The Economics of Ebola

The US-Africa Leaders Summit in Washington, DC, ended the first week of August, and brought together more than 50 African leaders to discuss Africa’s growing influence on the global stage. The summit came at a crucial time, in light of the recent Ebola outbreak in West Africa.

Ebola has infected more than 1,700 people in Guinea, Liberia Nigeria, and Sierra Leone – half of whom have died. The current Ebola outbreak is the largest on record and is expanding, despite great efforts to contain and combat it. Liberia’s president has officially declared a state of emergency. In response, the World Health Organization announced a $100 million plan to combat the disease.

West Africa, the epicenter of the  outbreak, is one of the poorest regions in the world. GNI Per Capita as of 2012 (current USD) in Guinea was $493.50, $413.80 in Liberia, and $633.50 in Sierra Leone. Such extreme poverty leads to unsuitable living conditions, a lack of sanitation, unreliable healthcare, and the consequential spread of lethal diseases. It is unsurprising to find such a vicious feedback loop in West Africa where poverty, economic volatility, and disease is the norm.

Beyond taking innocent lives, the Ebola outbreak may have severe consequences for the region’s economic growth and progress. Since the outbreak began, borders in West Africa have been closed, hotels are empty, and flights have been cancelled. Rio de Janeiro-based Vale SA (VALE5), the world’s biggest iron-ore producer, sent all foreign workers home and cut all operations by half, following the example of many other foreign companies in the region. Previous economic progress made in the region is sure to take a major hit. Such a devastating outbreak comes after years of relative peace among these three countries. Not long ago, all were involved in years of interconnected wars and civil strife. Today, they are working together to battle the Ebola outbreak.

Liberian Finance Minister Amara Konneh recently stated that the current outbreak has already cost his country’s economy $12 million USD. Liberia has shut down schools and many local markets in response to the outbreak. The finance minister also noted that GDP will expand 6.8% this year, a 2.5% drop from last year. Similarly in Guinea, the World Bank and IMF estimate that the countries GDP will fall from 4.5% to 3.5%. To add to the misery, economists agree that food prices will rise as staples and other supplies in the region become scarce. Sando Johnson, a senator in the province of Bomi, northwest of the Liberian capital Monrovia, stated, “the restrictions were ‘severe’ and warned that people would die of starvation if they are not relaxed.” In Liberia, a bag of rice selling for 1,300 LD ($15.76 USD) now goes for around 1,800 LD ($21.8 USD).

West African countries have deployed thousands of soldiers and policemen to enforce the quarantines at borders. These officials are tasked with conducting intensive searches of individuals and vehicles, only allowing essential goods to cross. This level of enforcement is believed to be necessary to contain the virus, or else we could be dealing with the next “bubonic plague” of our time. Such circumstances demonstrate the far-reaching effects of the current Ebola outbreak, and the need to end it.

Limited education, skyrocketing food prices, and closed borders, all byproducts of the outbreak, are becoming problematic. iF the virus spreads beyond West Africa, so will its negative consequences. It is now clear that Africa is at a critical point, and the response from global and African leaders will be essential in controlling the disease and limiting its effects on the worldwide economy.

 

 

 

 

 

 

 

 

 

 

 

 

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