Ebola's huge financial, economic damages

Going by a World Bank study, Guinea, Sierra Leone and Liberia could lose over FCFA 800 billion this year owing to Ebola.

The Ebola virus that has caused quite a significant scare in Guinea, Sierra Leone and Liberia is far from over and the damaging effects continue to weigh heavily on the countries. According to a recent release from the World Bank Group published on January 20, 2015, “the Ebola epidemic will continue to cripple the economies of Guinea, Liberia and Sierra Leone even as transmission rates in the three countries show significant signs of slowing.”

Decrease in Growth

Going by the release, “the Bank Group estimates that these three countries will lose at least 1.6 billion US dollars (about FCFA 922.6 billion) in forgone economic growth in 2015 as a result of the epidemic.” Of the whopping amount, Guinea is projected to lose 540 million US dollars (about FCFA 311.5 billion); Liberia, 180 million US dollars (about FCFA 103.8 billion) and Sierra Leone, 920 million US dollars (about FCFA 530.5 billion). These losses, the release states, represent over 12 per cent of the three countries’ Gross Domestic Product.

Damage on Investments

Evidently, the virus is scary to new investors who would have chosen the destinations of the three hardest hit countries to set up win-win businesses. This is more so as consumer and investor confidence has been eroded by the virus causing non-negligible disruptions in business trips and cross-border trade. This suggest a cumulative loss of more than 500 million US dollars (about FCFA 288.2 billion) across the region in 2015,” the release states.

Investor distaste for the countries will further diminish the 2015 growth estimates to -0.2 per cent in Guinea, 3 per cent in Liberia and -2 per cent in Sierra Leone. This is down from the pre-Ebola estimates of 4.3 per cent for Guinea, 6.8 per cent for Liberia and 8.9 per cent for Sierra Leone.

Toll on Sub-Saharan Africa

Sub-Saharan Africa also has its own price to pay. West Africa region alone could experience a 25 billion US dollar (about FCFA 14.4 trillion) economic loss in 2015. Against this backdrop, the World Bank Group expects the economies of the region to slow in the current fiscal year vis-à-vis their performances last year. The Bank, according to the release, expects Sub-Saharan Africa to grow at 4.6 per cent in 2015, down from 5 per cent of 2014. This bleak growth rate is masterminded by projected renewed spread of Ebola, violent insurgencies, further reductions in commodity prices and volatile global financial conditions.

Cushioning the Effects

To minimize the effects of the virus on the economies of the three affected countries, the World Bank Group has set up an emergency funding to bolster agricultural productivity, hardest hit by the Ebola crisis. According to a February 12, 2015 release published on the website of the World Bank, the group, “in a concerted push to revive agriculture and avert hunger in Ebola-hit countries, the World Bank Group has mobilised up to $15 million (about FCFA 8.6 billion) in emergency financing to provide a record 10,500 tons of maize and rice seed to over 200,000 farmers in Guinea, Liberia and Sierra Leone in time for the April planting season.”

The release further stated that, “more than one million people could go hungry unless reliable access to food and emergency measures are taken immediately to safeguard crop and livestock production.”

A World Bank statement on the virus indicates that the group has mobilised nearly US$1 billion (about FCFA 575.7 billion) in financing for the countries hardest hit by the Ebola crisis. This includes US$518 million (about FCFA 298.2 billion) from IDA for the epidemic response, and at least US$450 million (about FCFA 259 billion) from IFC, a member of the World Bank Group, for trade, investment and employment in Guinea, Liberia and Sierra Leone.