The economic impact of Ebola

Economies on hold

In Guinea, the economy is dominated by the mining of bauxite, gold and diamonds. Economic growth last year was about 2.0%, down from 3.9% the year before. The slowdown was due to political difficulties and the decline in mining investment. Economic growth is forecast to be a little over 4% in 2014 and 2015, due to expected increases in investments in big mining projects, such as the Simandou iron ore mine.

The fear of Ebola may result in a direct hit on such investments, which are dependent not only on foreign capital but also skills. Getting the management and technical expertise necessary to start the construction of such complex large-scale projects is not going to be easy. Guinean agricultural produce, which is exported to a number of African countries, including Morocco, which has asked for a postponement of the 2015 CAF (Confederation of African Football) tournament, may also be another victim.

In Sierra Leone, real GDP grew by about 15% in 2012 and edged down to 14% in 2014. It has been forecast to grow by about 16% in 2014 and 12% in 2015. As in the cases of Guinea and Liberia, iron ore production has been the source of the latest growth spurt. However, unlike in Guinea and Liberia, agriculture, manufacturing, construction and services have fuelled growth of about 6% from 2010–14. According to local sources, there seems to be somewhat less of a panic inside Sierra Leone than in its two neighbours. 

Although schools are closed and 21-day quarantines are carried out in neighbourhoods of Ebola victims, most offices and businesses remain open. Amadu Barry, a Sierra Leonean businessman with Australian citizenship, who has refused to return to “the land down under” says that “life is almost normal in Free Town”.

Nevertheless, many expatriates have left the Lion Mountains and it is unlikely that they will rush back or be replaced easily in the current situation of uncertainly. Therefore, Sierra Leone’s regenerated mining sector is likely to become vulnerable to skills shortages and potential reversals of capital flows.

Malick Niang, Regional Manager for West Africa of Dutch-funded ICCO Investments, said that they have put their activities in Liberia and Sierra Leone on hold until they become Ebola free. Although it is difficult to assess the medium- and long-term economic consequences of Ebola, Malick pointed out that in the short term there would be significant impact on trade, tourism and agribusiness. Nevertheless he remains positive about the long term, because “sub-Saharan Africa, particularly West Africa, has always been resilient and will recover from this crisis”.

The countries struggling with the Ebola virus are among the poorest in the world. This status does not create an urgency for the development of a vaccination or a drug by those who can – the big pharmaceutical companies or the governments they report to.

However, the call for a vaccine or drug by Africans and concerned non-Africans seems to be already heeded – not only because of a sense of human empathy but perhaps more out of the fear that the virus is exportable.

As shown by the alarm caused by, and attention on, the few patients in the US and Spain, it is in the interest of all that a vaccine or cure is found. The recovery of US victims in Atlanta last month has indicated that happy day may not be too far away. However, as was the case with the AIDS virus in the early years after discovery, many more victims may have to die and the economies of West Africa to continue being paralysed for some time to come. In order to prevent this, African governments and people must take the lead not only in calling outsiders for help but also in supporting Guinea, Liberia and Sierra Leone themselves, anyway they can. At this stage, nothing is too late or too little!

*Dr Sonko is chairman of Heeno International based in the UAE.