The Economics of Ebola
The Economics of Ebola
The U.S.-Africa Leaders Summit in Washington last week may have been overshadowed by the Ebola crisis facing West Africa, but decisions that flow from that historic gathering could determine how swiftly countries such as mine, Liberia, recover from the emergency.
While the virus has killed almost a thousand people, most West Africans will never contract the disease or know anyone who does. But Ebola's economic impact will affect millions. When this crisis ends, Liberia and her neighbors will need international assistance to rebuild their battered economies—help that America is uniquely placed to provide.
The reason this economic threat is so great is because of the controls needed to fight the disease. Save for the two airports remaining open in Liberia, our borders have been closed, schools and markets shut, the movement of people restricted, affected areas quarantined, and troops stationed on the streets. All of this means a virtual economic standstill.
We are now starting to receive international support. The World Bank and World Health Organization have established a special Ebola Fund to provide the three affected West African states, Liberia, Guinea and Sierra Leone, with $200 million in support. Initially these monies will be used to pay medics and essential security personnel and to redouble public-information efforts aimed at making citizens aware of how they can help prevent the spread of the disease.
In the medium term these funds will support basic economic-recovery measures. Yet once the immediate outbreak is contained and the threat to public health has ended, we will struggle to recover from Ebola's wider impact without significant assistance. What we need—and what the U.S. can offer—is economic growth that creates stable jobs and decreases the number of itinerant, semi-employed citizens who wander from village to village seeking work and—through no fault of their own—may well have increased the spread of the disease.
When Liberia's second civil war ended in 2003, we had lost 90% of our gross domestic product, virtually every major piece of infrastructure was destroyed, and most of our trained professionals—including doctors—had fled the conflict. In the past 10 years, we have started rebuilding the country, growing on average over 8% annually and attracting more than $16 billion in foreign investment. Yet our recovery is fragile and too dependent on sectors, such as timber and mining, that create few jobs. This leaves large numbers of Liberia's adult population, particularly those living in the vicinity of the capital, Monrovia, making ends meet as tinkers or hustlers.
Ultimately, stable and long-term employment delivered through foreign investment will be the only way to effect a significant economic change. More employment—full-time and permanent in location—would significantly limit the spread of a disease such as Ebola, which is spread through direct bodily contact.
That is why we are so hopeful about the unprecedented gathering of business and political leaders of the U.S. and Africa in Washington. Liberians needs an economic kick-start, but one impediment is a ban on the country's borrowing for day-to-day spending, imposed in 2010 after most of our foreign debt with the International Monetary Fund was written off. We will likely need America's support to relax those rules over the next few months.
For our economy to fully recover, we will continue to need access to foreign markets for our goods. New tariffs being imposed on African goods by the U.S. and Europe because of stalled trade talks would be bleak news for an economy left reeling by Ebola. So would U.S. failure to renew the African Growth and Opportunity Act, which expires in September 2015, when customs and duty-free tariffs for 39 African countries, including Liberia, would lapse.
While it is crucial for Africa's development that political disagreements in Washington are overcome, the leadership summit in Washington last week raises the prospect of the U.S. more broadly cementing its role in Africa not just a generous donor in times of emergency but as a trading partner creating jobs on both sides of the Atlantic.
It is a regular criticism of other major investors, such as China and Europe, that they do not create jobs in Africa apart from those for their own workers. While this is an exaggeration, it is not a charge that can be leveled at America, as the U.S.-Africa Summit demonstrated. The Coca-Cola Co. announced that it would invest an additional $5 billion over six years in manufacturing lines and production, as well as sourcing more agricultural ingredients from Africa. General Electric pledged to invest $2 billion by 2018 and double the number of its workforce on the continent. The Ford Motor Co. announced plans to expand manufacturing into Africa, with sales forecast to grow by 40% by 2020.
The commitment by corporate America to job creation and investment will help African nations to finally address the source of many challenges facing the entire continent: In the end, from Ebola to low life expectancy, the origin remains poverty.
Amara Konneh is the finance minister of the Republic of Liberia.