Ebola crisis: The economic impact
- 21 August 2014
- From the section Business
With more than 1,300 reported deaths from Ebola in West Africa, the virus continues to be an urgent health crisis, but it is also having a devastating impact on the economies of Guinea, Liberia and Sierra Leone.
"The economy has been deflated by 30% because of Ebola," Sierra Leone's Agriculture Minister Joseph Sam Sesay told the BBC.
He said President Ernest Bai Koroma revealed this staggering and depressing news to ministers at a special cabinet meeting. "The agricultural sector is the most impacted in terms of Ebola because the majority of the people of Sierra Leone - about 66% - are farmers," he said.
Twelve out of 13 districts in Sierra Leone are now affected by Ebola, although the epicentres are in the Eastern Province near the borders with Liberia and Guinea.
Road blocks manned by police and military are preventing the movement of farmers and labourers as well as the supply of goods.
"We are definitely expecting a devastating effect not only on labour availability and capacity but we are also talking about farms being abandoned by people running away from the epicentres and going to areas that don't have the disease," Mr Sesay added.
However, the chief co-ordinator for the United Nations Development Programme (UNDP), David McLachlan-Karr, thinks that the road blocks are absolutely crucial to containing the outbreak.
"A robust response to quarantining epicentres of the disease is absolutely necessary," he told the BBC. But he admits agriculture in Sierra Leone has been brought to its knees.
"We are now coming into the planting season which means a lot of agriculture is not happening, so down the line that will create food shortages and pressures on food prices. We are starting to see a rise in inflation and pressure on the national currency as well as a shortage of foreign exchange," he said.
The UNDP has appealed for $18m (£11m) to bolster Sierra Leone's health system while the World Food Programme says the total cost of its emergency operations in Sierra Leone, Guinea and Liberia is $70m.
In Guinea and Liberia the economic predictions may be less catastrophic but they are still worrying. The World Bank said it was expecting GDP growth in Guinea to fall from 4.5% to 3.5%.
The Liberian economy had been expected to grow by 5.9% this year but the country's Finance Minister, Amara Konneh, said this was no longer realistic due to a slowdown in the transport and services sectors and the departure of foreign workers because of Ebola.
The world's largest steelmaker ArcelorMittal has seen work disrupted on its iron ore mine expansion project in Yekepa in Liberia, after contractors declared "force majeure" and moved people out of the country.
Simandou, in the forests of eastern Guinea, is Africa's largest iron ore mine and infrastructure project. Vale, the world's biggest iron ore producer, was involved in Simandou until April. It evacuated six international members of staff and put the rest of the workforce in the area on leave.
Rio Tinto, the world's third largest mining company, which owns a share in Simandou, has donated $100,000 to the World Health Organization's work in the area and is also making sanitation equipment available to local people there.
A smaller British company, London Mining, has moved out some its non-essential expatriate staff from Sierra Leone, where mining has accounted for much of the country's recent growth. According to the International Monetary Fund, Sierra Leone's output grew by 20% last year; excluding iron ore mining, it grew by 5.5%.
But like Rio Tinto, London Mining has also donated money towards tackling the spread of Ebola, and educating local communities about the virus.
In Sierra Leone, commercial banks have reduced their hours of business by two hours to reduce contact with clients and the country's tourism industry has taken a severe knock - some hotels are empty and are laying off staff.
The closure of borders in West Africa and the suspension of flights are also having a detrimental effect on trade, severely limiting the ability of countries to export and import goods.
Recent examples are the closure of Cameroon's lengthy border with Nigeria and the announcement by Kenya Airways that it is suspending flights to and from Sierra Leone and Liberia.
All three West African nations are already poor countries, but the Ebola outbreak could make them even poorer. Sierra Leone and Liberia have both emerged from horrific civil wars and managed to rebuild their economies.
Liberia has been trying to revive its mining sector which before the civil war accounted for more than half its export earnings. But now there are fears that all the good work that has been achieved since those conflicts could be destroyed. There are also concerns that widespread poverty could force people to resort to criminality.
Meanwhile some international investors are nervously watching the Ebola outbreak unfold. Dianna Games, chief executive of Johannesburg-based consultants Africa@Work, says fears about the virus could damage Africa's economic revival of recent years.
"Ebola has made a dent in the Africa Rising narrative," she told the BBC. "The stereotypes of Africa as a place of poverty and disease have started to re-emerge again."
She thinks Nigeria is the only affected country that has the health system and infrastructure to deal with Ebola. At the moment there have only been 12 confirmed cases, all of which were linked to the death of one man from Liberia in July.
In the long run, Ms Games believes history will view the 2014 Ebola outbreak as a temporary blip rather than a permanent U-turn in the continent's fortunes.
"The fundamentals pushing this Africa Renaissance are still there," she said.