Impact of COVID-19 in Africa: role of Governance in driving Economic growth
By Emmanuel Allottey
The impact of COVID-19 has reversed the economic growth trajectory of many nations in Africa. Governments have been under pressure to respond swiftly and decisively to mitigate the impact of COVID-19 on the economy. The combination of government-imposed lockdowns and other restrictions needed to address the public health crises have resulted in reduction in economic activity and ultimately national output. The results of the decisions made have yielded mixed results highlighting the importance of governance in driving economic growth.
Africa has been plagued with poor governance and political instability stagnating development on the continent. Empirical studies have shown that countries which have established good governance regimes have been able to attain a faster economic growth. Effective governance and the rule of law are important determinants of economic growth. Throughout the pandemic, continued political unrest has been witnessed with incidents across the four corners of the continent. Governments have had to revert to emergency powers to govern during the pandemic.
Recent World Bank reports indicate that economic activity in Sub Saharan Africa is on course to contract by 2.8% in 2020. This is an aggregated average, with sharper deterioration in individual African states. Africa’s largest economies are anticipating a contraction in economic activity and have downgraded their domestic outlooks. Economic growth is a critical element for development. It has been the main engine for poverty reduction globally. The continued decline in economic activity will lead to the worst recession in Africa’s history.
The implementation of different economic interventions has come at an opportunity lost to national development projects. The deployment of these economic interventions has stretched already constricted national budgets and, in some instances, requiring further borrowing to bridge the deficit. Budgeted projects have had to be suspend or deferred to the detriment of national progress.
Government spending to combat the coronavirus has uncovered an inherent risk of misappropriation of resources and corruption in Africa. This corruption risk is a rule of law problem. It also compromises the pandemic response, undermining much-needed trust in public institutions, squandering supplies and resources, and impeding their flow to those in need.
COVID-19 is transforming the economic landscape in Africa and improved governance could correspond to higher levels of economic development. Improving governance, including aspects such as regulatory quality, rule of law, and government effectiveness, could be a key component to generate faster economic growth in Africa.