Beyond the health crisis, the consequences of Ebola are also economic and social. To make Sub-Saharan African countries more resilient in the face of epidemics, their health systems must be strengthened in the long term.

© European Commission DG ECHO
© European Commission DG ECHO

The Ebola epidemic has come as a reminder that health security is a global public good, but also that health policies must be strengthened considerably in Sub-Saharan Africa. Beyond the current health crisis, what are the economic and social consequences of Ebola for the countries that are directly affected and, more generally, for West Africa? What roles can donors play in addressing such a lasting crisis with long-term impacts? How to make these countries and populations more resilient to such a crisis?

What are the short- and medium-term consequences of the Ebola epidemic?

In terms of the direct health impact, according to the figures available to the health authorities in the affected countries, there have now been over 14,000 cases and over 5,000 deaths. WHO and the main operators in the field do, however, agree that the figures vastly underestimate the scope of the epidemic and that they should be doubled, or even tripled, to reflect the actual situation.

Since the Ebola epidemic profoundly destabilizes the functioning of health services in the affected countries, it also causes a major and indirect health impact, even if it is difficult to quantify. In Liberia, Sierra Leone and, to a lesser extent, Guinea, people with common diseases such as malaria, diarrhea or respiratory infections can no longer receive appropriate treatment and hospitals are no longer able to handle emergencies, caesarian sections, for example. Prevention programs, for child immunization for instance, are also disrupted, meaning there will be more long-term consequences.

Ebola does not only affect individuals, it also affects societies and their functioning, for example, by primarily striking health workers, or increasing the number of orphans. This destabilization also affects production capacities, particularly for subsistence agriculture, with foreseeable nutritional consequences in the long term.

 

Is this epidemic indicative of the state of health systems in a number of Sub-Saharan African countries?

Indeed, it is no coincidence that Ebola is spreading in countries that are among the poorest in the world. Liberia, Sierra Leone and Guinea are fragile States with some of the lowest human development indexes in the world, which explains the rate at which the epidemic has spread. Despite the encouraging growth performance over the past decade, these three countries have ineffective health systems, both in terms of infrastructure and facilities, but also and especially in terms of staff and governance. The Ebola virus thus reveals the long-term effects of the health policies that have been implemented. Generally speaking, it is clear that the arc of Africa’s current health problems, but also security problems, covers the map of fragile States.


 

 

Are the consequences of this epidemic likely to hinder the development trajectories of the affected countries?

The bulk of the economic impacts of the Ebola epidemic do not concern direct and indirect health costs (mortality, morbidity, decrease in the workforce, public health expenditure), but rather costs incurred by the changes in behavior resulting from the fear of contagion. Indeed, the main channel by which the epidemic affects economies is more the panic reaction than the health cost of Ebola, through the closing of borders, the movement restrictions in the territory, crops being abandoned… For example, in 2003, while the SARS (Severe Acute Respiratory Syndrome) epidemic was ultimately limited (8,500 cases identified and 800 deaths), it cost the global economy USD 40bn, i.e. USD 4.7m per case[1]. 80 to 90% of this cost was due to changes in the behavior of actors.

At this stage, it is difficult to estimate the potential economic and social impacts of Ebola and the significant margins of error, given the uncertainty over the rate at which the virus is spreading, actors’ behavior towards the virus, and the quality of available statistics in the countries in question. However, initial World Bank estimates[2] suggest that the economic growth rate of the economies in question will decline by between 2 and 3.4 percentage points in 2014 due to the epidemic, i.e. USD 359m. The World Bank Study envisages two scenarios for 2015. In the “optimistic” scenario, the epidemic would be contained by early 2015, with approximately 20,000 cases, and economic activity would gradually resume. In the “pessimistic” scenario, the epidemic would be under control more slowly and worsen until mid-2015, affecting 200,000 people. In the case of a pessimistic scenario, the economies would experience a shock with impacts that would take years to absorb (Graph below).

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Sources: IMF and World Bank

 

How can this impact on the economies in question be explained? First of all, the key production sectors of these countries (agriculture, mines, services) have been affected, both on the demand side (farms deserted, major infrastructure projects stopped, impossibility of importing goods required for production) and on the demand side (closing of borders with repercussions on the hotel industry, travel restrictions in the territory, certain markets closed). In addition, budget deficits will increase due to the decline in revenues caused by the slowdown in economic activity, as well as the rise in additional expenditure for emergency programs. According to forecasts, current account balances will also deteriorate as a result of the decline in exports and the increase in imports of food and other essential products. The provisional estimates of IMF staff assess the total financing deficit of the three countries at some USD 300m, provided the contagion is stopped by the beginning of next year. Another risk is the increase in the prices of food and other essential products, which threatens an already fragile food security in these countries, as well as social stability. Finally, it should be emphasized that the Ebola epidemic will have long-term consequences due to the loss of human capital (children not treated, rise in undernutrition and malnutrition, closing of schools, brain drain).

At this stage, West Africa’s performance is not threatened, as the three affected countries only account for a small proportion of GDP in the region. However, there have been spillover effects in various countries in the region (Côte d’Ivoire, Gambia, Senegal), in particular via a decline in tourism and intra-regional trade.

 

What should be the role of donors?

Donors are trying to address the situation by dealing with emergencies. In addition to direct financing to combat the epidemic, they have in particular allocated financial assistance that aims to cover part of the immediate needs to finance the balance of payments and budget, which are currently estimated at USD 100m for each of the three countries.


 

But beyond the emergency, there is a need here and now to rethink the health policies implemented in African countries to which donors contribute. The chronic underfinancing of this sector first of all draws attention to the responsibility of the countries themselves. In 2001, in Abuja, they pledged to earmark at least 15% of their national budget for health and only Rwanda and South Africa have reached this level today.

Since the early 2000s, in particular with the creation of the Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM), an increasing proportion of health assistance has been delivered via multilateral channels. For France, this share accounts for 80% of health assistance, which stood at EUR 773m in 2013. While no one questions the fact that funds such as GFATM, GAVI and UNITAID play a major role, their vertical approach does, however, not go without criticism. Indeed, while they dramatically increase access to prevention measures and treatment, resulting in a decline in morbidity and mortality for certain specific diseases, they have little impact on the health systems themselves, when they do not short circuit them for the sake of efficiency.

This focus on the major pandemics leaves aside the new health challenges for developing countries, whether this be the capacity to face an unexpected emergency such as Ebola, but also the expected increase in the chronic diseases of diabetes, cardiovascular diseases and cancer. Today, 57% of cancer – but 65% of deaths from cancer – already occur in low and middle income countries[3]. The burden of these diseases is still widely under under-diagnosed and is likely to have an increasingly important impact on mortality in these countries. In the developing world, health systems are not at all ready to face the ongoing epidemiological transition, as it requires preventive and curative capacities that are much greater in terms of complexity and cost than the capacities these countries have today. This will lead to both health and economic consequences, which will place a burden on State and household budgets, with the knock-on effect of a whole series of destabilizing phenomena, such as the catastrophic indebtedness of the most vulnerable or the traffic of counterfeit drugs.The overarching objective of bilateral aid, i.e. from State to State, is to strengthen health systems.

Agence Française de Développement today operates with resources from the French Muskoka Fund to build or refurbish facilities, train staff, provide equipment and drugs, and strengthen health governance systems in the 16 priority countries for French aid. AFD also works to facilitate financial access to healthcare for the most vulnerable, for example, via the Sahel Health Solidarity Initiative (I3S), which is implemented thanks to part of the 2013 revenue from the financial transaction tax. These operations are, however, limited by the grants that France has until now decided to earmark for bilateral aid.

 

How to make countries more resilient to such a crisis?

In addition to the need to strengthen health systems, this crisis highlights the lack of basic infrastructure and the need to improve service provision in African countries. There is indeed a considerable gap between the particularly high growth rates in the region as a whole and the difficulties populations have to access quality basic services (drinking water, sanitation, energy, health, education, public security, public transport). According to a survey conducted by Afrobarometer (2013) in 33 African countries, over 60% of respondents feel that they do not benefit from the economic development of their country, in particular due to the inability to access quality basic services[4].

In a similar vein, this epidemic has once again shown that it is the most vulnerable groups within populations who are the most affected in the event of a shock. Yet in the countries in question, as is the case in many African countries, appropriate social safety nets, both in crisis situations and in periods of stability, are practically non-existent and only cover a tiny part of the population. The Ebola epidemic also reveals the need to help countries establish social protection systems and institutions to fight against poverty, risks and vulnerabilities.


 

In the context of the ongoing negotiation on the Sustainable Development Goals (SDGs), which will follow on from the Millennium Development Goals from 2015 onwards, France, along with other major countries such as Germany and Japan, supports universal health coverage (UHC). For WHO and the World Bank, UHC now appears to be the way to strengthen the various components of health systems (facilities, equipment, staff, governance), but also to establish inclusive financing mechanisms in order to make healthcare demand viable and avoid catastrophic expenditure for the most vulnerable. There are a whole host of solutions for this – insurance or mutualist systems, free treatment policy, etc. – and they will need to be adapted on a case-by-case basis. It will be up to the countries to mobilize domestic resources, for example, by creating new tax areas. Donors’ support will focus on technical expertise, management tools, and assistance in implementing and supervising systems, as is the case in Niger with the I3S Initiative.

 

[1] Worse than Aids: the burden of cancer is falling increasingly heavily on the poor. The Economist, 1 mars 2014.

[2] Afrobarometer (2013), “After a Decade of Growth in Africa, Little Change in Poverty at the Grassroots”, October 2013. 

[3] Lee, J-W and W. McKibbin (2004), “Globalization and Disease: The Case of SARS”, Asian Economic Papers (Vol. 3 n° 1), MIT Press Cambridge USA.

[4] World Bank (2014), “The Economic Impact of the 2014 Ebola Epidemic: Short and Medium Term Estimates for West Africa”, 7 October 2014, Washington, D.C. 

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