Silver linings for Africa from Covid-19

The Covid-19 pandemic has wrought havoc on African economies, but all crises throw up new possibilities. Ronak Gopaldas looks at four areas that present strong opportunities

Finding silver linings in the face of a pandemic is an unenviable task, but amid the current shakeup, it is important not to lose sight of how these disruptions can be used to catalyse significant behavioural, business and governance improvements and leave lasting legacy benefits. Whilst much of the current focus has been short term “firefighting”, there may yet be longer term implications whose true impact will only be felt down the line.

In an African context, four areas stand out as being ripe for positive disruption: healthcare, public-private collaboration, economic diversification and regional cooperation.

Healthcare sectors will be upgraded

First, healthcare sectors will feel the benefit of investments. Since healthcare spending and investment has now assumed central importance, deploying these funds strategically could result in material improvements in skills, facilities and equipment.

With African public officials no longer able to travel abroad to seek medical treatment, they will have no option but to confront the reality of creaking public healthcare systems in their home countries. Never before has the incentive for elected leaders to do so been higher – they now stand to be direct victims of their own inaction and ineptitude as much as the man on the street.

Long-neglected and underfunded, most healthcare sectors on the continent are in a poor state and not equipped to cater to the needs of their populations. Indeed, healthcare delivery still remains a major challenge as less than 50% of Africans have access to modern health facilities. To put this in perspective (per a March 2020 article by The Guardian), “South Africa, which has one of Africa’s best public health systems, has fewer than 1,000 intensive care unit (ICU) beds, of which 160 are in the private sector, for a population of 56m. In Malawi, there are about 25 ICU beds in public hospitals, serving 17 million people. The main infectious diseases hospital in Zimbabwe’s capital, Harare, has none”

Although expectations for meaningful or dramatic improvement may be ambitious in the short term, any initiative which expands coverage and care for the most vulnerable in society will pay long-term dividends. Indeed, considering Africa’s much vaunted demographic dividend, ensuring a healthy population is central to capitalising on its human and economic growth potential.

Such efforts could also leave significant legacy benefits, as was the case in Sierra Leone, Guinea and Liberia in the aftermath of the Ebola crisis of 2014-15. The crisis forced governments to respond in ways that enhanced their operational, epidemiological and logistical capabilities. The net result was a far more resilient public health system with significantly better skills, institutional capacity and preparedness for future health crises.

Public-private collaboration

Second, the pandemic could positively disrupt the way governments engage with the private sector as savvy innovation, robust partnerships and efficient resource mobilisation become essential elements of crisis management. In this sense, the pandemic may have inadvertently been the catalyst required for business and governments to find common ground, thawing previously tense relationships between the private sector and the state in various countries.

Evidence of such synergies has already been on display. In Nigeria, individuals and corporate organisations have collectively contributed over N500bn ($1.3bn) in support of the federal government’s efforts to battle the crisis. Meanwhile, in South Africa, the private sector has lent its support and funding to efforts such as Spire (South African Pandemic Intervention and Relief Effort), Cobra (Covid Business Rescue Assistance) and SAFT (South Africa Future Trust).

Even in Tanzania, where the government has adopted a hostile stance towards investors in recent years, there is a shift. Barrick Gold Corporation, which had been entangled in a protracted dispute with Tanzanian authorities, has emerged as one of the leading commercial sponsors of Tanzania’s public health and economic response initiatives to the pandemic. This includes $1.7m worth of critical equipment and expertise, and the development and equipping of five quarantine centres.

The hope is that these initiatives will not be a flash in the pan. If such collaborations are properly harnessed, they could set a template for future engagement and reverse the trend of acrimony which has compromised investment in many countries in recent years. With the common goals of preventing systemic economic collapse, protecting their workforces and ensuring the survival of industry, both businesses and governments have redoubled their damage control efforts.

Aligning these incentives and sustaining this momentum may be the challenge in a post-Covid world. But if done well, the benefits could be two-fold. First, it could result in a shift in focus for companies from shareholder value, to stakeholder value – an area of particular importance considering Africa’s huge inequality gap. A more caring form of capitalism, which prioritises people over profits, could yet emerge in the aftermath of the crisis as companies adjust their business models for relevance.

Second, by viewing business as a strategic partner rather than an enemy, material improvement in the business environment and investment climate could be awakened, as governments become more engaged and responsive to the private sector’s needs.

Economic diversification

Third, economic diversification will gain momentum. The narrow dependence on commodity revenues has been a long-standing problem in Africa. This means that many countries’ economies are subject to boom-bust scenarios based on the vagaries of global developments. Forced by necessity rather than choice, economic diversification in Africa now needs to be ramped up significantly. There is therefore an opportunity to use the crisis effectively to strengthen industrialisation efforts towards productive, strategic and employment-generating long-term goals.

In this context, two areas stand out as opportunities.

First, the accelerated digitisation and technological focus means that companies and governments will need to become agile and responsive in the face of fast-evolving threats and challenges or risk becoming permanent laggards. Upgrading their ‘operating systems’ to be fit and ready for the fourth industrial revolution is now non-negotiable for both public and private sector entities. If done well, this could dramatically increase the efficacy of the public service, whilst also allowing businesses to reach constituencies that had previously been overlooked. The impact of increased connectivity and innovation as a result of these disruptions could be pronounced – offering opportunities to overcome many traditional barriers to entry.

Second, as food security becomes an issue amid heightened nationalism and border closures, African countries can unlock their significant comparative advantage in this regard to become the breadbasket of the world. Africa has about 600-million hectares of uncultivated arable land, roughly 60% of the global total. But the continent also has among the lowest agriculture yields in the world, making it ripe for positive disruption.

Both of these areas will need to be underpinned by the African Continental Free Trade Area, which will enhance regional integration, create more efficient value chains and unlock e-commerce potential – all of which are necessary to facilitate the transition towards modern, competitive and sustainable African economies.

Regional cooperation

Lastly, collective African leadership has long been an aspirational but elusive concept. Despite sound intentions, the plans for greater unity have failed to fully materialise due to political agendas, divergent visions, economic fragmentation and a lack of cohesion. However, recent developments have added renewed impetus to the idea that a new spirit of continental leadership may be in the offing.

Indeed, the response from regional bodies throughout the pandemic has impressed, as noted in a PSC report by the Pretoria-based Institute of Security Studies. Starting with the Africa Centres for Disease Control which convened a meeting of continental health ministers as early as February to map out a strategic response (and have subsequently provided technical, logistical and operational support to countries), to the activation of an Africa coronavirus crisis fund and the accelerated launch of the African Risk capacity insurance scheme to deal with contagious disease outbreaks, the continent’s regional agencies have been on the front foot in their responses.

Coordination with multilateral agencies such as the World Health Organisation and UNECA and sound communication strategies have also been a strong feature of these initiatives. At the apex, the African Union, notorious for being behind the curve on key issues, has reacted with remarkable urgency in efforts to provide support to the most vulnerable countries on the continent.

Whilst responses on a country specific level have been more of a mixed bag, on the whole the continental response has been decisive, coordinated and largely proactive. Even more impressive has been the approach towards negotiating and managing the continent’s debt burden, which has enlisted the help of heavyweights such as Donald Kaberuka and Ngozi Okonjo-Iweala to spearhead this process. The adoption of solidarity and strong collective bargaining positions has thus far made it more difficult for external parties to ‘divide and conquer’ and has thus far prevented African sovereigns from being bullied into punitive, sub-optimal arrangements.

Sustaining momentum

The question now is whether the continent’s leadership can continue to replicate this cohesion for big causes in the future. Africa’s leaders need to recognise that relevance will only be achieved as a collective. In simple terms, throwing a rock at something is far more likely to make an impact than a fistful of sand. Using the power of the collective adds both scale and gravitas to Africa’s global voice and will allow the continent to adopt a more muscular approach to international affairs. When viewed on a continental level, features such as its population and market size, favourable demographic, rapidly urbanising and rising middle class, and technological advances become too big to ignore.

The pandemic has shone a mirror on countries and continents, exposing a lot of the long-standing deficiencies and inefficiencies that have become par for the course in our societies. Yet at the same time, this crisis offers an opportunity to pause and reflect – and to reshape the world in a different image. The hope is that some of the momentum evidenced above will be sustained and catalysed into tangible and lasting progress.

Beyond the doom and gloom, there may yet be opportunities to restart, redress, and reimagine.

Read Ronak Golpaldas’s analysis of the economic impact of the coronavirus pandemic on Africa: Riding the Covid-19 economic storm