a slowdown in China as a result of COVID 19 having a disproportionate impact on trading partners such as Angola, Zambia,
Congo Brazzaville and the Democratic Republic of Congo (DRC). Data visualizations of trade flows by country can be found here: Recessionary trends at the global level and the potential for a prolonged reduction of economic growth in China will have direct impacts on commodity exports in the region ranging from copper in Zambia, precious metals in Tanzania, coltan in DRC and petroleum in Angola and the Republic of Congo.

The main export items between SADC countries include petroleum, agricultural products, electricity and clothing and textile products. Main export items to the rest of the world consist of predominantly export of natural resources (e.g. coal, ferrochromium, manganese ores, platinum, as well as precious metals and diamonds), resource intensive manufactured goods, mainly for the automotive industry, clothing and textiles, and tobacco. The highest share of total SADC exports over time is to the Asia-Pacific region followed by the EU. Trade within Africa is the smallest and of this the majority is intra SADC trade.
Although the pretroleum sector represents a declining percentage of African economic activity, many governments remain overly dependent on it for the revenues required to fund national budgets. In Angola, oil accounts for around 75 percent of total government revenue and 90 percent of export revenues. According to Africa Confidential, three-quarters of Nigerian and Angolan oil production for export in April remains unsold. Within sub-Saharan Africa, ODI projected that Angola, RoC, Lesotho and Zambia are among the most exposed to the economic impact of coronavirus and estimates that sub-Saharan Africa will stand to lose USD4 billion in export revenue prior to the identification of a single case of COVID 19 on the continent.