Liberia's Finance Minister Amara Konneh has disclosed that the outbreak of the deadly Ebola virus in Liberia and other countries within the Mano River Union (MRU) region has already cost the country's economy US$12 million between April and June alone. This amount represents about two percent of the country’s fiscal budget – and the disease is still spreading.
This means that Liberia would have to revise down its projected gross domestic product (GDP) growth of 5.9 percent by the International Monetary Fund (IMF), as reported by our business desk last week. Minister Konneh didn’t, however, say how much the economy would lose in the months of July and August, which witnessed increased in the spread of the Ebola epidemic in Liberia.
He is quoted by the Reuters news agency as saying that the Liberian government is scrambling for a response to the crisis. "We are scrambling for a response to this crisis … If it is not contained it will have serious consequences for our economy," Konneh told Reuters.
Liberia’s economy is being hurt as a result of massive slowdown in cross-border trade as the country’s military has been deployed at key border points connecting Sierra Leone and Guinea to enforce a 90-day State of Emergency. The local economy is also hurt by the Ebola outbreak as many consumers hold back spending thereby forcing certain businesses to suspend operations or operate for half day.
Daily newspaper sales have dwindled as print media houses report large numbers of returns. The manager of one of the local dailies told our business desk over the weekend that he is considering reducing the quantity of papers he prints.
“This paper is not being sold because government offices have urged most of their ‘non-essential staff’ to stay home and these people are our customers,” he said on condition of anonymity.
Like the media houses, most local businesses are becoming worried about paying their taxes at the end of the month. For cross border traders business environment is bad as their movement has been restricted in a bid to contain the Ebola virus.
Liberia, Sierra Leone and Guinea, who are experiencing the deadliest outbreak of the Ebola epidemic, are among the world's poorest countries at the bottom of global development indexes. These countries have shown signs of leaving behind brutal wars and leaping into Africa's economic boom – before the outbreak of the lethal Ebola epidemic.
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.
With the death toll more than 980, Ebola is hitting 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.
"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," Konneh stated.
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 falling from 4.5 percent to 3.5 percent.
The World Bank and African Development Bank have committed US$260 million to help the three worst-affected countries.
Fleeing Farmers, Falling Revenues
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 Finance Minister Konneh observed 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. We expect hoarding by people in urban areas that could drive food prices up," he said.
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.
Due to the fear of contagion from close contact – Ebola is spread by contact with the bodily fluids of infected humans or animals – taxis were now only taking three passengers in the back instead of the previous four, and this had pushed fares up.
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," Minister Konneh said.
Appeal to Investors to Stay
Most major foreign companies operating in Guinea, Sierra Leone and Liberia are reportedly responding cautiously, reducing staff movements and adopting precautionary health measures. There are reports that some foreign companies have begun evacuating their expatriate staff from Liberia.
The World Bank warned that if the evacuation of skilled expatriate staff continued, there would be a "sizable decline in production" from mining operations in the affected region.
The two big iron ore miners in Liberia, Arcelor Mittal and China Union, are still operating, Konneh said.
"We are trying to ensure we put in place health protocols in mining areas," he added.
Canadian Overseas Petroleum, a partner with oil major ExxonMobil in offshore exploration in Liberia, however, announced recently that 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," the company told Reuters.
Liberian and Sierra Leonean officials have 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'," said Konneh.