COVID-19 may not be hitting economic activity in Africa as hard as some news reports would suggest, with 60% of respondents to an Africa Oil & Power survey reporting a highly positive or positive outlook for their business for the next 12 months. An additional 56% of respondents to the survey, run from May-August 2020, said it was likely or very likely their company would commit to a major investment decision by next year.
Despite unprecedented policy support in China, Europe and the United States, global GDP is expected to fall by 5.2% in 2020, according to the World Bank. Developing countries and emerging markets are expected to see GDP contract between 5-8% for 2020, causing between 71 million and 100 million people to be pushed into extreme poverty.
Despite the drop in GDP, Africa is likely to find incredible opportunity on the international markets, especially as the COVID-19 crisis forces a shift towards keeping trade partners close to home — both from a physical distance perspective, and from a geopolitical context. Africa can and should reposition itself “as multinational enterprises from major economies may relocate production centers.
Coordinated actions in attracting FDI and joint investment in regional public goods could boost local transformation and technology transfer,” the Organisation for Economic Cooperation and Development states in a recent report. Economic leaders like the United States and Europe are likely to look to the global south for new manufacturing bases.
Survey respondents to the AOP survey agreed the impacts of COVID-19 will depend on how businesses and countries respond to the situation. “The positive or negative impact from the COVID-19 blow is very much dependent on how we react to the current situation,” one respondent said.
Several factors are also vital for business to move forward, with 22% of respondents saying that borders need to be reopened without restrictions; 21% of respondents said there needs to be a vaccine and/or treatment for COVID-19; 13% said borders need to be reopened without restrictions and that the oil price needs to stabilize above $40/barrel.
Others agreed future planning is vital, saying “Certainly, we are in a very challenging situation; however, we must plan ahead.”
Additionally, several companies won free delegate passes to AOP’s 2021 events for completing the survey. The winning companies are: Sky Eye Measurement, Canada; Nicmo Group, Botswana; Price Energy, Nigeria; Tempus v Petroleum, Namibia; and Stellae Energy, UK.