Through restrictions, diversion of resources among other emergency response actions being taken, economies across the globe are under duress. The global economy is reportedly facing its worse prognosis since World War 2. In Africa, a projected 1.4% decline in GDP equivalent to $29 billion for the entire continent was reported from initial analysis. As the clock ticks, the worst-case scenario is unfolding – pointing to negative growth in 2020, as low as -5.1% GDP growth. This is reported as likely to push the region into the first economic recession in 25 years.

As the clock ticks, the worst-case scenario is unfolding – pointing to negative growth in 2020, as low as -5.1% GDP growth. This is reported as likely to push the region into the first economic recession in 25 years. These losses translate to lost jobs – where an estimated 50% of all jobs in Africa could be lost, lost income and enterprise opportunities for the over 1.2 billion people on the continent. This pushes the continent further up the vulnerability scale. This is because while climate change is global, the poor are disproportionately afflicted because they are unable to afford goods and services they need to buffer against its worst effects. These economic ramifications are exposing first, the fragilities and second, the often-ignored realities, of African economies which hinges largely on the actions of the informal sector which cumulatively employs over 80% of Africa’s population.

Revisiting these aspects provides an opportunity for the continent to rebuild fool-proof post-COVID-19 economies, addressing fundamentals whose importance has been spectacularly exposed by this crisis. First, starting with ignored realities. For example, the closure of marketplaces has brought to light, the important role played by the informal sector in providing fundamental goods and services that keep households and the economy moving. This has been felt across the board. To the urban middle-class, when the usual trip to the market to replenish groceries can no longer happen because the market is closed, the important role played by the local grocery vendors in open markets, locally known as mama mboga’s in keeping households nourished hits home first and hard. When a mama mboga who trades less than $150 daily by selling her produce to middle class buyers, can no longer make the much-needed daily sales to sustain her, her family and replenish her business, she stares at a bleak future, a likelihood of losing her business for good. These impacts cascade down the supply-chain – impacting the transporter and all the way back to the farm, where diminished demand means a likelihood that ready harvests could be lost on the farm.

Second, we cannot ignore fragilities – one key lesson to Africa has been the fact that, during crunch times, countries by and large take care of their own. For example, while Africa needs an estimated $100 billion in emergency response and to buffer its economies, at this hour of need, every country in the globe now is focused mostly on taking care of their own citizens – with multiple rounds of stimulus packages running into the trillions of dollars. Some extending up to 20% of their GDP. But they are all focused on buffering their own economies. Given the nature of this pandemic where every country is dealing with this crisis and putting their citizens first, no country, stands ready to “bail out” Africa’s economies that may be at an even higher risk given their very low base. This is a lesson to Africa, that the continent can only bet on what it has at hand.

Re-building Better and Stronger: Harnessing the Power of Communal Cooperatives in Africa

Rebuilding better needs a strategic approach and two key aspects stand out if Africa is to rebuild better. First, the continent must rebuild from the foundation – which is the informal sector. And second, in doing so, the region must leverage on financing structures familiar to the informal sector. Up to 90% in Africa, inadvertently engaged in the informal sector transact in cash and in part, the convenience of mobile money. Formal financial structures such as bank accounts, tax brackets etc., are out of their reach. However, they are accounted for in cooperatives, which exist in some form even at the lowest socioeconomic level. This is the structure of cooperatives that are known in different names but exist in nearly every community level in every country. Cooperatives are weaved into the diverse cultures in the continent and draw on critical values that are fundamental to development – selflessness, trust and co-creation of value. Community cooperatives are proven to work, are accessible and relevant to the diverse financing needs of the informal sector having withstood the test of time. They build on trust which is the social capital and the most asset that many strive on for progress in communities...Read more from the attached document.