The economic costs to conflict in South Sudan and Ebola in West Africa


Originally published at www.humanosphere.org on January 15, 2015.

Ebola in West Africa and the conflict in South Sudan are causing significant harm to regional economies in sub Saharan Africa. Separate reports issued on Wednesday detailed the steep costs. Together, they show just how regions are affected by sudden crises — whether they be conflict or the spread of a virus.

For East Africa, the cost of the now year-long fighting in South Sudan could reach $63 billion in five years. Fighting that started in December 2013 has left more than 10,000 people dead and more than 1 million of the country’s 12 million people. The humanitarian toll has been immense — add onto that the fact that the country’s economy contracted by 15 percent in 2014.

The problems are harming near-by Ethiopia, Kenya, Sudan, Uganda and Tanzania, says the U.K.-based consulting group Frontier Economics. With stalled peace talks, it is possible the conflict will continue. If it does, South Sudan and its neighbors stand to see economic loses. The group estimates that South Sudan alone will see as much as $28 billion lost in the next five years. Those losses will harm other countries, but the bigger costs will come from the potential need for regional armies get involved and resources required to support South Sudanese refugees.

“Despite great efforts by Africa and the international community to end this senseless war, the tragedy continues, at massive cost,” Dr. Salim Ahmed Salim, former Tanzanian minister for foreign affairs, wrote in the report introduction. “No monetary figure or economic projection can quantify the full human cost of this conflict.”

The report attempts to quantify the economic costs of conflict. Its aim is to provide further facts that will motivate the international community and regional leaders to take action. If the human toll of fighting is not compelling enough for political leaders, maybe the estimated $30 billion it will cost to provide humanitarian assistance does the trick.

According to the report: “Without a swift end to the fighting, South Sudan runs the risk of becoming a failed state. Worse still, it could become the epicenter of a full-blown regional conflict. To ensure this is not the trajectory for South Sudan will require African leaders, with the full backing of the international community, to take swift and decisive action, and to sustain that action.”

Similar economic warnings have been made about the Ebola outbreak in West Africa. The U.N. Development Program said economic development in West Africa slowed due to Ebola. It provided more than $1 million to the Liberian government to pay Ebola health and community workers.

For the past few months, both the International Monetary Fund and the World Bank have issued reports and updates detailing the economic losses caused by spread of Ebola. The provision of $430 million to Guinea, Liberia and Sierra Leone by the IMF caused a debate over its role in supporting the countries. The World Bank is kicking in another $1 billion in financing for the countries.

All saw economic growth fall by roughly half in 2014. That is expected to continue into 2015 as Ebola remains. The good news is that things are getting better. A new study estimates Liberia could be Ebola-free by June if sick people continue going to medical centers. Sierra Leone is also bullish on its progress with its president predicting zero cases by the end of March.

However getting to zero is not the end of the story. Surveys of Liberian households show that close to half of household heads are unemployed. The majority of job losses were in cities and by the private and nongovernmental organizations sectors. It is a problem that is affecting women more than men and contributing to problems like food insecurity.

“From a poverty perspective, we are particularly concerned about households being forced into coping strategies that may harm their long term prospects to improve welfare, and now we can follow this in almost real time,” said Kristen Himelein, the World Bank Group’s poverty economist for Liberia and Sierra Leone.

The fragility that led to the spread of Ebola in West Africa and conflict in South Sudan will not subside when the respective problems are dealt with. Economic losses will make matters worse and only mount if the end to Ebola and conflict in South Sudan do not end soon.

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