Control Risks on which industries will aid Africa’s post-COVID-19 recovery

The devastating impact of COVID-19 in Africa is not seen in the case numbers but rather in the economic effect that the pandemic has on businesses, growth, and economic activity. Marisa Laurenco, an Associate Analyst at Control Risks, joined CNBC Africa to discuss a report on Africa's post-COVID-19 recovery. The monetary response across the continent has been challenging due to issues with monetary policy, transmission mechanisms, lack of fiscal space, and the capability of central governments to make a significant difference in their economies. Central banks in Africa have introduced various monetary policy measures and billions of dollars in stimulus packages, responding to disruptions in global supply chains, fluctuating commodities prices, and severe economic impacts of lockdowns. However, only five countries in Africa - Botswana, Mauritius, Morocco, Egypt, and South Africa - have the capacity for meaningful stimulus spending. South Africa implemented a massive $26 billion stimulus package, while other countries that are relatively diversified struggle to avoid steep economic contractions due to limited fiscal capacity. The liquidity packages do not always reach all parts of the population due to low levels of financial inclusion, hindering their effectiveness in mitigating economic impacts. South Africa, for example, may not fully utilize a significant portion of its loan relief package, indicating risks of ineffective deployment. In terms of emerging stronger from the crisis, countries with diversified economies, developed retail, manufacturing, and construction sectors are likely to fare better over the coming years. Mauritius and Morocco, reliant on international tourism, stand to recover strongly as tourism resumes. Small economies in Africa, particularly those dependent on agriculture, have been less severely impacted by strict lockdowns and social distancing measures, positioning them for a more robust recovery from the pandemic.