Potential Economic Implications of Ebola
Honest Prosper Ngowi, pngowi2002@yahoo.com, +255 754 653 740
The outbreak and wide spread of ebola has been among the leading sad news in the second half of the year 2014 across the globe. Although the outbreak and major effects have been mainly felt in West Africa, the whole of Africa, including Tanzania, may be affected by this decease. Given its mode of spread and measures that have been and those likely to be undertaken to contain it, ebola may have major and far-reaching negative implications to the global economy but mostly so for Africa and Tanzania for that matter. In what follows, selected potential economic implications of ebola are outlined.
Cross-border trade
At the core of measures that have been undertaken and that may be undertaken by some countries in adressing ebola spread is limiting and even stopping movements of people from one country to another. As part of this measure, we have experienced Cameroon closing its long border with Nigeria. Border closures will automatically have negative implications on cross-border trade of involved countries. This may reduce and even wipe out the economic advantages associtaed with imports and exports from neighbouring countries. The extent of impacts will depend on the volume of cross border trade taking place between the countries in question. In an event of a country being totally isolated from the rest of the world due to ebola, such a country will be in autarky. This is an economic situation where a country becomes a closed economy that neither exports nor imports. Students and scholars of international trade in general and those of theories, models and practices of gains from trade in particular will appreciate the fact that an economy in autarky is no good economy.
Transport sector
In the bid to keep ebola at bay, Kenyan authorities are reported to have halted Kenya Airways flights to the ebola-troubled Western African region. This has also been done by such major careers as British Airwaya and Emirates. It is also reported that Korea Air was stopping its Kenya trips. Air France and possibly more aviation kings and queens in the African sky have expresses concerns of flying to West Africa especially to Conakry Guinea, Sierra Leone, Liberia and Nigeria. This response by the aviation industry will impact the concerned companies, their shareholders, staff, and all those in different nodes of their value chains associated with flights to the ebola-troubled countries.
The decisions by the corporate chiefs and captains and titans of the aviation industry will also have major and far-reaching negative economic implications to the affected countries. Inter alia, revenues accruing directly and indirectly from the stopped flights will dry up. Imports and exports hitherto handled by these flights will go to the negative territory. The extent to which each country will be affected will depend on the percentage share of the affected economic activities in the country's economy.
Tourism sector
Ebola outbreak in West Africa may have immense negative economic implications to the African continent via the route of the tourism sector. Ebola will be a push factor that will scare away the would-be tourists in the many attractive destinations in the beautiful African continent. It is very unfortunate that the potential victims in this context may be both countries within and outsie ebola danger zone. This may be due to fear of the would-be tourists to visit even ebola-free territories. As is the case for the cross border trade and aviation industry, the magnitudes of the economic ruin that can be caused by the impacts of ebola on tourism sector will be proportionate to respective country's dependency on the sector.
Given intersectoral linkages that exist between various sectors of the economy, the impacts of ebola on the few selected sectors here will, by extension, apply to other related sectors too. The higher the linkages and dependencies, the higher the economic vulnerabiltiies and vice versa, ceteris paribus (other factors being equal). Generally therefore ebola may wipe out the economic gains in the concerned countries as well as derailing the positive economic growth projects in many African economies.
Government budgets
The ebola outbreak is likely to be catching African governments unawares and with their financial pants down. With a generally poor performance in revenues collection leading to worrisome budget deficits, huge and swelling national debts as well as highly donor dependency, ebola may derail many countries' budgets. Adressing the outbreak in affected countries and preventing the spread to the countries that are yet to be affected is a costly undertaking with substantial budgetary implications.
Ways forward
Given the harm that ebola can cause in both affected and unaffected African economies including Tanzania, the best ways forward is to give it the weight it commands and deserves. For affected countries, efforts should be on stopping its spread within and outside those countries. In countries where ebola is yet to enter, efforts should be to keep it at bay as the scientific community fights to find lasting solution. Prayers should not be forgotten!
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