COVID-19: 150 million jobs in Africa at risk

The Coronavirus crisis has put between 300,000 and 3.3 million people at a high risk of losing their jobs, depending on the intervention measures taken to stop the spread. This is According to a recent report by The United Nations Economic Commission for Africa.

The possible loss of jobs, according to the report, is attributed to the fact that Africa has far fewer doctors, hospital beds, and ventilators per capita than any other region in the world and the outbreak could, in essence, break an already strained or in some cases non-existent health sector.

Even as governments, the private sector and NGOs offer solutions to curb the health crisis of the virus, there is still a worldwide looming economic danger posed by the pandemic.

The report raises fear that the jobs or incomes of some 150 million Africans, across both the formal and informal sectors, are vulnerable in the crisis. This is equivalent of a third of the total jobs across the continent which is about 440 million. Currently, it is estimated that the informal sector accounts for 300 million jobs while the formal employed sector accounts for about 140 million jobs.

Some of the most vulnerable sectors like manufacturing, retail and wholesale, tourism, and construction could potentially see more than half the workforce affected. This includes casual craft, trade and plant-operating jobs in the manufacturing and construction sectors. However, since most of Africa’s informal sector workforce are involved in subsistence agriculture, they won’t be adversely affected.

In Kenya, the hospitality and floriculture industries have felt the impact of the virus fastest with several hotels shutting down or retrenching staff. Meanwhile, it’s been reported that close to30,000 flower farm workers have been impacted since the pandemic has slowed down flower exports. The Cancellation of oversea orders and travel restrictions on affected countries has hit the industry hard with an estimated 40 percent plunge in sales forcing players to turn on their 150,000 workforce to save their companies from outright losses.

Another major blow from the pandemic will be the ripple effect it will have on sectors or businesses that were already struggling. For instance, state-owned South African Airline, is facing imminent bankruptcy after the government decided not to bail it out. The airline is reported to have offered severance packages to all 4,700 staff as it plans to fire all the staff.

Some industries, like print media which have been in steady decline, might see an accelerated decline leading to further job losses, since most people are turning to online websites for daily news and updates.

In the report, McKinsey suggests that major additional stimulus may be required to mitigate damage to economies and livelihoods. African countries have so far announced stimulus packages of 1 to 1.5 percent of GDP, but this won’t be enough, according to McKinsey.

African countries could still be left with a gap of five percentage points of GDP growth to return to pre-crisis levels and one to two percentage points to avoid an economic contraction given that the COVID-19 crisis could contract their GDP by between three and eight percentage points.

So just how should the stimulus packages look like and what should they prioritise?

The packages should typically have these three objectives in mind:

In order to return to the pre-crisis economic levels, the report suggests that Governments should ensure that there is availability of basic incomes and essential products and services to individuals and households in need. African governments should also safeguard small and medium-size enterprises (SMEs) and the jobs of the people who work for them.

Supporting individuals and households by ensuring some form of basic income is also key to ensure that the most vulnerable citizens are able to have a way of life. President Uhuru Kenyatta announced 4 days ago that the government has released Sh8.5 billion to elderly persons and Sh500 million that was in arrears has been released to persons with severe disabilities.

“The national government has also released an additional Sh5 billion to counties to cushion vulnerable Kenyans. Piloting of the fund will be done in Nairobi,” he added.

To further protect vulnerable Kenyans, the president said needy households have already been identified in Nairobi and will receive the weekly covid-19 stipend. The piloting of the programme started last week in Nairobi.

The number of recorded COVID-19 cases in Africa, stands at just over 21,000 as at April 19th, with 1,080 reported deaths. This number is still relatively small, but it is growing fast and many experts are warning for African countries to prepare for a much larger number.