Isolation over Ebola taking toll of African economies

Airlines have canceled their flights to the most Ebola-affected countries. Prices of staple goods are going up, and food supplies are dwindling. Border posts are being closed, expatriate workers are going home and national growth rates are projected to plummet.

Ebola — the reality and the hysteria over it — is having a serious economic impact on Guinea, Liberia and Sierra Leone, three nations already at the bottom of global economic and social indicators. Aggravating both the financial and social consequences, these countries and their frightened African neighbours are enacting concentric circles of quarantines, cutting off neighbourhoods, regions and even whole nations.

International medical authorities have warned against such practices, arguing that they will worsen suffering and deprivation, and do little to stop the spread of the disease.
But many African nations have gone ahead anyway, sealing borders, barring entry to residents of the affected countries, stopping their national carriers from flying to them, and even, in the case of Senegal, refusing to allow humanitarian flights with urgently needed supplies and medical personnel. That decision has infuriated aid agencies here in their West African hub. South Africa and Kenya, two of the continent’s economic heavyweights, have restricted entry to people coming from the Ebola zone.

For the worst-hit countries, “isolating and stigmatising them and making it difficult to transport supplies, personnel and other resources” can only make things worse, the World Health Organisation’s regional director for Africa, Luis Gomes Sambo, said at a meeting in Ghana last week.

For three nations that have only recently emerged from decades of war and political upheaval, Ebola has dealt a hard blow. “After a decade of conflict we were set to restore the economy to its prewar status,” Amara Konneh, Liberia’s finance minister, said in an interview. “This outbreak is dealing a serious blow to all of our efforts. This is the biggest crisis we have faced since the end of our civil war.”

With sections of Liberia and Sierra Leone under quarantine and the borders Senegal and Guinea sealed, the movement of goods has slowed. National budgets are under strain, health care expenditures are rising, government revenues are dropping and agricultural production, especially in Sierra Leone, is taking a hit. South Africa is barring entry to non-South Africans who have been in the affected countries, and Kenya and Senegal are practicing similar measures.

“With the main harvest now at risk and trade and movements of goods severely restricted, food insecurity is poised to intensify in the weeks and months to come,” the United Nations Food and Agriculture Organisation’s regional representative for Africa, Bukar Tijani, said in a statement Tuesday.

This week the United Nations warned that the price of cassava, a staple starch, increased 150 percent in Monrovia in the first week of August. In Sierra Leone rice, fish, palm oil and other basics have all risen in price, according to the country’s finance ministry.

Fear of Ebola has added uncertainty, recalling the worst period of the 1990s civil wars in West Africa. “People are thinking, ‘This is going to be as bad as the war,"’ said Rupert Day, who runs a British cocoa and coffee trading company in eastern Sierra Leone, at the heart of the Ebola zone. “My staff said, ‘At least during the war, you knew when the rebels were coming,’” Day said. He has had to shut down much of his operation and lay off many in his staff of around 90.

Five months into the epidemic, World Bank officials said they are still working out the epidemic’s economic impact in light of a new World Health Organisation estimate of 20,000 potential Ebola cases.

But the bank has already projected a drop in Guinea’s GDP growth rate of at least one percent. In Liberia health care expenditures will now account for 25 per cent of the government’s annual budget because of Ebola, instead of 8 per cent, said the country’s finance minister. ArcelorMittal, which runs a major iron ore mining operation in Liberia, has delayed an expansion because contractors have evacuated 645 employees. In Sierra Leone, where the country’s main agricultural region has been hardest hit, the finance ministry wrote this week of the “devastating impact of the disease” on the country’s economy, predicting a 4 per cent drop in growth.

The evidence is so far mostly anecdotal. But analysts, economists and officials agree: the shock is noticeable. “Very, very damaging,” said the president of the African Development Bank, Donald Kaberuka, in a statement last week, while the ratings agency Moody’s spoke of “significant economic and fiscal ramifications” from the epidemic across the region.

Drastic drop in output

In Sierra Leone, where the finance ministry this week produced a detailed summary of Ebola’s economic implications, there will be fewer farmers to harvest cassava, cocoa and coffee in the country’s breadbasket. Villagers spoke of harvests being canceled this year because so many farmers had died, and the finance ministry predicted “the loss of a whole planting season.” It projected a one-third drop in agricultural output.

Roads normally well-travelled by produce-bearing vehicles are empty. At numerous checkpoints along the main road, crowds of small traders are backed up, refused passage by soldiers and the police guarding them.

In the capital, Freetown, patrons are sparse at hotels and restaurants catering to the expatriates who are vital for the economy. Hotel occupancy rates have dropped 40 per cent.

There is already “scaling down” at the country’s three biggest manufacturers: a brewery, a bottling company and a cement plant, the finance ministry said. Construction on major road projects has been suspended following the evacuation of foreign staff members overseeing the projects. Mining, of iron and diamonds, most significantly, presents a mixed picture, with some companies expected to meet production targets, but diamond miners probably not, with a production drop in the latter sector of 10.4 percent.

In the eastern city of Kenema, population 600,000, the major city in Sierra Leone’s Ebola zone, the market stalls are still full of goods and produce, but it is unclear how much of the produce, on which the rest of the country depends, is flowing out. There is a “shortage of basic food items in the markets, especially in the urban areas,” the finance ministry said.

“You have a general sense that the economy is completely shut up,” said a leading official in the region, David Keili-Coomber, the paramount chief. Timber harvesting, a mainstay, is frozen because trucks can’t move the trees out due to roadblocks. “People have a lot of timber stored up,” the chief said. “They can’t sell it.”

Farmers need bank loans to hire labour to clear the land around the cacao trees, but “because of Ebola they won’t give us loans,”  Keili-Coomber said. “There is a general atmosphere of fear.”

Day, the manager of Tropical Farms, said the epidemic had stymied his operation. Buying cocoa and coffee beans has become nearly impossible. “We’re closed at the moment,” he said in an interview in Kenema. “We can’t take the risk of sending staff into the bush,” to buy beans from small-scale growers. Many of them have died, in any case. “The guys from this village, or that village, have died,” Day continued. “That makes it really upsetting. I know these guys.”

International New York Times