Anxiety at the depressed economy in the wake of the Covid-19 pandemic has taken a hue of normality. Many in the continent and around the world wonder how worse it could get and for how long.
It is not about to let up. The African Development Bank supplement economic outlook released a couple of weeks ago, and specifically looking at the effects of the pandemic, projects the continent could lose a combined value of goods and services that could amount $236.7 billion in the 2020/21 financial year.
The projection follows a trend in the new normal. Last month, the World Investment Report projected foreign direct investment to Africa to the continent will reduce by 25 to 40 per cent this year.
A loss of 40 per cent FDI flows to the continent could mean a mere $27 billion from $45 billion in 2019.
In East Africa, it would mean $4.6 billion from $7.8 billion in 2019.
Foreign investment is crucial as it leads to increased employment and growth of the economy.
Combined with the loss in goods and services, the projected FDI decline could seriously dent the economy, occasioning much human cost.
How the continent recovers has therefore been of uppermost concern.
There’s some hope, however, though respite does not appear likely next year.
The investment report projects a rebound in 2022 with FDI possibly reverting to the pre-pandemic trend.
I saw a hint of this rebound in the recent findings reported in this newspaper showing how Rwanda’s green energy sector could create 31,000 jobs a year despite the crisis.
Investment in the sector is among the SDG sectors the World Investment Report emphasises needs to be promoted in Africa to recover the economy.
It makes this point while observing the existence of huge funds running to over $1 trillion — funds mostly invested in developed countries in renewable energy, for instance.
With Africa receiving consideration in the investment it could go a long way, taking the example of Rwanda and the potential to create jobs in the green sector.
The need has been expressed for increased SDG investment in the least developed countries. Even so, many countries are not quite ready yet.
While more than 150 countries have adopted national strategies on sustainable development, very few contain concrete road maps for the promotion of investment in the SDGs.
The investment report suggests an Action Plan comprising a range of policy options to respond to the investment mobilisation, channelling and impact challenges.
The suggested measures are urgent, this being the last decade for the implementation of the SDGs.
In the meantime, importance has been attached to the investment ties to the continent by major global economies, primarily the United States and China but also the United Kingdom, France and the Russian Federation.
The ties are a vital factor in mitigating the FDI decline. However, observers haven’t failed to note the timing and self-interest of these global powers in their beeline to the continent.
While not devoid of good intentions for the continent, the United States with its Prosper Africa Initiative announced last year also has an eye to neutralise China’s influence in the continent.
The United Kingdom’s scramble for economic ties during its Africa Investment Summit in January this year is mainly because of Brexit.
France with its Choose Africa initiative does not want to be left behind, while Russia declared its investment intentions at its Africa Summit and Economic Forum.
In all of this, the African Continental Free Trade Area will play a role with its promise to be a game-changer.
Though commencement of trading under the AfCFTA is now set for January 2021, it has received mention as a factor that could provide support to FDI in the continent and grow value for its goods and services.
One hopes it should be soon.
Twitter: @gituram
The views expressed in this article are of the author.