Home Africa COVID-19: Employment effects likely to be severe in urban areas -ECA
COVID-19: Employment effects likely to be severe in urban areas -ECA

COVID-19: Employment effects likely to be severe in urban areas -ECA

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The Economic Commission for Africa (ECA) says COVID-19 employment effects are likely to be severe in urban areas.

It said this in a statement issued on Wednesday by the Communications Section in Addis Ababa, Ethiopia, and made available to the News Agency of Nigeria (NAN).

The organisation called for adequate consideration of the vulnerability of city economies as African governments consolidate efforts and define stimulus measures to mitigate national and regional economic impacts.

“Urban-based sectors of the economy (manufacturing and services) which currently account for 64 per cent of Gross Domestic Product (GDP) in Africa are expected to be hit hard by COVID-19 related effects, leading to substantial losses in productive jobs.

“In particular, the approximately 250 million Africans in informal urban employment (excluding North Africa) will be at risk.

“Firms and businesses in African cities are highly vulnerable to COVID-19 related effects, especially Small and Medium Enterprises (SMEs) which account for 80 per cent of employment in Africa.”

According to the statement, urban consumption and expenditure (of food, manufactured goods, utilities, transport, energy and services) is likely to experience a sharp fall in light of COVID-19-related lockdowns and reduced restrictions.

Ms Thokozile Ruzvidzo, Director, Gender, Poverty and Social Policy Division of the ECA, said as engines and drivers of economic growth, cities face considerable risks in light of COVID-19 with implications for the continent’s resilience to the pandemic.

“Africa’s cities drive consumption with their growing middle class with per capita consumption spending in large cities being on average 80 per cent higher at the city level than at the national level.

“COVID-19 related decline in urban consumption will thus impact domestic value chains, including rural areas.”

The ECA added that with the per capita expenditure of African local authorities being the lowest in the world at 26 dollars, many local authorities are poorly resourced and less able to contend with the onslaught of COVID-19.

It said that alarming also was the likely fall in revenue streams for local authorities due to COVID-19 curtailing their already limited ability to respond to the crisis.

“Intergovernmental/national transfers which account for 70 to 80 per cent of local authorities’ finance are likely to be reduced due to immediate national response and recovery requirements.

“Own source revenues which are already low at only 10 per cent of local authorities’ finances with city level lockdowns and restrictions leading to reduced economic activity.

“Yet, local authorities are frontline responders to such shocks and crises.

“Given the proximity to their constituencies, local authorities are well positioned to and already do lead responses to some of the immediate effects.

“By doing so, they have a better understanding of needs and necessary measures,and enable higher transparency of accountability.”

In light of these circumstances, the statement said the ECA was proposing specific support to city governments to mitigate and respond to the economic effects of COVID-19, in addition to the immediate health and humanitarian focus.

It added that disaggregating the analysis and identification of priorities and responses at the sub-national and city scales was a first step.

According to the ECA, proactive measures are also needed for urban economic recovery including measures to boost finances and capacities of local authorities as first responders.

It said there should be short term bailouts and exemptions for SMEs to limit productivity and employment losses and social protection for those in informal urban employment should be provided.

It emphasised that in this regard, local governments must be supported because they are better able to respond to local needs including coordination with community-based structures.

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