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Covid-19: World Bank discloses when Sub-Saharan Africa will fall into recession

The dreaded Coronavirus pandemic is expected to drive Sub-Saharan Africa into its first recession in 25 years.

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World Bank picks holes in CBN’s policies on lending, MSMEs loans,Covid-19: World discloses when sub-Saharan will fall into recession, World Bank predicts rebound of Sub-Saharan Africa’s economy next year, World Bank warns Nigeria, others in Africa not to relax.

The dreaded Covid-19 pandemic, which has significantly spread around the world and caused a lot of disruptions on the global economy, is expected to drive Sub-Saharan Africa into its first recession in 25 years.

This was disclosed in the World Bank’s latest Africa’s Pulse report, a twice-yearly economic update for the region, which was released on Thursday, April 9, 2020.

The report shows that the forecast for the Sub-Saharan Africa region is expected to decline from 2.4% in 2019 to between -2.1% to -5.1% in 2020.

The forecast came with a recommendation is made for African policymakers to focus on saving lives and protecting livelihoods by strengthening health systems and taking quick actions to minimize disruptions in food supply chains. According to Hafez Ghanem, Vice President for Africa, World Bank:

‘’The Covid-19 pandemic is testing the limits of societies and economies across the world and African countries are likely to be hit particularly’’.

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‘’We are rallying all possible resources to help countries meet people’s immediate health and survival needs while also safeguarding livelihoods and jobs in the longer term – including calling for a standstill on official bilateral debt service payments which would free up funds for strengthening health systems to deal with Covid-19 and save lives, social safety nets to save livelihoods and help workers who lose jobs, support to small and medium enterprises, and food security”

(READ MORE: CBN pays $4.45 billion external debt to World Bank, others in 2-month)

An analysis from the report shows that the COVID-19 pandemic is going to cost the region between $37 billion and $79 billion in output losses this year. Sectors  that will be affected by this includes: trade and value chain disruptions, decline in foreign remittances, tourism, foreign direct investment, foreign aid among others.

Coronavirus Outbreak to Impact Tourism Across African Continent,Covid-19: World discloses when sub-Saharan will fall into recession

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The GDP growth in the region, particularly in the 3 largest economies in Sub-Saharan Africa i.e. Nigeria, South Africa and Angola, is projected to decline sharply, due to persistent weak growth and investment.

The Coronavirus crisis can also potentially cause food security crisis in Africa, with agricultural production expected to contract between 2.6% in optimistic period and as much as 7% during trade blockages.

Food imports are expected to decline by as much as 25% or as little as 13% due to drop in local demand and high cost of transaction.

(READ MORE: World Bank deploys $150 billion to save the world from global meltdown)

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The Bretton Wood institution has pledged about $160 billion in financial support over the next 15 months to help countries protect the poor and vulnerable, support businesses and aid economic recovery.

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Africa has 10,956 confirmed cases of the Coronavirus, with 562 deaths and 1,149 recoveries so far.

The International Monetary Fund (IMF) and the World Bank Group have already rallied for bailout funds and debt relief for the poor and emerging countries as part of measures to help mitigate the impact of lockdowns and restrictions as a result of the coronavirus outbreak.

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Nigeria had also announced its intention to borrow $6.9 billion from the multilateral agencies to help cushion the effect of the Coronavirus pandemic on the country’s economy. A breakdown of that shows that  $3.4 billion will be from IMF, $2.5 billion from World bank and $1 billion from African Development Bank.

Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

2 Comments

2 Comments

  1. Richard Ossai Ogu

    April 9, 2020 at 8:07 pm

    Good evening Mr Olisa. Nice to have explain the future aspect of Our Economy. I hope our Government would listen and address the issues raised here. Thanks.

  2. Moonstarboy

    April 9, 2020 at 8:17 pm

    Is very unfortunate that Nigeria is going to fall in this category our leaders need to brace up

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Coronavirus

Combined Vaccine Manufacturing capacity to hit 6.8 billion doses in 2021

COVID-19 vaccine manufacturing capacity is expected to hit 6.8 billion doses in 2021.

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Covid-19: First world nations oppose waiving intellectual rights for vaccine development

Meristem Group disclosed that the combined effort in manufacturing COVID-19 vaccines for global use is expected to yield about 6.8 billion doses in 2021.

This was revealed in the Annual Outlook 2021 report presented by Meristem Group, titled Bracing for a different future.”

According to the report, the existing manufacturing capacity will only be sufficient enough to immunize about 44% of the global population, which would create obvious vaccination gap and make the pandemic last longer than necessary.

The report states,

  • The cold temperature requirements for vaccine storage pose major logistics concern particularly in Sub-Saharan Africa and other low-income countries. WHO estimates that about 50% of vaccines are wasted every year, largely due to a lack of temperature control.”

According to the report, the estimated 6.8billion doses are expected to be collaboratively manufactured as follows:  CanSino – 0.2billion, AstraZeneca – 3.0 billion, Gamaleya – 0.3billion, Moderna – 0.4billion, Pfizer-BioNtech – 1.3billion, SinoPharm – 1billion, and SinoVac – 0.6billion.

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What you should know

  • The global population as of 2020 is 7.8billion and 70% is required to achieve herd immunity (otherwise called herd protection)
  • Herd Immunity or herd protection is achieved when you have most of the population immunized against an infectious disease.
  • 2 doses of the vaccines are required for each person for immunity.
  • It is expected that between 11 and 15 billion doses would be required to achieve the desired herd immunity, globally.
  • From all indications, herd immunity may not be achieved until mid or late 2022, with the subsisting 100% vaccine production capacity utilization in 2021 – with neither production nor distribution losses.
  • To achieve regulatory approval, a vaccine must undergo a three-stage clinical development process after the exploratory and pre-clinical stages and the U.S Food and Drug Administration (FDA) sets a phase 3 efficacy benchmark of 50%.

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Coronavirus

Covid-19: Global deaths surpass 2 million

Global casualty record for the Covid-19 pandemic surpassed 2 million deaths on Friday.

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Nigeria blows past 40,000 COVID-19 cases

The Global casualty record for the Covid-19 pandemic surpassed 2 million deaths on Friday, with the United States accounting for 1 in every 5 deaths, as it has recorded over 386,000 casualties so far.

This was disclosed in a report by Reuters in its Covid-19 tally reported on Friday evening.

After the United States, Brazil, Mexico, India and the U.K contribute nearly 50% of the combined casualties.

The report also disclosed that an average of 11,900 casualties are recorded per day in year 2021, despite the fact that it took 9 months for the world to record 1 million casualties.

United Nations Secretary-General, Antonio Guterres, said the 2 million death count was “a heart-wrenching milestone.”

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  • “Behind this staggering number are names and faces: the smile now only a memory, the seat forever empty at the dinner table, the room that echoes with the silence of a loved one,” he added.

The WHO warned that 2021 could be tougher due to the nature of new variants which transmit the disease faster.

  • “We are going into a second year of this. It could even be tougher given the transmission dynamics and some of the issues that we are seeing,” WHO Chief, Mike Ryan, said.

Analysts expect the global death toll to surpass 3 million by April 2021.

What you should know 

  • Nairametrics reported that the total number of covid-19 cases in Nigeria had surpassed the 100,000 mark on Sunday 10th January 2021, according to the Nigeria Centre for Disease Control.
  • The African Union stated that it secured 270 million Covid-19 vaccine doses for the continent from drug manufacturers to supplement the COVAX programme, a step towards the commencement of the complex task of vaccinating over 1.2 billion people with limited financial resources.
  • The Nigeria Centre for Disease Control on Friday 15th January 2021, announced that 1,867 new cases of the covid-19 virus were recorded across 24 states in the country. This represents the highest number of cases recorded in a single day.

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Debt Securities

Interest rates will remain low until the end of H1 2021 – Meristem Securities

Meristem Securities has argued that interest rates will remain low until, at least, the end of H1 2021.

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Why Emefiele’s interest rate policy is ‘great’

Meristem Securities has asserted that interest rates will remain low until, at least, the end of H1 2021.

This statement was made at the recently held webinar on Global Economy and Outlook, which the company themed: Bracing for a Different Future.

Although the company acknowledged that there is mounting pressure for upward movement in yields from several stakeholders, it appears the company concurs nothing concrete is in sight.

This line of reasoning seems to have influenced their decision to advise investors to move away from Treasury instruments.

What they are saying

Meristem advises that:

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  • “Buy and hold strategy investors seeking to generate above average returns should move away from risk free Treasury instruments and focus on investment grade commercial papers and bonds which satisfy investment objectives.”
  • “Active traders with higher risk appetite are advised to focus on high-yield short duration instruments, which would be re-invested into a higher yield environment should rate reversals occur.”

The advice regarding shunning Treasury instruments appears to be in order, considering that treasury bill rate has been declining, with the latest figure — November 2020 — 0.03% as per the CBN monthly interest rate data.

Further checks from the Debt Management Office website, indicates that the latest figures for Eurobonds and Diaspora bond fall short of the fixed yield at issue for all the different categories of bonds in issue.

What you should know

Latest figures from the CBN’s monthly interest rate indicate that:

  • Treasury bill rate has been on a steady decline for six months, down to 0.03% since the last rise (2.47%) in May 2020.
  • Fixed deposit rates (one, three, six and twelve months) have also been declining – the latest figures for these indicate that in November 2020, one-month deposit rate was 1.92%, 2.9% for three months, 2.84% for six months, and 4.89% for 12 months.
  • Compared with the corresponding period in 2019, the figures indicate that these rates fell by 75%, 66%, 71% and 49% respectively.

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