How will COVID-19 impact Africa’s trade and market opportunities?

The COVID-19 pandemic is expected to hit African economies extremely hard. According to the World
Bank, economic growth in sub-Saharan Africa will decline from 2.4% in 2019 to between -2.1% and -5.1%
in 2020, depending on the success of measures taken to mitigate the pandemic’s effects. This means
that the region will experience its first recession in 25 years.

The decline will be primarily due to large contractions in South Africa, Nigeria, and Angola driven by
their reliance on exports of commodities whose prices have crashed as well as other structural issues.
Before the pandemic, Africa’s trade with the rest of the world has been showing good momentum.

However, the COVID-19 (coronavirus) pandemic will put a brake on this for the time being. The mass
production shutdowns and supply chain disruptions due to the rare “twin supply-demand shock” will
create ripple effects across all global economic sectors, causing further uncertainty for a continent
already grappling with widespread geopolitical and economic instability. With China, Africa’s largest
trading partner, and other major economies gradually reopening their economies, Africa’s trade will
gradually pick up, however, the path might not be that smooth at least for the foreseeable 1-2 years.

So, where is Africa’s future market and trading opportunities? As the old saying states, “crisis is also an
opportunity.” This time is no exception. African countries can build more resilient and sustainable
economies if they can do things right following the pandemic. At least four policy options can be
considered;

1) Further diversify African economies and strengthen the few strategic sectors. The pandemic
crisis highlights the importance of food and health sectors for all countries. Africa is uniquely
positioned to further leverage its rich agricultural resources by improving basic infrastructure
and efficiency, and agro-processing capacity. More resources will be needed to strengthen the
public health sectors, with the support of development partners.
2) Africa must embrace the digital age and adopt more and more digital technologies for both
productions and services, such as banking, retailing, and learning as well as public services.
3) Africa must strengthen intra-regional trade.
4) Africa will need more international trade agreements to support its growing but still fragile
export sectors.