The COVID-19 pandemic has resulted in the largest capital outflow from sub-Saharan Africa with over $4.2bn leaving the region from the end of February.
The International Monetary Fund disclosed this in its latest Regional Economic Outlook for sub-Saharan Africa, which was released on Wednesday.
Although the destinations of the outflow were not specified, countries affected by the development, according to the report, are Nigeria, South Africa, Zambia, Kenya, Namibia and Rwanda.
Cote d’Ivoire and Ghana are also affected.
The report linked the outflow to ‘spillovers from a rapidly deteriorating external environment, said to be compounding the economic challenges facing countries in the region.
A sharp slowdown in growth among key trading partners of many of the countries in the region has reduced external demand, according to the report.
The global economic slowdown arising from the coronavirus pandemic is expected to reduce growth in the region’s trading partners by about six percentage points in 2020.
The IMF also observed that ‘tightening global financial conditions’ was reducing investment flow and adding to external pressures.
The report added that sharp decline in commodity prices, especially oil, had exacerbated challenges in some of the region’s largest, resource-intensive economies, particularly Nigeria and Angola.
According to the IMF, sub-Saharan Africa is facing an unprecedented health and economic crisis as a result of the COVID-19 pandemic.
The IMF, in the report, projected the region’s economy would shrink by 1.6 per cent in 2020.
It also projected that real per capita income would fall by even more, -3.9 per cent on average.
Painting a bleak future for sub-Saharan Africa, the IMF warned “the crisis threatens to reverse recent development progress across the region and may weigh on growth for years to come.”
The report observed that COVID-19 was already threatening to unleash an unprecedented health crisis on sub-Saharan Africa.
As of April 13, over 7,800 cases of COVID-19 have been confirmed across 43 countries in the region, with South Africa, Cameroon, and Burkina Faso the most affected.
“The rapid spread of the virus, if left unchecked, threatens to overwhelm weak healthcare systems and exact a large humanitarian toll,” the report said.
In another development, the World Bank and the IMF have welcomed the decision of the G20 countries to suspend debt repayment by the poorest countries.
The decision, aimed at safeguarding lives and livelihoods in poor nations as the world battles the COVID-19 pandemic, was taken at the G20 Finance Ministers’ Meeting.
A joint statement released by President of the World Bank Group, David Malpass, and IMF Managing Director, Kristalina Georgieva, hailed the outcome of the meeting.
The joint statement, which was posted on IMF website on Wednesday, said the G20 countries agreed to suspend repayment of official bilateral credit on May 1.