Despite having successfully contained the outbreak of the deadly Ebola virus and obtained a clean bill of health from the World Health Organisation (WHO) in 2014, the World Bank has disclosed at the ongoing World Economic Forum in Davos that Nigeria stands to lose $186 million to Ebola impact in 2015. According to the report, presented in Davos yesterday, “even if Ebola is controlled and further outbreaks avoided, economic costs will be incurred across sub Saharan Africa (SSA) in 2015.
Consumer and investor confidence has been eroded by the outbreak of the virus, and disruptions to travel and cross-border trade suggest cumulative losses of more than half a billion dollars across the region in 2015, outside the three directly affected countries. Economic damage would of course be larger if the Ebola outbreak cannot be contained.”
The report stated further that, countries neighboring those directly affected by Ebola, such as Côte d’Ivoire and Mali, and regional hubs and trade routes (e.g., Nigeria) have experienced small but noticeable declines in cross-border trade, as travel has been restricted and borders closed. “Overall, including effects on travel, tourism, and trade, the largest estimated effects on GDP from consultation with World Bank country teams were in Nigeria (about $186 million), Côte d’Ivoire (about $93 million), Mali (about $75 million), and Senegal (about $45 million). Still, the estimated effects are small in relation to these four national economies,” the report said.
The World Bank’s Global Economic Prospects report (January 2015) expects SSA to grow at 4.6 per cent in 2015, down from a 5.0 per cent forecast in June 2014. Projections have been revised downwards on account of global events, including the West African Ebola epidemic and the net effect of winners and losers from a steep fall in global oil and commodity prices. Key risks to this projected growth include a renewed spread of Ebola, violent insurgencies, further reductions in commodity prices, and volatile global financial conditions.
Much of the economic impact of Ebola beyond the epicenter of directly affected West African countries is based on fear, as was the case during the SARS outbreak in East Asia a decade ago. This fear – as well as the associated aversion behavior –relates to concerns that the epidemic cannot be contained (heightened by several cases in the USA and the EU) and in some cases to misperceptions about African geography (certain economically affected countries have not experienced a single case of Ebola). The impact is also uneven, with reported magnitudes of indirect impact varying greatly from country to country.
There has been a marked reduction in travel and tourism in the directly affected countries, but also across the continent. Fear and ignorance have been significant drivers of the indirect impact as many destinations experiencing cancellations and reduced bookings have not experienced a single case of the disease. Many of these countries are further from those directly affected than are the main European capitals. In many countries the trend is similar to that of SARS in 2003, when non-affected countries saw declines in travel bookings of between 15 percent and 35 percent.
“As a powerful vehicle for economic growth and job creation, lower growth in travel and tourism creates economic concerns. The World Bank’s 2013 Tourism in Africa Report highlights how one in every 20 jobs in Africa involves the tourism and travel industry and many more are supported indirectly by the sector.
The analysis in this report begins to put a price on the success of recent efforts, as well as on the risk of backsliding. The likely impact of Ebola on the African economy has been reduced, through containment and preparedness efforts, by an order of magnitude: from perhaps more than $30 billion, the annual output of a large African economy, to perhaps $6 billion.
To reduce these costs further, and set Africa back on a more secure economic course, the sole acceptable objectives must be short-term elimination of Ebola from Guinea, Liberia, and Sierra Leone and enhanced pandemic preparedness across the entire African continent. Only then will we be able to avoid not only the economic costs that this report has attempted to quantify, but also the untold human suffering entailed by any future repeat of West Africa’s recent experience,” the report said.