Online, March 1st, 2022 (ECA) -The socio-economic impact of COVID-19 on households and firms in Africa, a less documented aspect of the pandemic’s repercussions, was at the heart of discussions at a joint webinar by the ECA offices for North Africa, West Africa and the African Institute for Economic Development and Planning (IDEP) on Monday 28 February.
Authors of the ECOWAS-WFP-ECA Monitoring report on the impacts of COVID-19 in West Africa, the ECA report on the impact of COVID-19 on North African enterprises and an ongoing study on SMEs and family firms’ access to finance in North Africa presented several recommendations to mitigate the micro-economic impact of the pandemic. A related objective was to improve countries’ resilience as Africa is bracing itself for additional shocks including rising food and energy prices in the wake of the conflict in Eastern Europe and deep and lasting damages caused by climate change.
Recommendations included maintaining COVID-19 health measures, increasing vaccine availability, implementing social protection measures to curb rising food insecurity in West Africa and mobilising external resources to finance economic recovery.
Millions of people in West Africa unable to meet their food needs
According to tothe ECOWAS-WFP-ECA Monitoring report on the impacts of COVID-19 in West Africa, the pandemic is having a lasting impact on West African households: the number of households living in extreme poverty (less than USD 1.9 a day) increased by 2.4 percent in 2020 and 2.9 percent in 2021, and 70 percent of surveyed slum dwellers have reported skipping meals or eating less due to the crisis. Despite improvements in food availability following the lifting of sanitary restrictions, food prices and inflation have remained high, and most of West African households are not back to their situation pre-COVID-19.
The study also revealed that, in 2021, in conflict-affected areas such as the Lake Chad Basin, the Liptako-Gourma region and the Sahel, households have even resorted to selling productive assets and nearly 25 million people were unable to meet their food needs, which is 34% higher than in 2020.
“Households remain very dependent on informal activities and remittances. Solutions are needed to stabilise household incomes and make them less dependent on factors they can’t control”, said Karima Bounemra Ben Soltane, Director of the African Institute for Economic Development and Planning.
The COVID-19 crisis is also structural and taking a heavy toll on firms
The ECA experts also stressed that COVID-19 should not be treated as a mere conjunctural crisis but a structural one. Policy makers need to implement transversal and sectorial policies that will help national economies recover, transform, ensure more productive firms survive the shock, and preserve employment and productivity. Adapting development models to develop resilience will be key.
Research on the impact of COVID-19 on North African enterprises has also revealed that, in the case of Tunisia, the sectors most affected by the pandemic and suffering from the greatest uncertainty regarding return to pre-COVID-19 levels of employment and turnover are tourism, catering, and construction. These sectors also saw the highest drops in investments, with – 22.8 percent for hotels, tourism and catering; - 22% for construction, and -17.1% for the transport sector.
Across sectors, the Tunisia study has revealed that access to liquidity and finance have played a key role in enterprises’ ability to survive the crisis, grow and innovate. This was particularly an issue for smaller and micro enterprises, who have been more vulnerable to the crisis due to their lower financial capacity.
In addition to reforms, the experts recommended that special attention be given to micro and small and medium enterprises (SMEs), and particularly family-owned ones, given the key role they play in achieving inclusive recovery and job creation. Measures should include improved financial literacy to improve firms’ ability to secure funding, use it more efficiently and transparently, achieve higher productivity and become greener.
Family firms can facilitate women’s participation in the labour force
Micro, small and medium sized enterprises (SMEs) are currently the biggest employer in North Africa. Among them - when including the informal sector - family firms are the most common form of ownership and management in the sub-region and can be a key employer for youth and women. Moreover, they tend to be more resilient during crises than non-family-owned SMEs.
“Family firms are important because they account for the majority of SMEs in North Africa. They can also act as an avenue for bringing more women into the labour market as they are characterised by a higher share of firms with female ownership than non-family firms. This is important in our sub-region where female labour force participation is very low compared both the participation of men and of women in the rest of the world”, said Zuzana Brixiova Schwidrowski, Director of the ECA office for North Africa.
The webinar on “The socio-economic impact of COVID-19 on households and firms in Africa” was held on 28 February 2022 as part of a series of conferences ahead of the 8th Session of the African Regional Forum for Sustainable Development scheduled on 3-5 March 2022 under the theme “Building forward better: A green, inclusive and resilient Africa poised to achieve the 2030 Agenda and Agenda 2063”.
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