Like in many continents, the outbreak of the novel Coronavirus is having a negative impact on African economies, changing the overall economic outlook for countries in the region from that of expansion (earlier expected at the beginning of the year) to a broad-based contraction/slowdown.
However, we believe there are lessons for African leaders to learn from this crisis. Herein, we highlight the critical lesson and recommendations.
One key lesson for Africa is finding a way to reduce its huge dependence on external economies. Although African countries were the last to record rapid cases of COVID-19, globally, the economic impact of the virus transcended the outbreak within African countries.
Clearly, the outbreak of the virus within Asia, Europe, and America exposed the overdependence of African countries on trade as well as financial market flows.
Certainly, the African Continental Free Trade Area (AfCFTA) was designed with the intent to correct this vulnerability.
As such, as the restriction on the lockdown is increasingly phased out, our view is that discussion on the implementation of the AfCFTA agreement remains a priority while promoting policies to sustain cross border industrialization of the continent.
United Capital Research