“The African Economy in the COVID-19 Era” by Malik Mashigo

Dreaming in Africa is like staring at the stars from the bottom of the ocean with a shiver of sharks circling around you.

The COVID-19 era has clearly been the ocean in which African economies have been drowning. The United Nations Conference on Trade and Development estimates that Africa’s GDP will fall by 1.8%, with smaller economies on the continent expected to contract by up to 7.8%, because of lockdown restrictions limiting economic activity.

Africa was already falling before the coronavirus pandemic. Between 2010 and 2015, her collective GDP declined by around 3.3%. With the price of commodities plummeting and debt levels skyrocketing, the pandemic simply aggravated the problems that had already existed on the continent, becoming the anchor that pulled Africa further down to the bottom of the ocean.

Decolonising neo-colonialism

Neo-colonialism must be the biggest shark stopping the African economy from reaching for the stars.

Africa’s dependence on exporting raw materials is a product of neo-colonialism. The fact that the classical African colonized economic system of exporting raw materials outside of the continent, to be used in manufacturing goods that are imported back and sold at a value-added price still exists calls for great concern. Africa’s economy is still very much vulnerable to commodity prices. Export adjustments and falling demand in commodities due to the COVID-19 pandemic have played significant roles in the contraction of many African economies. Africa’s dependence on exporting raw materials is the blood of the African economy that attracts the craftiest pup of neo-colonialism: debt.

Debt is the baby shark that seems harmless and necessary for Africa, but it leads her to an even darker place, a bottomless pit, an economic abyss.

After exploiting Africa’s resources, neo-colonialist nations and international organizations offer loans to African countries at high-interest rates. In many African countries, the Debt-to-GDP ratio was already north of 60% even before the pandemic struck. But it is not that Africa is borrowing excessively, it is that she is paying too much interest. African governments spend much of their revenue on debt-servicing, paying off 10-year government bonds with interest rates from 5% to 16%. COVID-19 anchored African countries into much deeper debt, the International Monetary Fund granted South Africa a $4.3 billion loan in response to the pandemic, the largest of any African country.

If Africa does not stop falling into the debt trap, the economic abyss may become her permanent home.

The African dream may seem far from coming true but there’s hope. As Kwame Nkrumah stated, Neo-colonialism is the last stage of imperialism.

Corruption in Africa

Corruption in Africa is the shark with a sharp fin stabbing the back of the African dream.

Amid COVID-19, the inequality gap between the wealthy and the poor is set to widen if not addressed. The wealthiest in Africa are politically connected. As of December 2019, the richest woman in Africa also happened to be the daughter of the former long-time president of Angola. This was until her assets had been frozen by the Angolan government on alleged charges of money laundering and embezzlement. Recently there have been stories of government officials stealing COVID-19 related funds circulating around mainstream media in Africa. Corruption will widen the current inequality gap on the continent to the point where African economies will bleed out to death if it is not stopped.

Capitalism is legalized corruption; therefore, capitalists have accumulated more wealth during this pandemic. We have seen that while more than 40 million people in the United States have lost their jobs, the billionaires have collectively accumulated more than $637 billion during this pandemic. In Africa, capitalism is more political, for example in South Africa, the so-called “Covidprenuers” who have been looting billions from her emergency funds are linked to spokespersons, ministers, and secretaries-general. Capitalism can only exist in inequality; poverty is its daily bread.

Transparency and accountability make up the double-edged Africa will need to kill the shark that is corruption in Africa. There’s hope for Africa, the African dream is among the stars she is staring at.

The Pan-African dream

An integrated, prosperous, and peaceful Africa. This is Africa’s hope, enshrined in the African Union’s Agenda 2063.

An Africa in which regions are economically integrated, a connected Pan-African economy where people, goods and services move freely. This is the dream in the stars, one that our Pan-African ancestors dreamt of, one that led to the formation of the Organization of African Unity and later the African Union, one that inspired the establishment of the African Continental Free Trade Area.

The AfCFTA is the world’s largest free-trade agreement aimed at creating one single African market, combining a population of 1.3 billion people and a GDP of $2.6 trillion. Trading under this agreement was set to commence from 1 July 2020, but it was postponed due to the pandemic.

In as much as unifying Africa comes with incredible opportunities, there are also many challenges. Connecting a diverse continent that is neo-colonized, debt-burdened, and infested with corruption, in the COVID-19 era, seems like a dream too far off. But as the famous African proverb states, “If you want to go fast, go alone. If you want to go far, go together.”

Leaders of the Pan-African dream must not act selfishly, but to make the dreams of the ordinary African come true; for the refugee escaping war seeking a better life, for the mother who sells vegetables on the side of a road to provide for her children, for the young man who lives on the street unemployed. The leaders’ actions must outlast them.

The African economy must leap out of the economic abyss, away from the bottom of the ocean, and escape all the sharks circling around her, to swim to the top and reach for the stars she has been staring at.

Malik Mashigo.

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