The impact of the pandemic in sub-Saharan Africa has generated an unprecedented regional contraction due to the disruption of trade, restrictions on tourism and the fall in demand and prices of raw materials. African governments, which have acted decisively to contain the spread of the virus, have avoided a health crisis, but the measures implemented have had a major impact on the economy of heavily indebted markets that lack the capacity to respond with fiscal stimulus packages similar to those of developed economies. Crédito y Caución expects a deep recession in the region's largest economies, Nigeria, South Africa and Angola, and a slow recovery that will limit growth in the medium term.
The possible economic rebound in 2021 is surrounded by an unusually high level of uncertainty, and a sovereign debt crisis cannot be ruled out. Countries with a high level of foreign currency denominated debt, such as Zambia or Angola, are particularly vulnerable. Financial support from multilateral institutions such as the IMF or the World Bank will be essential to help the region mitigate the negative effects of the pandemic on its economies and societies.
The countries most affected by the severe recession are those dependent on tourism, oil exports and volatile financial flows. Countries where tourism accounts for more than 25% of export earnings, such as Tanzania, Mauritius and Cape Verde, are particularly vulnerable to the collapse of global tourism. Metal exporters, such as South Africa, Botswana and Zambia, have experienced a sharp decline in revenue. The shock is even greater in the Republic of Congo and Angola, where oil accounts for over 90% of exports. Other countries in the region, with more diversified economies, will suffer less impact. Kenya will suffer a small contraction and in Ethiopia and Rwanda growth rates will remain slightly positive. Senegal, Ivory Coast and Uganda will recover more strongly in 2021.
The pandemic has triggered large movements in exchange rates. South Africa, the economy of the region most integrated into the global financial markets, has suffered a sharp depreciation of its currency due to capital outflows. In addition, the unprecedented shock to the world economy promises a loss of remittances, an important source of foreign funding for countries such as Nigeria, Ghana, Kenya and Senegal.