Cost Of Ebola: How The Disease Damaged The Entire African Economy
From the Independent. Story by Satyajit Das, a former banker. His latest book, “A Banquet of Consequences,” is due to be published this month.
The West African Ebola crisis is now considered “fixed.” Several countries have been declared free of the disease but the recent outbreak of Zika is a reminder of the cost of major outbreaks of serious infectious diseases.
First, the direct costs of containing and controlling the outbreak are significant. The humanitarian and medical aid costs of the West African Ebola crisis has run into billions of dollars. A 100-bed isolation facility costs around US$1-1.5 million or about US$10,000-15,000 a bed. It requires trained medical staff. Sierra Leone alone needed 750 additional doctors and 3,000 more nurses. These must be sourced from foreign countries, diverting resources.
Longer term, development of vaccines and prevention or treatment programmes becomes a significant recurring cost. One of the most insidious aspects of Ebola was the infection and death of West African health care professionals, already in limited supply. Rebuilding the health infrastructure is likely to be slow and expensive.
The indirect costs are equally great. Epidemics reduce economic activity and trade as businesses cannot operate normally and movement of goods and people becomes difficult. In the affected regions, large numbers of the population fled or were cut off by quarantine, disturbing food production. In Liberia, the rice harvest fell 25 percent due to the lack of workers and fear of congregating in groups.
This results in food security issues in primarily agricultural subsistence-based economics.
Falling production and availability also affects those not directly involved, increasing prices of basic items like food. Revenue is lost due to restrictions on movement and suspended transport links. Fear of exposure to pathogens affects economic activity. Tourism is directly impacted, with falls of about 75 percent in visitors. Businesses dependent on foreign skills are affected as many firms scale back or shut operations, withdraw non-essential personnel and defer new investment.
Public finances are badly affected. Slower economic activity has an immediate decrease in tax revenues and rising spending to deal with the epidemic. The long term damage may be substantial, reducing potential growth.
The World Bank initially estimated the economic impact at over US$30 billion for Guinea, Liberia and Sierra Leone. This was later downgraded to US$3-$4 billion, still significant relative to total combined GDP of around US$50 billion.
Epidemics in poor and volatile countries with poorly developed institutions, infrastructure and processes also feed political instability.
Damage extends beyond the affected geographical region. Effective control of diseases like Ebola requires expensive, rigorous screening and border closures. The impediment to travel affects trading and cripples global supply chains, accelerating the economic damage. Fear of contagion also reduces travel, socializing and normal activities.
Despite the fact that only five of 54 African countries reported an actual case of Ebola, the economic effects of the epidemic affected the entire continent. The International Monetary Fund cut its growth forecast for economic growth in sub-Saharan Africa to 5 percent from 5.5 percent, citing “economic spillovers” from the outbreak.
Corporate events were cancelled. Investors and businesses suspended investment and trips to the continent. Tourism, an important activity and source of foreign exchange, was affected. Travel bookings across Africa fell by up to 70 percent. Key destinations in Eastern and Southern Africa, thousands of kilometers from the site of the outbreak, were hit with cancellations.
Even African football was affected. The African Cup of Nations was relocated after Morocco refused to host the event fearing the spread of the virus at large gatherings. Airlines suspended flights as people eschewed travel in fear of infection in what one commentator termed “an epidemic of ignorance”. Major disease outbreaks have huge and ongoing costs, even after they are deemed to be resolved.
Read more at Independent.
Sign up for the AFKInsider newsletter — the most compelling business news you need to know from Africa and the African diaspora, delivered straight to your inbox.