Locust plague, COVID-19 weigh on East Africa’s economic outlook

The World Bank recently announced the first phase of an additional $500 million package to combat the locust invasion in East Africa and the Middle East. According to Moody's, though crucial, the support package pales in comparison with the magnitude of the twin shocks that the East African economies face from the pandemic and the locust invasion. Kelvin Dalrymple, vice-President and Sovereign Analyst at Moody’s joins CNBC Africa for more.

Wed, 27 May 2020 10:14:56 GMT

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AI Generated Summary

The World Bank's $500 million package to combat the locust invasion in East Africa and the Middle East is deemed crucial but falls short of the extensive damage caused by the twin shocks.
Moody's has revised down growth forecasts for East African countries, attributing the downward trend to the combined impact of the pandemic and the locust invasion on key economic sectors.
Efforts towards economic diversification, export promotion, and revitalization of the agricultural sector are identified as critical steps in mitigating the economic downturn in East Africa.

East Africa is facing a challenging economic outlook as it grapples with the twin shocks of the COVID-19 pandemic and the locust invasion, which have taken a significant toll on the region's economies. The World Bank recently announced the first phase of a $500 million package to combat the locust invasion in East Africa and the Middle East. However, according to Moody's, this support package, while crucial, pales in comparison to the magnitude of the challenges facing the East African economies. Kelvin Dalrymple, the Vice President and Sovereign Analyst at Moody's, shed light on the implications of these crises on the region's economies in a recent interview with CNBC Africa. Dalrymple emphasized the critical nature of the funding provided by the World Bank but expressed concerns about its modest size in the face of the extensive damage caused by the twin shocks. Moody's has revised down its growth forecasts for several East African countries, including Rwanda, Uganda, Tanzania, Kenya, and Ethiopia, reflecting the impact of the pandemic and the locust invasion on these economies. The economic drivers in the region, such as tourism and agriculture, have been severely affected, leading to a significant downturn in GDP growth rates. Countries heavily reliant on tourism are expected to face a prolonged recovery period, with a potential rebound not anticipated until mid-2021. Dalrymple highlighted the importance of economic diversification and export promotion to aid in the recovery efforts of these countries. The agricultural sector, which accounts for a significant portion of GDP and employment in East Africa, is seen as a key focus area for revitalization. However, the challenges posed by the locust invasion, which has spread from Somalia to Kenya and Uganda, have further strained the region's resources. Kenya, for instance, has borrowed $500 million to combat the locust invasion, adding to its existing financial burdens amidst the pandemic. While the funding provided by the World Bank is essential in addressing immediate concerns, the long-term sustainability of these measures remains uncertain. Both the locust invasion and the COVID-19 pandemic have created prolonged crises with no fixed end in sight, necessitating comprehensive and sustained support for the affected economies. As East Africa navigates through these challenging times, concerted efforts towards economic recovery and resilience building will be vital in shaping the region's post-pandemic future.