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Economic and Market Impact analysis of COVID-19 on West and Central Africa - WFP-Regional Bureau VAM/M&E/Nutrition/Supply Chain, 30 March 2020

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o The 19 countries of West and Central Africa all fall into the categories of low or lower-middle income economies, within which they can be further broadly grouped into 3 clusters based on Gross Domestic Production. Most of the countries in the lowest group have been affected by conflict of one form or another, although not a causal analysis as several countries in the top two ranges have also faced conflict or political turmoil in the last decade. Ebola crisis affected three of them: Guinea, Liberia and Sierra Leone.

o The strong agricultural season of 2019/20, with overall higher than average production of cereals, has meant good supply of cereals and declining prices in many markets across the region. However, this is not the case everywhere. As background to assessing the impact of Covid-19 on market prices, it is important to note that food commodities prices have been volatile throughout 2019. Consumer price index (CPI) for food is at its highest since 2008 in the Monetary Union of West Africa zone.

o For West Africa countries, crashing demand from China and the rest of the world will dry down major economic sectors, notably agriculture, extractive industry and tourism. Fragile economies, like Mali, Chad, Niger, Burkina Faso are likely to suffer more.

o Migrant remittances are an important source of external finance in West Africa. In general, migrant remittances surpass official aid and foreign direct investment and remittances flows contribute substantially to economy growth and to household incomes. Remittances are an important income source for many households in the region, both in rural and urban areas.

o Most of the rural people that migrated in urban areas in west Africa are involved in the informal sector.
They are sending back money to their families living in rural areas. Disruption in the supply chain from China will affect all these livelihood groups to a certain degree. Moreover, increasingly strict mitigation measures attempting to reduce movement and interaction will have direct and substantial negative implication for livelihoods based in the informal sector.

o More than 80 percent of rural population rely on subsistence farming in West and Central Africa. The 2020 off season harvests should be reaching markets and providing substantial incomes of stallholder farmer. However, market closure, restriction on internal and cross borders movement limit markets access. Planting period starts in May/June for the main agricultural season while the Covid-19 epidemic is forcing governments to cut agricultural expenses and to prioritize health-related expenditures. If the above-mentioned restrictions continue, famers won’t have access to market to buy good quality seeds and fertilizers.

o As the virus transmits most easily in high density popluation, cities are likely to face the brunt of outbreaks around the world. West and Central Africa are undergoing rapid urbanization, introducing another major vulnerability to the mix. It will be increasingly important to monitor the food security and nutrition status of urban populations in particular as this crisis unfolds.