The impact of COVID-19 on African trade, Baker McKenzie

22 avril 2020Wathinote Covid-19

Author: Virusha Subban

Affiliated organization: Baker McKenzie

Type of publication: Article

Date of publication: March 17, 2020

The Coronavirus (COVID-19) has resulted in mass production shutdowns and supply chain disruptions due to port closures in China, causing global ripple effects across all economic sectors in a rare “twin supply-demand shock”. As China is one of Africa’s biggest trading partners, the effects of COVID-19 are already being felt in the continent.

Africa is now feeling both the humanitarian and economic impact of the virus and plans to control and manage the challenges of COVID-19 are underway across the continent. Economically, the effects have already been felt in that demand for Africa’s raw materials and commodities in China has declined and Africa’s access to industrial components and manufactured goods from the region has been hampered. Adding to the supply chain challenges are the travel restrictions that have been imposed by several African countries.

Economically, the effects have already been felt in that demand for Africa’s raw materials and commodities in China has declined and Africa’s access to industrial components and manufactured goods from the region has been hampered

“Over three quarters of African exports to the rest of the world are heavily focused on natural resources and any reduction in demand impacts the economies of most of the continent. Countries such as the DRC, Zambia, Nigeria and Ghana are significantly exposed to risk in terms of industrial commodity exports, such as oil, iron ore and copper, to China and other countries.” However, it is also expected that once COVID-19 is brought under control it could lead to an increase in demand for raw materials.

The impact of COVID-19 will also be felt in the manufacturing sector. Because China is part of the global supply chain, factory closures raise the risk of supply chain disruptions for multinational companies with delays, raw material shortages, increased costs and reduced orders affecting manufacturing plants around the world, including in Africa. Further supply chain disruptions will impact the import of manufactured goods into Africa from other parts of the world as well, including Europe.

Over three quarters of African exports to the rest of the world are heavily focused on natural resources and any reduction in demand impacts the economies of most of the continent. Countries such as the DRC, Zambia, Nigeria and Ghana are significantly exposed to risk in terms of industrial commodity exports, such as oil, iron ore and copper, to China and other countries

According to research from Baker McKenzie and Oxford Economics, African imports from outside the continent reveal that industrial machinery, manufacturing and transport equipment constitute over 50 percent of Africa’s combined needs. The most important suppliers in this regard are Europe (35 percent) China (16 percent) and the rest of Asia, including India (14 percent). As such, disruptions due to the impact of COVID-19 will lead to a decrease in the availability of manufactured goods imported into Africa.

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The impact of COVID-19 on African trade, Baker McKenzie

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