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Ebola: Economic Impact Could Be Devastating
Latest Issue: 
  • September 17, 2014

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Liberia, August 2014.

Ahmed Jallanzo, UNICEF

STORY HIGHLIGHTS
  • A new World Bank report outlines the short and medium-term economic impact of West Africa’s Ebola epidemic
  • The crisis could cost Guinea, Liberia and Sierra Leone up to $809 million by 2015
  • Countries and their partners must come together quickly to reverse the aversion behavior that is causing the economic damage

WASHINGTON, September 17, 2014—The Ebola epidemic in West Africa has stolen the lives of nearly 3,000 people since January 2014. In addition to lost lives, the disease is dealing a severe economic blow to families and governments. Closed borders and abandoned farms are driving up food costs leaving many people in rural communities hungry. Emergency spending on health services is drawing money from already cash-strapped government budgets. The epidemic could reverse years of economic gains made by countries in this developing part of the world.


" Early estimates for growth in Guinea have been halved from 4.5% to 2.4% as a result of the disease. "

A new World Bank report outlines the short and medium-term toll the Ebola crisis could take on the three most heavily affected countries – Guinea, Liberia and Sierra Leone – if those countries and their partners don’t immediately ramp up efforts to contain the disease outbreak. Estimates of the impact on the three countries for 2015 range from $97 million (if the epidemic is rapidly contained) to $809 million (if control of the epidemic is delayed).  

Guinea

The impact is already evident in Guinea, Liberia and Sierra Leone, the three countries with the highest number of Ebola cases. Early estimates for growth in Guinea have been halved from 4.5% to 2.4% as a result of the disease. Already among the poorest countries in West Africa with a population of 12 million, Guinea has seen the biggest losses in its agriculture industry. An exodus of farm workers from the countryside has meant lower exports of key products like cocoa and palm oil.

Sierra Leone

Sierra Leone, once navigating toward Middle Income status at an 11.3% annual growth rate could see growth of only 8% in 2014 and zero in 2015. The disease has spread to all but one of the country’s 13 districts, with four doctors and 30 nurses among the dead. The country has been devastated by restrictions on international travel, the closing of markets, disruption of farming activities and a slow-down in critical mining operations as a result of foreign workers fleeing the country for fear of contracting Ebola.

Liberia

Liberia is currently the country worst affected by the Ebola crisis. The virus has spread quickly, rates of infection are surging and deaths continue to rise. According to the report: “The largest economic effects of the crisis are not the direct costs (mortality, morbidity, caregiving, and the associated losses to working days),” the report reads, “but rather those resulting from changes in behavior–driven by fear–which have resulted in generally lower demands for goods and services and consequently lower domestic income and employment.”

The country could see negative growth rates in 2015—if Ebola is not quickly contained—impacted by the closure of one the country’s two major mining companies as a result of the disease outbreak and by disruptions to farming and agriculture. The services sector has also been affected. Liberia has seen incoming commercial flights slump from 27 per week to just six. Some hotels have reported occupancy rates as low as 10% leading many hotel workers to lose their jobs.

So far, neighboring countries have had limited economic impacts as a result of the epidemic, but that could change if measures are not taken to quickly contain the disease and prevent its spill-over, the report warns. Countries that could be affected include Nigeria, Cote d’Ivoire, Guinea-Bissau, Senegal and The Gambia.

The overall impact of Ebola is evident in two distinct areas, the report reads. First are the direct and indirect effects of sickness and death. Second are the behavioral effects resulting from peoples’ fear of a spreading epidemic, which in turn leads to a fear of interacting with others, closes the workplace, disrupts transportation and panics governments and businesses into closing seaports and airports.


" Taken together, the humanitarian response, the fiscal support, the investment in secure transportation links and the expanded disease surveillance and treatment capacity will not only stem the Ebola epidemic, but help to reverse as quickly as possible the aversion behavior that is causing so much economic damage "

Recommendations

Limiting the human costs and economic impacts of Ebola Virus Disease will require significant financial resources, coordination between international partners and the affected countries and commitment. The report recommends the following measures:

  • Supporting the humanitarian efforts to finance medical equipment, emergency treatment units and personnel salaries
  • Helping countries bridge the $290 million fiscal gap for 2014 and continue as the gap grows in 2015
  • Providing infrastructure and financing to countries’ international transportation links
  • Strengthening the surveillance, detection and treatment capacity of African health systems

“Taken together,” the report says, “the humanitarian response, the fiscal support, the investment in secure transportation links and the expanded disease surveillance and treatment capacity will not only stem the Ebola epidemic, but help to reverse as quickly as possible the aversion behavior that is causing so much economic damage.”