Pandemic pulse: The latest on Africa - Capital Economics
Africa Economics

Pandemic pulse: The latest on Africa

Africa Economics Update
Written by Virag Forizs

The recent drop in new Covid-19 cases in much of Sub-Saharan Africa is likely to encourage policymakers to further relax restrictions on economic activity, which will give a leg up to recoveries.

  • The recent drop in new Covid-19 cases in much of Sub-Saharan Africa is likely to encourage policymakers to further relax restrictions on economic activity, which will give a leg up to recoveries.
  • The sharp rise in daily new coronavirus cases across much of Sub-Saharan Africa at the start of Q3 appears to have gone into reverse. New Covid-19 cases seem to have peaked not only in South Africa, the epicentre of the region’s outbreak, but in other parts of the region too. (See Chart 1.) In most countries, cases started to decline around the end of July, although the fall has come later in Ethiopia.
  • African authorities, in particular in South Africa and Rwanda, have pushed to increase testing in recent months. (See Chart 2.) Admittedly, testing in the region remains low compared to other EMs. But increased testing combined with the recent fall in Africa’s Covid-caseload is certainly an encouraging sign.
  • Lockdown measures have eased in recent weeks. (See Chart 3.) South Africa moved from lockdown level three down to two in mid-August, reopening much of the economy. And Nigeria transitioned into the third (and final) phase its national coronavirus response strategy earlier this month. Restrictions on international travel have been lifted in many countries, including in heavily tourism-dependent Kenya and Rwanda.
  • High-frequency data suggest that, after stalling in the first half of Q3, economic activity has picked up once again. Google data suggest that visits to retail and recreation outlets have, at a regional level, nearly returned to pre-crisis levels. (See Chart 4.) Perhaps unsurprisingly, there is a degree of divergence across countries. In South Africa and Namibia, activity remains muted, while Nigerian and Angolan retail trips are essentially back near the baseline. And in Côte d’Ivoire and Ghana, visits now exceed pre-pandemic levels.
  • The outlook for the region is held back by headwinds, including low commodity prices and governments’ limited fiscal space to support activity. But further easing of containment measures, which seems likely given the fall in Covid-cases across the region, will give a much-needed boost to economic recoveries.

Chart 1: Daily New Cases (7-day moving average)

Chart 2: Coronavirus Tests per Thousand (Latest)

Chart 3: Oxford University Government Response Stringency Index

Chart 4: Retail & Recreation Visits
(% Change From 3rd Jan. – 6th Feb. Baseline)

Sources: Johns Hopkins, Our World in Data, Oxford, Google, Refinitiv


Virág Fórizs, Africa Economist, virag.forizs@capitaleconomics.com