The Economic Consequences of Ebola
While African countries are rolling out measures to stop Ebola from spreading, their double digit Economic Growth has been slowed. Since August 2014, South Africa on has banned travellers from Ebola-stricken countries from entering the country, and on Senegal announced it was closing its border with Guinea as a preventative measure, while Chad said it had closed its border with Nigeria. This ban on travel has meant imports and exports are affected, far beyond the borders of the affected countries. Riots broke out in a slum in Liberia’s capital, Monrovia, as residents desperate for food rations battled police. The World Food Programme (WFP) said that about 1 million people are facing food shortages because of quarantines around the region. The fear of Ebola has hit African hotels and tourism companies hard – nowhere more so than at the epicentre of the crisis, Sierra Leone.
The World Health Organisation (WHO) is concerned that the scale of the outbreak has been underestimated especially in Liberia and Sierra Leone, and that many people with Ebola symptoms have not been identified. New treatment centres in Liberia have been overwhelmed as soon as they opened by patients who had not previously been identified. It is not possible to know the true numbers. Ebola epidemic takes toll on business in quarantine zones and across Africa. The more pressing need is survival.
When his neighbours began falling ill with Ebola, Sheikh Kallon felt fortunate that he was well enough to continue tending his farm deep in the forested interior of Sierra Leone. Then, one of his drinking buddies died of the disease, and Kallon’s entire family was quarantined for 21 days.
“I asked my workers to keep going to the farm, but they said they don’t want to touch money from my hands in case they get Ebola,” he said.
With his crops rotting in the fields, Kallon now spends his days sitting with his family on their porch surrounded by soldiers enforcing the quarantine. The soldiers hardly need bother: lifelong neighbours are too terrified to approach, and a few miles away an entire community that has been unable to trade altogether has run out of salt.
Rural farmers like Kallon – whose rice, cocoa and cassava fields account for nearly half Sierra Leone’s gross domestic production – are among the hardest-hit in the economic fallout of the world’s biggest Ebola epidemic.
The repercussions have radiated from these far-flung villages to the country’s financial markets, prompting cutbacks by multinational firms whose revenues had previously spurred double-digit growth and allowed Sierra Leone, Liberia and Guinea painstakingly to rebuild their war-shattered economies over the last decade.
Three-quarters of Sierra Leone’s 20% economic growth last year was fuelled by the mining industry. Foreign companies such as London Mining, in which the commodities giant Glencore has an offtake agreement, had planned to treble yields in a decade. But London Mining’s shares plunged by 19% after the company reduced forecasts in part because of the Ebola crisis this year. The British firm has now moved some workers from Sierra Leone. Commercial banks have slashed working hours to minimise contact with clients.
The World Food Programme is scaling up its operations to provide food to about one million people across Guinea, Liberia and Sierra Leone at a cost of $70m (£42m). Sierra Leone has asked it to “consider significantly upscaling supplies, even for non-quarantined communities,” according to a UN source.
The impact has spread thousands of miles to African countries that have never recorded an Ebola death.
Investment summits have been cancelled as far afield as Namibia, almost 3,000 miles from the core of the epidemic, and west African athletes were banned from competing in some Youth Olympics events this month. Korean Air Lines scrapped flights to Kenya, a regional hub that has not recorded any Ebola cases in this outbreak.
“Beyond a health crisis, we’re looking at a whole range of knock-on effects,” said David McLachlan-Karr, UN country co-ordinator for Sierra Leone. “The single biggest concern is the longer term impact on development aspirations, which is premised on high foreign investment and high earnings.”
A girl walks past a sign warning of the dangers of Ebola outside a government hospital in Freetown. Photograph: Carl De Souza/AFP/Getty Images
Officials in all three countries have trimmed growth forecasts as money is diverted into tackling the crisis.
Even before the quarantine, Kallon had difficulties. A state of emergency meant more than two dozen checkpoints sprang up between Kailahun in the east and Freetown, eight hours’ drive away.
With fewer farmers travelling, the cost of farm produce doubled in a matter of weeks, said Umaru Barry, a sharply dressed trader selling smartphones in the capital’s hilly streets. Barry’s own trade was suffering. “We sell expensive phones and mainly foreigners would buy them, but now they’ve all left the country,” he said of the phones that retail at around $700 (£422). “I used to sell two phones a week.”
Perhaps the biggest sign of the deepening financial chill is the silence of Freetown’s black market “dollar boys”.
In a country where banks are unable to meet demand for hard currency, their piercing cries of “Pounds! Dollars! Euros!” have long drawn everyone from petty traders to multinationals, and are a reliable gauge of financial health. “There’s no business any more,” said John Moriba, a dollar boy sitting glumly beside a bucket of chlorinated water in which he regularly dips his hands to kill the Ebola virus. “Normally I have a lot of people calling, but today it’s 3pm and nobody has come yet. Before Ebola, that was never possible.”
Many of his clients were dealers who bought goods cheaply in neighbouring Guinea before reselling them at home, but closed borders have stopped inter-country trade.
Moriba is less worried about Ebola itself than the negative perceptions. “We heard that even if you have Ebola you can sit next to somebody, just don’t touch. So I don’t know what all this trouble is about,” he said. Although the virus kills with gruesome speed, Ebola can only be passed on if bodily fluid from affected patients enters mucous membranes in the eyes, nose or mouth.
Telltale signs of a slowdown litter the capital. Freetown’s only sushi restaurant now sells chicken sandwiches, as its Chinese fish suppliers have shut up shop. In one popular hotel, where 34 bedrooms overlook a stunning stretch of bay, only eight rooms were filled.
This month, British Airways and Kenya Airways banned flights to both Sierra Leone and Liberia. On Wednesday, Air France suspended its flights to Sierra Leone on the advice of the French government.
“We need to work hard to ensure that the economy doesn’t suffer irreparable damage,” said the UN’s McLachlan-Karr. “It’s not helpful for companies to shut down operations … when in fact appropriate measures can be put in place to ensure it doesn’t spread. That reinforces not only isolation but also the perception of the country being in crisis.”
In every crisis, somebody benefits. The medicine companies are seeing a boom. They are even being allowed to release remedies far ahead of the previous years it would take to test antidotes. And of course, they name their price. Their share prices will no doubt continue to rise.
Reference: The Guardian Newspaper, Uk
18 Nov 2014
The Economic Consequences of Ebola