The sub- Saharan Africa region has had the largest capital outflow with over $4.2bn leaving the region since the COVID-19 pandemic hit the continent 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 without the exception of 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.