> Posted by Jeffrey Riecke, Communications Associate, CFI
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New World Bank analysis indicates that along with the already devastating loss of life, the Ebola outbreak could cause “potentially catastrophic” economic effects on West African countries, especially in the three hardest hit. According to the analysis, Liberia’s GDP could fall by 12 percent, Sierra Leone’s by 9 percent, and Guinea’s by 2 percent.
Efforts to contain the epidemic are fueling much of the economic slowdown, like the closings of businesses, transportation infrastructure, and critical air and sea links with other nations. As mentioned in a post on this site a few weeks ago, microfinance institutions are being affected, too.
Between 80 and 90 percent of the economic losses suffered from Ebola are related to containment behavior, a dynamic consistent with recent SARS and H1N1 outbreaks. A lower supply of available workers – due to employee illness, death, and caregiving – is a smaller factor. At the same time, health systems are collapsing under the onslaught of the epidemic, leaving those with other serious illnesses unable to receive treatment. These conditions cause shortages, panicked buying, and speculation, which lead to rises in food prices and inflation. Economic life in the affected areas was already extremely tough to begin with. In Liberia, Sierra Leone, and Guinea, more than 50 percent of the population lives below the poverty line.
The World Bank analysis was based on World Health Organization (WHO) findings released several weeks ago. This week, WHO shared an updated, more severe report as the number of Ebola cases has doubled in the past three weeks. Liberia, Sierra Leone, and Guinea contribute a relatively small portion of the economic activity in West Africa. If the virus is not contained, the economic impact will be much larger, as it moves beyond those three countries, the World Bank stated. Still, President Kim indicated yesterday that 80 to 90 percent of the epidemic’s economic impact could be mitigated “if we get an effective response on the ground in the next few months.”
Like all else in the region, microfinance institutions have taken precautionary measures. BRAC Liberia, one of the country’s biggest MFIs, has reportedly suspended loan operations for at least a month. The case is the same for BRAC Sierra Leone. CARE Liberia has limited group meetings. Some lenders in the region who are continuing operations are easing repayment structures and granting forgiveness to clients when deemed necessary. The Liberian microfinance market has roughly 53,000 borrowers, Sierra Leone 110,000 and Guinea 117,000.
In the face of the devastation and the inability to fully continue financing efforts, many MFIs are leveraging their non-lending capacities to help stop the virus’ spread and support community resilience. BRAC Liberia and Sierra Leone have offered health awareness communication through one-on-ones, group meetings, and even street theatre performances. Hundreds of community health workers have engaged in the effort. Posters, flyers, and hygiene kits have been distributed throughout communities.
More recently, as direct contact is no longer advisable, the BRAC MFIs are getting involved in other ways. Awareness campaigns are continuing using alternative means, such as over the radio. Some core staff at country offices have remained stationed, supporting the prevention efforts of authorities. Institutions have donated prevention supplies to ministries of health and sanitation.
In Liberia, the MFI Foundation for Women (FFW) is advising the community to be smart in the fight against the virus, but to also properly manage their businesses. Charles Naiwah, Program Manager of FFW urged, “Don’t let Ebola put you out of business.” His MFI has disseminated core messaging and awareness materials to the community as well as preventative gear to combat the virus.
On Tuesday U.S. President Obama announced a “major increase” in the U.S. response to the epidemic. The U.S. could send up to 3,000 additional American troops to support civilian aims and build field hospitals with up to 1,700 total beds. In a recent statement, Margaret Chan, the World Health Organization’s Director General said, “Today, there is not one single bed available for the treatment of an Ebola patient in the entire country of Liberia.” The U.S. will also send 400,000 treatment kits for families and create a new training facility to train up to 500 health workers per week. The move by the United States is with the hope that it will trigger greater global action. Next week the U.N. Security Council will hold an emergency meeting to discuss a response to the crisis.
At least 2,400 people have died from the virus, and cases are now appearing in Nigeria and Senegal.
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