Ebola: Poorer Economies Lose Out

Medic-ALL (23:11:2014) by Kayode Kuku

Having devoted a good percentage of posts on this blog to news on the ravaging impact of the Ebola virus epidemic over the last couple of months, the varying degrees of successes achieved in containing the deadly disease in different parts of the world seems to point indispuatably but not entirely to the inequality in healthcare systems.

Now we know that Ebola had been in existence as early as nearly 4 decades ago, with outbreaks in Sudan and Zaire occurring between June and November 1976. But asides from laymen hearing of "Ebola" in some Hollywood movies or medical students reading a few lines about the disease in their medicine notes, not even the March 2014 outbreak in Guinea  reported by the World Health Organization attracted any real attention either from the media or the World's biggest economies. It can easily be inferred by the closest observers that Ebola in Africa was not taken seriously until it entered into the commercial capital of one of Africa's biggest economies and one of the World's Biggest crude oil producing countries in Nigeria.

About a week following the entry of the Ebola-infected Liberian into Nigeria in July 2014, The WHO On 8 August 2014, the declared the epidemic to be an international public health emergency. Urging the world to offer aid to the affected regions, the Director-General said, "Countries affected to date simply do not have the capacity to manage an outbreak of this size and complexity on their own. I urge the international community to provide this support on the most urgent basis possible. This was after about 4 months of the disease ravaging the West African countries of Guinea, Sierra Leone and Liberia with death toll rising, about 1000 as at early August.


The truth is that the disease which is said to have entered into West Africa in December 2013, had unfortunately hit , "3 of Africa's Poorest economies" (to borrow the CNBC Africa headline from September 2014). The reality of this is that Ebola choose countries whose contributions to the Global Gross Domestic Product could easily be considered negligible by most. In a blog post in August "The Economics of Ebola",
The Liberian Finance Minister, cited the international aid of $200 million recieved via the specially set-up Ebola Fund established by the World Health Organization and World Bank in August to provide support for the 3 West African Countries. The question is how much attention would the the deadly disease have received if the countries affected were some of the region's biggest economies.

The disease however continues to have huge economic impacts even in this so-called poor economies with Ebola itself directly costing the governments of these countries increasingly. The factors  contributing to the growing cost of Ebola include direct costs of the illness (government spending on health care) and indirect costs, such as lower labor productivity as a result of workers being ill, dying or caring for the sick.

But the majority of the costs stem from the higher costs of doing business within countries or across borders. These are largely due to “aversion behavior”, or changes in the behavior of individuals due to fear of contracting the disease, which has also left many businesses without workers, disrupted transportation and led to restrictions on travel for citizens from the afflicted countries.

According to the latest World Bank group report, if the Ebola epidemic is contained by the end of 2014, the economic impacts on West Africa, including on Guinea, Liberia and Sierra Leone, could be lessened and economies would begin to recover and catch up quickly. If the crisis continues into 2015 as predicted, slower growth could cost the region $32.6 billion over 2014 and 2015 and lead to much higher levels of poverty.

There is no doubt that the inadequacies of the health-care systems in the three most-affected countries help to explain how the Ebola outbreak got this far. Spain spends over $3,000 per person at purchasing-power parity on health care; for Sierra Leone, the figure is just under $300. The United States has 245 doctors per 100,000 people; Guinea has ten. The particular vulnerability of health-care workers to Ebola is therefore doubly tragic: as of November 18th there had been 588 cases among medical staff in the three west African countries, and 337 deaths. The hope for these countries therefore lies in the hands of some of the world's bigger economies (who may not necessarily benefit in anyway from the epidemic stricken countries) to help their healthcare sysytem and invariably the "receeding" economy.

Refs: The Economics of Ebola (Medic-ALL blog)

The Economist 

TheWorldBank.org

Ebola Takes Toll on African Economy

Wall Street Journal (05:09:2014) by Matina Stevie, Nicholas Bariyo and Gbenga Akingbule:

Ebola's economic toll on Africa is starting to emerge.

The flow of goods across many African frontiers, from Congolese copper crossing the Botswana border to used cars driven into Nigeria, is seizing up on fears that traders could be carrying or catch the killer virus. The trade slowdown comes on top of a drop in tourismand the suspension of commercial flights to West African cities as well as Nairobi, a continental hub.

The upshot: An accelerating continental economy has hit a massive speed bump. The International Monetary Fund projected sub-Saharan Africa would grow by 5.4% this year, but it is now warning that Ebola is set to badly hit growth rates in the countries directly affected.

The Ebola outbreak began in Guinea eight months ago and has since spread to Sierra Leone, Liberia and Nigeria. A separate Ebola outbreak has surfaced in the Democratic Republic of Congo.

The World Health Organization has warned that the epidemic is likely to accelerate and more than 20,000 people could be infected. Already, more than 1,900 people have died.

Ebola's economic impact has become so severe that the IMF is now warning that stricken countries could need emergency assistance. Guinea, Liberia and Sierra Leone have all been burning holes in their finances trying to curb the outbreak, and a dramatic downturn in trade—specifically timber and rubber—will compound those troubles.

"What is already clear at this stage is that growth is likely to slow sharply," said Gerry Rice, a fund spokesman. "Significant financing needs are likely to rise."

The World Bank and the IMF said recently that the epidemic would shave a full percentage point off Guinea's growth rate, slowing it to 3.5%.

Sierra Leone's economy was set to grow by a breakneck 13.9% rate in 2014, and Liberia's by 5.9%, the IMF predicted earlier this year. While the fund still hasn't specified how it believes the outbreak will affect those growth rates, the impact is expected to be significant, setting back fragile economies that were beginning to stage convincing economic expansions.

The Washington-based institution is already funding assistance programs to the three West African nations affected by Ebola. Sierra Leone benefits from a roughly $96 million IMF program, while Guinea is drawing on a $200 million loan, and Liberia on an $80 million one. IMF rules allow it to enhance or extend such loan facilities.

Agriculture accounts for some 40% of the economic output in Liberia and Sierra Leone and a quarter in Guinea, and the sector is taking a hit in the three countries as farmers are forced to leave the fields and can't trade across borders because many have closed, according to Manji Cheto, vice president at the New York-based Teneo Intelligence consultancy. What could be worse is the jobs and vital income lost in the sector: In Sierra Leone, for example, about 70% of the workforce is occupied in the broader agricultural sector.

Nigeria, which this year surpassed South Africa as the continent's largest economy, is better positioned to absorb the impact of the Ebola epidemic, which at this point appears confined to two cities, Lagos and Port Harcourt.

Still, Ebola is deterring those who help drive trade with Nigeria. A Nigerian customs official said revenue from import duties of used vehicles has declined drastically. Part of the reason is that increased surveillance for the disease at land borders—including quarantines for those with high fevers—has slowed trade and potential customers to a trickle, the official, who declined to be identified because he wasn't authorized to speak to the media said.

And It isn't just cars. "Many of my customers from neighboring countries have stopped coming," said Yusuf Adamu, an electronics dealer in Nigeria. "When I try to reach out to them on the phone they complain of stringent Ebola screening measures."

Zambia's health ministry said Friday that it was reviewing travel regulations for people entering its borders from Congo, the latest country to be hit by Ebola. Since Aug. 25, Botswana's authorities have blocked the entry of more than 100 trucks carrying copper from Congo.

Traffic along the Rwanda-Congo border has dropped drastically, as travelers stay away due to long screening queues. According toFrançois Kahwerikula, a Congolese customs official at the Goma border crossing, known asGrande Barriere, daily collections have declined by 30% to 40% since Congo announced that it had confirmed the Ebola outbreak.

More than 10,000 people cross the Rwanda-Congo border every day for business, but a Congolese mineral dealer, Siraje Bigirimana, said he is booking a hotel room in Rwanda until the situation is safe. "It's very expensive to operate in such a situation," Mr. Bigirimana said.

Rwandan Health Minister Agness Binagahwo said that Kigali had deployed troops and civilian health workers to ensure that all people going through the borders are screened. All people with a fever of 37.5 degrees Celsius (99.5 degrees Fahrenheit) and above are being turned away at the busy cross points.

"No one passes without being screened," said Ms. Binagwaho said. "There is good coordination and everything is going in fine."