Ebola crisis: The economic impact

Liberia security forces block a road Military road blocks are preventing the movement of goods and workers

With more than 1,300 reported deaths from Ebola in West Africa, the virus continues to be an urgent health crisis, but it is also having a devastating impact on the economies of Guinea, Liberia and Sierra Leone.

"The economy has been deflated by 30% because of Ebola," Sierra Leone's Agriculture Minister Joseph Sam Sesay told the BBC.

He said President Ernest Bai Koroma revealed this staggering and depressing news to ministers at a special cabinet meeting. "The agricultural sector is the most impacted in terms of Ebola because the majority of the people of Sierra Leone - about 66% - are farmers," he said.

Twelve out of 13 districts in Sierra Leone are now affected by Ebola, although the epicentres are in the Eastern Province near the borders with Liberia and Guinea.

Road blocks manned by police and military are preventing the movement of farmers and labourers as well as the supply of goods.

"We are definitely expecting a devastating effect not only on labour availability and capacity but we are also talking about farms being abandoned by people running away from the epicentres and going to areas that don't have the disease," Mr Sesay added.

A lone man sits outside shops that were closed in Monrovia's West Point slum Many shops have been forced to close as part of quarantine measures
Food shortages

However, the chief co-ordinator for the United Nations Development Programme (UNDP), David McLachlan-Karr, thinks that the road blocks are absolutely crucial to containing the outbreak.

"A robust response to quarantining epicentres of the disease is absolutely necessary," he told the BBC. But he admits agriculture in Sierra Leone has been brought to its knees.

Start Quote

The stereotypes of Africa as a place of poverty and disease have started to re-emerge again”

End Quote Dianna Games Africa@Work

"We are now coming into the planting season which means a lot of agriculture is not happening, so down the line that will create food shortages and pressures on food prices. We are starting to see a rise in inflation and pressure on the national currency as well as a shortage of foreign exchange," he said.

The UNDP has appealed for $18m (£11m) to bolster Sierra Leone's health system while the World Food Programme says the total cost of its emergency operations in Sierra Leone, Guinea and Liberia is $70m.

In Guinea and Liberia the economic predictions may be less catastrophic but they are still worrying. The World Bank said it was expecting GDP growth in Guinea to fall from 4.5% to 3.5%.

A Liberian soldier walks along a deserted street with shops closed in Monrovia, Liberia Economic growth in Liberia has been revised down due to the outbreak

The Liberian economy had been expected to grow by 5.9% this year but the country's Finance Minister, Amara Konneh, said this was no longer realistic due to a slowdown in the transport and services sectors and the departure of foreign workers because of Ebola.

Mining impact

The world's largest steelmaker ArcelorMittal has seen work disrupted on its iron ore mine expansion project in Yekepa in Liberia, after contractors declared "force majeure" and moved people out of the country.

Simandou, in the forests of eastern Guinea, is Africa's largest iron ore mine and infrastructure project. Vale, the world's biggest iron ore producer, was involved in Simandou until April. It evacuated six international members of staff and put the rest of the workforce in the area on leave.

Rio Tinto, the world's third largest mining company, which owns a share in Simandou, has donated $100,000 to the World Health Organization's work in the area and is also making sanitation equipment available to local people there.

Smelter Steelmakers and miners have been hit by the outbreak

A smaller British company, London Mining, has moved out some its non-essential expatriate staff from Sierra Leone, where mining has accounted for much of the country's recent growth. According to the International Monetary Fund, Sierra Leone's output grew by 20% last year; excluding iron ore mining, it grew by 5.5%.

But like Rio Tinto, London Mining has also donated money towards tackling the spread of Ebola, and educating local communities about the virus.

Borders closed

In Sierra Leone, commercial banks have reduced their hours of business by two hours to reduce contact with clients and the country's tourism industry has taken a severe knock - some hotels are empty and are laying off staff.

The closure of borders in West Africa and the suspension of flights are also having a detrimental effect on trade, severely limiting the ability of countries to export and import goods.

Recent examples are the closure of Cameroon's lengthy border with Nigeria and the announcement by Kenya Airways that it is suspending flights to and from Sierra Leone and Liberia.

Man with suspected ebola The outbreak has caused a number of countries to close their borders

All three West African nations are already poor countries, but the Ebola outbreak could make them even poorer. Sierra Leone and Liberia have both emerged from horrific civil wars and managed to rebuild their economies.

Liberia has been trying to revive its mining sector which before the civil war accounted for more than half its export earnings. But now there are fears that all the good work that has been achieved since those conflicts could be destroyed. There are also concerns that widespread poverty could force people to resort to criminality.

'Fundamentals'

Meanwhile some international investors are nervously watching the Ebola outbreak unfold. Dianna Games, chief executive of Johannesburg-based consultants Africa@Work, says fears about the virus could damage Africa's economic revival of recent years.

"Ebola has made a dent in the Africa Rising narrative," she told the BBC. "The stereotypes of Africa as a place of poverty and disease have started to re-emerge again."

She thinks Nigeria is the only affected country that has the health system and infrastructure to deal with Ebola. At the moment there have only been 12 confirmed cases, all of which were linked to the death of one man from Liberia in July.

In the long run, Ms Games believes history will view the 2014 Ebola outbreak as a temporary blip rather than a permanent U-turn in the continent's fortunes.

"The fundamentals pushing this Africa Renaissance are still there," she said.

More on This Story

More Business stories

RSS

BBC Business Live

  1.  
    OFCOM BOSS LEAVES 09:56:
    Ed Richards, Ofcom chief executive

    Ed Richards is standing down as chief executive of Ofcom, the regulator of television, radio and internet services. Patricia Hodgson, Ofcom chairman, said: "Under his leadership, Ofcom has helped to deliver superfast broadband, 4G, lower prices, innovation, competition, and sustainable public service broadcasting in the UK."

     
  2.  
    WONGA 09:52:

    The Financial Conduct Authority is sending a message to the payday loan industry. Clive Adamson, director of supervision, said: "We are determined to drive up standards in the consumer credit market and it is disappointing that some firms still have a way to go to meet our expectations. This should put the rest of the industry on notice - they need to lend affordably and responsibly."

     
  3.  
    Via Twitter Adam Parsons Business Correspondent

    tweets: "FCA says did deal with Wonga requiring company "to make significant changes to its business immediately....should put industry on notice""

     
  4.  
    Via Twitter Neil Hume, Financial Times Commodities Editor

    tweets: "It's turning into a rout. Brent down 1.4% to $92.86 this morning in the wake of the latest Saudi OSPs [oil sales price] "

     
  5.  
    WONGA 09:21:

    Payday lenders like Wonga were criticised last year by the Office of Fair Trading for the number of times debt was rolled over, extending the amount of time a borrower has to repay, but also increasing the overall cost of the loan. Earlier this week, Wonga said 2013 profits fell by 53% to £39.7m due to "remediation costs" - money it had to pay back to customers as a result of its own mistakes.

     
  6.  
    WONGA 09:09: Breaking News
    Wonga logo

    Wonga will write off the debts of 330,000 customers who are in arrears of more than a month. Another group of 45,000 customers who have been in the red for less time can pay their debt without interest and charges. Wonga is doing this following "discussions" with City watchdog the FCA.

     
  7.  
    DOMINO'S PIZZA 08:58:
    pizza

    Shares in Domino's Pizza are up 2.2% after the fast food firm said third-quarter sales were up 12.9%. The company says it has been helped by a shift to online sales.

     
  8.  
    CONSERVATIVE CONFERENCE 08:37:
    Prime Minister David Cameron

    The Daily Telegraph is swooning over Prime Minister Cameron's conference speech. "Electrifying," is how it describes the PM's pledge to raise the 40p tax threshold. The Telegraph doesn't quite claim credit for the move, but does remind us that it has been campaigning for such a reduction.

     
  9.  
    MARKET UPDATE 08:27:

    The FTSE 100 is down 0.24% in early trading following a 1.4% loss for the Dow Jones in on Wednesday.

     
  10.  
    PARIS MOTOR SHOW 08:11: BBC Radio 4
    Discovery Sport

    Jaguar Land Rover has plenty to boast about at the Paris Motor Show. It has doubled sales volume and employment in five years. On Today Andy Goss, global sales director says that 80% of its output is exported. But to compete it has to build plants abroad, he says. A new plant opens in China at the end of this year and one in Brazil around a year later.

     
  11.  
    VIRGIN MONEY FLOAT 08:03: Via Email Kamal Ahmed BBC Business editor

    emails: "Virgin Money's announcement of its intention to sell a stake on the London stock exchange brings to an end another chapter in the sorry story of Northern Rock. The functioning bits of the bank, which spectacularly collapsed in 2007 and was bailed out in February 2008 with £1.4bn of tax payers' money, were bought by Sir Richard Branson and US investor WL Ross for £747m in 2011."

     
  12.  
    MARKET REPORT 07:50:
    Share price board, Tokyo

    It has been a shaky session for shares in Tokyo, the Nikkei 225 index closed 2.6% lower at 15,661. The Hang Seng in Hong Kong, which has fallen more than 9% since hitting a six-month peak in September amid pro-democracy protests, is closed for a public holiday.

     
  13.  
    Via Twitter BBC Radio 4

    tweets: "'Downgrade could follow Brexit' says Standard and Poor's Mortiz Kraemer @EthicalMan"

     
  14.  
    HEADLINES
     
  15.  
    LORD HILL 07:33: BBC Radio 4
    Lord Hill

    "He showed no grasp of the issues," is the verdict of Phillippe Lamberts, co-chair of the Greens in the EU parliament, on Lord Hill's appearance before European members of parliament on Wednesday. "Behind his charm there was apparently little knowledge of the subject matter at hand," Mr Lamberts said on Today.

     
  16.  
    VIRGIN MONEY FLOAT 07:26:

    So, will ordinary folk be able to buy shares in the Virgin Money offering? Not until they start trading. The offer is open to "certain institutional investors". Although they are giving staff £1,000 of shares apiece.

     
  17.  
    VIRGIN MONEY FLOAT 07:11:

    Virgin Money has announced details of its share sale. The firm hopes to raise £150m from the sale of about 25% of the bank, it said. If the sale is successful the Treasury will receive £50m, which was part of the deal when Virgin Money took over assets from Northern Rock.

     
  18.  
    ECB MEETING 06:57: BBC Radio 4
    Eurozone sign

    The European Central Bank (ECB) hosts its monthly meeting in Naples today, amid worries that the eurozone economy is deteriorating. "The ECB can buy time for governments to act... but it cannot generate lasting growth," says Moritz Kraemer from Standard & Poor's on Today. He says Europe needs to reduce the debt load of households, firms and governments.

     
  19.  
    PIMCO EXODUS 06:48: BBC Radio 4

    Investors have taken £14.5bn out of the investment firm Pimco since its founder Bill Gross resigned last week. Andrew Balls, chief global investment office at Pimco, says "it's calmed down very quickly though". The departure was not a huge surprise, he reckons. Mr Balls reminds listeners to Today that Mr Gross was 70 "and wouldn't be there [Pimco] for ever". Ouch.

     
  20.  
    PARIS MOTOR SHOW 06:40: BBC World News
    Rolls Royce chief executive, Torsten Muller-Otvos

    "We are on the roll ja," says the German chief executive of Rolls Royce Motor Cars, Torsten Muller-Otvos on World Business Report. He expects the company to have another record year. He is standing in front of a limited edition Rolls-Royce Phantom, only 20 were made and, sorry readers, they are all sold out.

     
  21.  
    SHARING ECONOMY 06:31: Radio 5 live

    What is the sharing economy? "The sharing economy defines the assets you own and skills you have" says Debbie Wosskow, chief executive of Love Home Swap on 5 live. (Are we clear now?) Customers need protection, but regulation needs to keep up with this emerging market, she says. She's writing a review into the sharing economy.

     
  22.  
    CONSERVATIVE CONFERENCE 06:17: Radio 5 live

    Lord Digby Jones, the crossbench peer and businessman is on 5 live after his appearance at the Conservative Party conference. He is worried people think money grows on trees, rather than coming from business, but also says business should mend its image: "I don't want chief executives paying themselves big bonuses [right now]. They may deserve it, but it sets a lousy example."

     
  23.  
    ARGENTINA 06:13: Radio 5 live
    President Cristina Fernandez

    The boss of Argentina's central bank has resigned. Juan Carlos Fabrega had been calling the government to tackle inflation and rein in spending. That created conflict with the nation's economy minister. The BBC's South American Business Reporter Katy Watson says the resignation doesn't make President Cristina Fernandez de Kirchner look good either.

     
  24.  
    PARIS MOTOR SHOW 06:07: Radio 5 live

    Jurgen Stackman, chairman of carmaker Seat is on Radio 5 live. Ten years ago electric vehicles were seen as the future, so what went wrong? Industry watchers were very optimistic about the speed of people picking them up, he says. Electric cars still have mileage and range limitations and families with one car don't want to rely on an electric car, he adds.

     
  25.  
    US SHARES SLIDE 06:00: BBC World News
    New York Stock Exchange

    There were sharp losses for US shares overnight. On World Business Report, Michael Hewson, chief analyst at CMC Markets reminds us that the US market has had a good run recently. But there is not much to be positive about at the moment, he says. The recent economic data from China and Japan has not been great. Traders are also preparing for higher interest rates in the US, Mr Hewson says.

     
  26.  
    06:00: Howard Mustoe Business reporter

    Good morning. You can get in touch via email bizlivepage@bbc.co.uk and on twitter @BBCBusiness

     
  27.  
    06:00: Ben Morris Business Reporter

    There were sharp losses for US shares overnight, so it will be interesting to see how Europe responds to that later. Plus we'll have reports from the Paris Motor Show. It should be a fun morning, so stay with us.

     

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.