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In this photo taken on Monday, Aug. 4, 2014, health workers speak to people on the streets to educate them about the deadly Ebola virus in the city of Freetown, Sierra Leone. Much of Africa’s economy is taking a hammering from the Ebola crisis, and the damage is continuing to rise. (Youssouf Bah/AP)
In this photo taken on Monday, Aug. 4, 2014, health workers speak to people on the streets to educate them about the deadly Ebola virus in the city of Freetown, Sierra Leone. Much of Africa’s economy is taking a hammering from the Ebola crisis, and the damage is continuing to rise. (Youssouf Bah/AP)

Ebola fears dragging down African economies Add to ...

From the safari industry to the agriculture and mining sectors, much of Africa’s economy is taking a hammering from the Ebola crisis, and the damage is continuing to rise.

The heaviest toll is being suffered in the three main Ebola-afflicted countries in West Africa, but the spillover effect is crossing borders and hitting other regions. And as Ebola cases reach the United States and Europe, foreign anxieties are hurting investment in Africa and wreaking havoc in vulnerable sectors such as tourism and trade.

While most of Africa’s economy is not directly affected by the Ebola epidemic, the impact on some sectors and countries is serious enough to hurt the continent’s overall economy, dampening prospects in a region that had been among the world’s fastest-growing.

Ebola was one of the main reasons the International Monetary Fund reduced its growth estimate for Africa this week, forecasting 5-per-cent growth this year instead of the 5.5-per-cent expansion that it had predicted in April.

Trade, tourism and investment confidence in Africa are being “severely affected,” the IMF said this week. “A more protracted Ebola outbreak or a wider extension of the epidemic could have severe consequences for the economy of the region.”

Earlier this month, the World Bank warned that the Ebola crisis could inflict $33-billion (U.S.) in damage to West African economies by the end of next year if it continues to escalate. But its researchers now admit that the $33-billion figure could be an underestimation.

“The epidemic is moving faster than we economists can work,” said a blog last week by World Bank senior economist David Evans and Center for Global Development senior fellow Mead Over.

“The latest information suggests that even the World Bank’s ‘High Ebola’ scenario may be optimistic,” they said. They cited especially the effect of “aversion behaviour” – the fear factor that leads to closed borders, reduced trade, suspended airline flights and the curtailing of commercial activities by multinational companies in West Africa.

The latest Ebola cases in Spain and Dallas “generate aversion behaviour towards Africa which threatens to persist and damage African economic growth for years to come,” the two economists said.

Many multinational companies and foreign investors have cancelled visits to Africa or suspended activities and withdrawn employees from West Africa.

Perhaps the worst example of “aversion behaviour” is in the tourism industry. Hotel bookings have dropped in tourism-dependent countries such as Gambia, despite the absence of Ebola cases. And thousands of foreign tourists have cancelled safari vacations in East Africa and Southern Africa, even though those regions are far from the Ebola-afflicted countries and have not experienced even a single Ebola case in the current outbreak.

A major online safari broker, SafariBookings, conducted a survey of 500 safari tour operators last month and found that half of the tour operators had suffered 20- to 70-per-cent declines in their African safari business because of the Ebola fears.

“It is a heavy blow for the industry and the numerous wildlife reserves that rely on its revenue,” the company said. “Tour operators reported that many tourists view Africa as a single country when it comes to risk assessment. They don’t realize that East and Southern Africa, where most safaris are conducted, are just as far from the outbreak area as Europe or South America.”

Africa’s biggest economy, Nigeria, has experienced only 20 cases of Ebola this year, and its small outbreak has been officially declared over, with no cases in the past six weeks. Yet some malls and shops in its biggest city, Lagos, have reportedly seen declines in demand of up to 40 per cent as retail consumers lay low in response to Ebola fears.

The cocoa sector, meanwhile, could be affected in key producing countries such as Ivory Coast, which traditionally relies on migrant labour from neighbouring countries to help harvest crops. The Ebola outbreak in those neighbours has led to closed borders and fewer migrants.

The greatest damage, however, has been inflicted in the three main Ebola-hit countries: Liberia, Sierra Leone and Guinea. Growth forecasts in all three countries have been sharply downgraded.

Farm fields are lying idle because of Ebola quarantine rules and the deaths of hundreds of farmers. Food prices have soared by an average of 24 per cent across the three countries, and malnutrition is expected to rise. Mining companies have withdrawn many of their employees from the three countries.

While many countries have been hurt by the Ebola crisis, others have been affected by lower commodity prices and labour strife this year. South Africa, the second-biggest African economy, announced on Wednesday that its growth will fall to 1.4 per cent this year, barely half of the 2.7 per cent rise that the government had forecast in February, primarily because of a marathon strike in the platinum-mining sector this year.

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