The Economic Costs of COVID-19 in Sub-Saharan Africa: Insights from a Simulation Exercise for Ghana

Abstract

Globally, countries have resorted to social distancing, travel restrictions and economic lockdowns to reduce transmission of COVID-19. The socioeconomic costs of these blunt measures are expected to be high, especially in sub-Saharan Africa where many live hand-to-mouth and lack social safety nets. Social Accounting Matrix multiplier model results show that Ghana's urban lockdown, although in force for only three weeks in April 2020, has likely caused GDP to fall by 27.9% during that period, while an additional 3.8 million Ghanaians temporarily became poor. Compared to the government's revised GDP growth rate of 1.5% for 2020, the model predicts a contraction of 0.6 to 6.3% for 2020, depending on the speed of the recovery. The US$200 million budgeted for Ghana's Coronavirus Alleviation Program will close only a small part of the estimated US$ 2.3 billion GDP gap between the fast recovery scenario and government's revised GDP trajectory.

Keywords: COVID-19; Ghana; Social accounting matrix multiplier model; Socioeconomic impact; Sub-saharan africa.

Fig. 1

Cumulative COVID-19 cases and timeline of policy response measures, mid March to mid June 2020. Source Authors’ representation based on GSS (2020) and The Presidency (2020)

Fig. 2

Costing the COVID-19 pandemic. Source Compiled from MoF (2020). Note NPRP National Preparedness and Response Program, CAP Coronavirus Alleviation Program

Fig. 3

Change in GDP during three-week lockdown and hypothetical extension, by percent and value. Source Ghana SAM Multiplier Results

Fig. 4

Contribution of restrictions and shocks to GDP losses during lockdown. Source Ghana SAM Multiplier Results

Fig. 5

Change in agri-food system GDP during lockdown period by system component, by percent and value. Source Ghana SAM Multiplier Results. Note: Figures in brackets next to labels show each component’s share of national GDP

Fig. 6

Contribution of restrictions and shocks to agri-food GDP losses during lockdown. Source Ghana SAM Multiplier Results

Fig. 7

Change in household incomes during lockdown, percent. Source Ghana SAM Multiplier Results

Fig. 8

Percentage change in poverty rate and change in number of poor during lockdown. Source Ghana SAM Multiplier Results

Fig. 9

Change in GDP relative to baseline in 2020. Source Ghana SAM Multiplier Results

Fig. 10

Projected cumulative GDP losses in 2020 relative to 2019. Source Ghana SAM Multiplier Results

Fig. 11

Change in poverty headcount rate relative to baseline in 2020.n Source Ghana SAM Multiplier Results