News / Economy

    Ebola Strains Fragile W. African Economies

    Government health workers administer blood tests for the Ebola virus in Kenema, Sierra Leone, June 25, 2014.
    Government health workers administer blood tests for the Ebola virus in Kenema, Sierra Leone, June 25, 2014.
    Reuters

    Poverty, then war. Now, a deadly plague.

    Among the world's poorest states at the bottom of global development indexes, Sierra Leone, Liberia and Guinea had shown signs of leaving behind brutal wars and leaping into Africa's economic boom – before a lethal Ebola epidemic struck.

    As the world's biggest outbreak ravages the populations of these small states from West Africa's Mano River region, their resource-dependent economies are reeling from the impact.

    A UNICEF worker talks with motorcycle taxi drivers about Ebola and precautions in Voinjama, Liberia, in this UNICEF handout photo.A UNICEF worker talks with motorcycle taxi drivers about Ebola and precautions in Voinjama, Liberia, in this UNICEF handout photo.
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    A UNICEF worker talks with motorcycle taxi drivers about Ebola and precautions in Voinjama, Liberia, in this UNICEF handout photo.
    A UNICEF worker talks with motorcycle taxi drivers about Ebola and precautions in Voinjama, Liberia, in this UNICEF handout photo.

    With the death toll topping more than 900, Ebola is crippling tourism, reducing travel and trade, and slowing farming and mining – delivering body blows to what had been buoyant GDP growth driven by increasing foreign investment, officials said.

    “A common feature of these three countries is they're all fragile states,” Makhtar Diop, the World Bank's vice president for Africa, said on a call with reporters.

    “It means that they're countries that need more support from the international community in normal times. ... And this external shock that they're currently facing, this crisis, is taking them even further back,” Diop said.
     

    Liberia loses $12 million

    Liberia's Finance Minister Amara Konneh said the outbreak had already cost his country's economy $12 million between April and June – 2 percent of the budget – and the disease was still spreading. Liberia would have to revise down its projected GDP growth of 5.9 percent, he said.

    “We are scrambling for a response for this crisis. ... If it is not contained, it will have serious consequences for our economy,” Konneh told Reuters.

    In the ramshackle ocean-front capital Monrovia, still scarred by a 1989-2003 civil war, relatives of Ebola victims were dragging bodies into the dirt streets rather than face quarantine enforced by troops.

    Sierra Leone's foreign minister, Samura Kamara, said his country could ill afford the costs of fighting the epidemic.

    “You have to divert resources. You have to divert energy. So you are slowing down the other aspects of real economic development just to fight a disease that erupted out of nowhere,” he told Reuters on a visit to Washington.

    An initial World Bank-IMF impact assessment for Guinea, where the outbreak started in a remote forest region and has killed over 350 people, projects the bauxite exporter's GDP growth will fall from 4.5 percent to 3.5 percent.

    Banks offer aid

    The World Bank and African Development Bank have committed $260 million to help the three worst-affected countries.

    With two Ebola deaths also reported so far in Nigeria, fears are growing about how the deadly virus could affect Africa's top oil producer and most populous nation, as well as the surrounding region.

    Farmers flee, revenues fall

    The World Bank said agriculture had been hit in Guinea, Sierra Leone and Liberia as rural workers fled farming areas in the affected zones, where some Ebola patients have been shunning medical treatment and hiding away in their villages.

    Liberia's Konneh said a slowdown in farming and transport and reduced activity at popular markets could push up prices of essential food items and other goods.

    “We're watching inflation. So far it's not been bad – but we're worried about the Lofa food belt, where people are quarantined and major markets closed,” Konneh said. “We expect hoarding by people in urban areas that could drive food prices up.”

    In Monrovia, residents said the Ebola emergency, and the fear and suspicion it has generated, was disrupting daily life, affecting everything from street hawking to taxi fares.

    “Prices have gone up high. They're charging us as though we were dressed in suits with neckties. Transportation fare is up now,” said Seyon Tweh, a small trader.

    Taxi drivers set limits

    Because of fear of contagion – Ebola is spread by contact with the bodily fluids of infected humans or animals – taxis were now only taking two passengers in the back instead of the previous four, pushing up fares.

    Konneh said the government would prevent price-gouging.

    Some major airlines, such as British Airways and Emirates have halted flights to affected countries, and expatriates there are fleeing the Ebola risk, government officials said, adding this reduced consumption and revenues.

    “We've seen international workers leaving the country in numbers,” Liberia's Konneh said.

    “We're seeing a fall-off in financial receipts due to lower activity at the airport and hotels,” Emmanuel Soussouadouno, a senior official at Guinea's finance ministry, told Reuters.

    During overlapping civil wars that lasted more than a decade, Sierra Leone and Liberia were symbols of Africa's “Hopeless Continent” image, with their diamond riches driving a conflict made notorious by amputations and rapes.

    Guinea suffered spillovers of refugees and fighters.

    But in the decade since peace was restored, the Mano River states have experienced surging growth propelled by foreign investment in mining, oil exploration and construction.

    That recovery is now threatened. “This economic challenge comes at a time when all three countries have been enjoying peace and stability after years of interconnected wars and civil strife,” Liberia's Konneh said.

    Investors aren’t rushing out

    Most major foreign companies operating in Guinea, Sierra Leone and Liberia are responding cautiously, reducing staff movements and adopting precautionary health measures.

    “Some companies are moving back workers and others have postponed projects to see how the outbreak develops,” said Katie Greary, medical director at International SOS, a travel security risk services company.

    The World Bank said if the evacuation of skilled expatriate staff continued, there would be a “sizable decline in production” from mining operations.

    The two big iron ore miners in Liberia, Arcelor Mittal and China Union, are still operating, Konneh said. He added, “We are trying to ensure we put in place health protocols in mining areas.”

    In the Guinean mining town of Siguiri, where an Ebola isolation ward was opened in July to cope with new cases, AngloGold Ashanti said it was taking health measures but there had been no impact on its operations there.

    In the wider region, mining companies are on alert. Perseus Mining, which has mines in Ghana and Ivory Coast, said it has issued health warnings and barred from its sites anyone coming from Guinea, Sierra Leone or Liberia in the last month.

    Canadian firm delays oil drilling

    Canadian Overseas Petroleum, a partner with oil major ExxonMobil in offshore exploration in Liberia, said it was pushing back the start of drilling.

    ExxonMobil declined to comment on personnel but said safety was a top priority. “Our Monrovia office remains open,” it said.

    Liberian and Sierra Leonean officials appealed to major investors not to abandon their countries because of Ebola.

    “My message is: 'Don't leave the country. Stay with us – let’s fight this together,'" Konneh said.

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